• Alphachain Team

Gold: Multi Year Highs

Gold was the star of the show last week after the commodity gained over 5% moving to multi year highs. The asset was able to close above the $1,900 level and going into the trading week has breached the all-time highs and is currently trading at $1,933/oz. Investors have flocked to bullion due to the uncertainty within the dollar and the safe haven currently being viewed as overbought. This could also be largely down to the effects of the FED Asset purchase programme starting to take effect on the greenback as Covid-19 cases within the nation continue to rise.


In addition to this, tensions between the nation and China continue to wear down the US currency and add further pressure. The DXY pressed beneath the 95.00 mark and violated previous key levels of support. At present the next key support level remains at 93.80. This week is could see further selling on the USD with the FOMC set to release their statement and hold a press conference on Wednesday.


US/China Relations

Relations between the US and China continue to show signs of strains given the events that have transpired in the past week. The US ordered the consulate in Houston, Texas to close its doors and President Trump warned that more Chinese consulates in the US could be closed. Reports have suggested that the consulate in San Francisco is harbouring a Chinese military researcher who is currently wanted by the FBI. In retaliation, China confirmed that it will be ordering the US to close the Chengdu consulate which led to the US lowering the flag after surpassing the closure deadline. In addition to this US Secretary of State Pompeo continued to reiterate that Huawei is a national security threat.


Eurozone

As the DXY slides lower, the Euro gained and broke above the 1.1700 level and with the Eurozone coming to an agreement in regard to the recovery fund, this fuelled Euro’s bullish move even further. The EU recovery fund has been maintained at €750bln and will set aside €390bln in grants and €360bln in loans. EURGBP remained sub 0.9150 as buyers made attempts to push prices higher. GBP held its ground against the currency amidst uncertainty still remaining surrounding a post-Brexit deal. Reports state that there has been neither a ‘breakthrough nor breakdown’ and progress is yet to be made on major sticking points. Talks between the two parties are expected to run down to the wire. The UK has also announced that it will be imposing a 14-day quarantine on individuals travelling in from Spain after the nation reported a spike in covid-19 cases in Catalonia and Aragon. It is also important to note that the UK is mulling whether to impose this embargo on Germany and France who have also seen surges in cases going into the week.


WTI Crude Oil

WTI Crude Oil finally broke near term daily resistance around $41/bbl. as the risk appetite improved during the week. The break higher was short-lived as sellers stepped in at $42.50, which has held as strong level of support in the past for the recovering commodity.

In the cryptocurrency space, ETHUSD has broken to the upside from its long-term bearish channel. The crypto asset broke above previous weekly resistance around $290 and went on to trade above the $300 level. The bullish move on the asset was also seen in LTCUSD which traded in to the $50 level before seeing selling pressure step in. BTCUSD currently trades above the $10,000 mark as liquidity flows into the crypto space. Investors and traders will be watching $10,455 closely as this level has held as a level of resistance in the past.

Here is a breakdown of the high impact data releases this week.

Wednesday

02:30 CPI q/q & Trimmed Mean CPI q/q. Markets to watch: AUD Crosses

15:00 Pending Home Sales m/m. Markets to watch: USD Crosses

19:00 FOMC Statement. Markets to watch: USD Crosses

19:30 FOMC Press Conference. Market to watch: USD Crosses

Thursday

09:00 German Prelim GDP q/q. Markets to watch: EUR Crosses

13:30 Advance GDP q/q. Markets to watch: USD Crosses

Friday

13:30 GDP m/m. Markets to watch: CAD Crosses

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