The Bloomberg Commodity Index fell for a second day as oil, copper, soybeans, and almost every other futures contract linked to industrial and agricultural staples retreated

20 May 2021, 03:25

Market Focus

U.S. stocks closed mixed and Treasury yields rose as minutes showed Federal Reserve officials were cautiously optimistic about the U.S. recovery at their April meeting, with some signaling they’d be open “at some point” to discussing scaling back the central bank’s massive bond purchases.

The S&P 500 fell for the third day, and 10-year Treasury yields jumped to session highs following the release. Energy and raw-material stocks fell the most as commodities prices tumbled amid mounting concern about inflation and potential curbs on monetary stimulus. The Nasdaq 100 notched a small advance, boosted by late-day gains in tech stocks including Facebook Inc. and Alphabet Inc.

At its worst moment, Bitcoin dropped about 30% to within a whisker of $30,000. It pared that decline to about 8% by 4 p.m. New York time. Other cryptocurrencies held double-digit percentage losses, pressured in part by a Tuesday statement from the People’s Bank of China reiterating that digital tokens can’t be used as a form of payment.

Stocks have lost steam in recent sessions, with pricier sectors such as technology tumbling on worries about inflation and a Covid-19 resurgence in some countries. While policymakers have signaled, they intend to maintain an accommodative stance for some time to come, traders will parse the Fed’s minutes for clues about the outlook. The Bloomberg Commodity Index, which touched a nine-year high last week, fell for a second day as oil, copper, soybeans, and almost every other futures contract linked to industrial and agricultural staples retreated.

Main Pairs Movement

A gauge of the dollar’s strength halted a four-day loss as traders awaited minutes of the Federal Reserve’s April meeting for clues on its next policy move.

The euro climbed to the highest since January and funds already long the currency left buy stops above the Feb. 25 high of 1.2243 to add to their positions, traders said. USD/JPY bounced off residual buy orders carried over from the New York session above 108.80, according to other traders.

The Norwegian krone and the euro gained the most among Group-of-10 currencies while the New Zealand dollar fell. USD/NOK dropped 0.2% to 8.2118; NZD/USD retreated 0.3% to 0.7228.

Technical Analysis

EURUSD (4 hour Chart)

Euro fiber sharply slipped with the initial market reaction to FOMC Minute, fell from day high at 1.2245 level to nearly day lowest spot, trading at 1.2173 as of writing. FOMC’s April meeting showed some policymakers are concerned about rising inflation in the near term, provide a boost to the greenback. For the technical aspect, the RSI indicator retreat from the overbought territory that shows 51 figures, which suggests a neutral momentum for a short run. On average price view, 15-long SMA indicator is an ongoing ascending trend in day market after it euro aimed to higher stack and 60-long SMA retained upside slope.

At the moment, we expect the market will remain bull movement further if euro fiber could hold above 1.2151 level. Meanwhile, it also focuses on ECB President Lagarde speaking tomorrow that could give the market a direction and policymaker favor for upcoming euro movement. Moreover, the euro needs to defend the 50 levels of RSI indicator to ensure that the market remains long-side momentum.

Resistance: 1.22

Support: 1.2151, 1.2106, 1.207

GBPUSD (4 Hour Chart)

Sterling retreated from perch to fresh lows after Fed’s hawkish statement in FOMC minute while down nearly .47% in the day and traveled today low bound, trading at 1.4116 as of writing. Some officials saw taper talk starting at upcoming meetings and schedules but note that the economy still has a gap from their goals. For the RSI side, the indicator shows 45 figures after plummet, suggesting a slightly bear market ahead. On the other hand, 15-long SMA indicators start to turn flat move after overwhelming and 60-long SMA indicators remaining an ascending movement.

As price action demonstrates, it seems to fail to defend the 1.42 level as the dollar’s strong boost up, moreover, sterling sentiment has slipped to the bearish side. Therefore, we need to see the first support level could be defended. If market momentum could sharing up the first support level, we expect it could roam between the first resistance and support level. If the market consecutive fell, we expect the market would test the psychological support level at 1.4.

Resistance: 1.42

Support: 1.3959, 1.4, 1.4108

XAUUSD (4 Hour Chart)

Gold traveled with sightly change in the day market after dollar index jumped higher over 90 which aimed to FOMC hawkish meeting result that scared market, while U.S. 10 years Treasuries yield flare-up to nearly months high. On the other hand, the cryptocurrency market went extremely volatile due to regulatory worry which leads to market transfer funds to the gold market with the risk-off flow. For the moving average side, the 15-long SMA indicator retained its slope to an upside trend, and the 60-long SMAs indicator retaining its north side momentum. For the RSI side, the indicator shows 59 figures after it touches once overbought territory, suggesting a slightly bull market move at the current stage.

Overall, we see gold seems steady above downside trend after choppy move in the day market. For a long perspective, we still believe the downside trend will be a pivotal support level. Furthermore, we hope the 1850 level could firmly defend if any upwind move.

Resistance: 1900

Support: 1850, 1812.88, 1800, 1763.837