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Daily Commodity Outlook, June 11 2020

Asian stocks slipped on Thursday after the Powell painted a long road ahead for the largest economy to recover from the economic damage due to the Covic-19, a contrast with the V-shaped recovery in U.S. equity. Mr Powell dampened expectations for a rapid rebound in the world’s most important economy after the coronavirus pandemic forced shutdown and projected that the job market could takes years to recover. Market sentiment is a bit off today with stock futures ticking lower.
The dollar ticked lower after Fed chief Jerome Powell said they will keep pumping stimulus into the economy until the labour market has healed. A senior economist – Yelena Shulyatyeva noted that the Fed estimates it will take nearly three years for the economy to return to pre-virus levels and the low interest rate is likely to continue till 2020. This low yield could reduce the attractiveness of USD.
Copper recorded a broad rally overnight, as market participants digested the Federal Reserve’s latest monetary policy decision and outlook for the economy over the coming years. The Fed left interest rates unchanged on Wednesday and committed to maintaining its unprecedented stimulus plan. The main driver behind the copper rally has been the re-opening of the Chinese economy which led to a resumption of demand for the metal. Meanwhile, lockdown measures which disrupted supply chains and limited scrap availability provided support for the recent rally. For copper, expectations around the Chinese government stimulus have been key, but whether this economic stimulus can help copper this year is yet to be seen. 
Gold rallied higher, benefitting from the modest safe-haven flows as bleak economic projections from the U.S. Federal Reserve boosted demand for the safe-haven metal. On Wednesday, the U.S. central bank repeated its promise of continued extraordinary support, estimating the U.S. economy to shrink by 6.5% in 2020 and the unemployment rate to be at 9.3% at year’s end. Fed officials also signalled the need to remain vigilant and committed to keeping the key interest rate near zero at least through 2022. Looking ahead, the stimulus measures and low interest rates environment could provide support for a further rally in the precious metal in the long run, as it is often used as a hedge against inflation and currency debasement.
Oil prices are seeing a recovery due to inventory induced slide levels but are still well off intraday highs. From the start of May, strategically positioned oil traders have remained content to pocket dips, and likely more so this week, encouraged by OPEC+’s substantial commitment and resolve after the weekend meeting which, on the surface, seems solid enough to form the foundation of more constructive pricing.  
Technical & Trade views
 
USDCAD (Intraday bias: bullish above 1.33430)
We turned bullish as price is bouncing off 1st support and is currently testing our intermediate support at 1.3430  where the horizontal swing high is. Price is likely to bounce  further from here towards 1st resistance where the horizontal swing high is. MACD is also showing bullish momentum to continue.

UKOIL (Intraday bias: neutral between 1st support and 1st resistance)
We are seeing a neutral scenario where price stands in between our support and resistance level.Ichimoku cloud is showing mixed sentiment as well.  If price could break below support level at 39.82, 37.66 marks a potential downside target for shorts. 
 
XAUUSD ( Intraday bias: Bearish below 1738.917)
Price is facing bearish pressure from our first resistance, in line with our descending trend line and 88.6% fibonacci retracement where we could see a further drop to our first support level, in line with our 38.2% fibonacci retracement. Stochastic is approaching our resistance as well where we could see a reversal below this level. 

XCUUSD ( Intraday bias: bearish below 2.67885)
Price reversed nicely rom our first resistance, in line with our 200% fibonacci extension, 78.6% fibonacci retracement where we remain bearish below this level and could see a further drop to our first support level. Stochastic is facing bearish pressure from our resistance as well. 
 
 
 
 

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