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Market Watch: Oil continues to grow


19 May 2020

In most cases, the first trading day of the week contains the least amount of important macroeconomic reports, which means trading activity in most currency pairs can remain low to moderate.

I’ll draw your attention to the report on GDP figures from in Japan for the first quarter of this year. The data came in above analysts’ expectations, which is a bullish signal for the stock market, but bearish for JPY, since any improvement in the economic situation reduces interest in safe haven assets such as the yen.

Nevertheless, buying activity in the USD/JPY currency pair remains restrained, although the bullish scenario remains a intact until the quotes return below 106.70 - the nearest strong technical support level.

And now let's move on to the trouble brewing between the USA and China, which is generating a demand for safe haven assets. Let me remind you that from last Friday, the ban on the purchase of chips made by Huawei came into force - this is the next stage of the trade war between the world’s 2 largest economies which has increased the demand for gold.

Today, gold is trading above $1,770 an ounce, which is still below the yearly highs. Any further deterioration in trade relations between the US and China will contribute to a slowdown in global economic growth and, as a result, an increase in demand for gold. The next target for buyers remains $1800 per ounce.

I will also draw your attention to the growth in the oil price and the new highs since mid-March. The price has managed to overcome the previous high at $30.55 per barrel and now there is a chance of further growth to the $35 a barrel mark.

Despite the steady increase in oil prices, demand for the Canadian dollar remains restrained. Thus, the USD/CAD currency pair is still holding above previous lows and the psychological support level of 1.4000. Nevertheless, the risk of further selling pressure continues to increase. The main bullish driver for CAD is rising oil prices. Therefore, any further growth in the “black gold” can provoke a strong selloff  for this currency pair.

The above review is not a direct guide to trading, and can only be classed as a recommendation.r #dollar #news #recentnews #forexforecast

#source

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