Daily Key points: Recession clouds on the horizon

The USD remained rather stable against a number of its counterparts yesterday, yet we must note that last week weak data tended to knock it down and escalated more or less market worries for a possible recession in the US economy. Nevertheless San Francisco Fed President Daly, which usually rests on the dovish side of the bank, stated on Friday that she would be prepared to back another 75 basis points rate hike in the Fed’s next meeting, which reaffirmed the market’s expectations for the steep hiking path of the bank. Today we note the release of the US durable goods orders for May which are to show the level of trust of US companies to actually invest in the US economy while later on we get also the pending sales also for May. On the other hand, US stockmarkets tended to be on the rise on Friday with all major US stockmarket indexes, the Dow Jones, S&P 500 and Nasdaq ending their day in the greens, trying to recover some ground or even implying some optimism.

Gold’s price opened with a slight positive gap as reports surfaced that G7 nations plan to sanction gold imports from Russia a move that is realised could tighten the supply of the precious metal. At the same time we note that the Loonie tended to gain against the USD benefitting from the greenback’s inactivity, while at the same time found some support as oil prices were on the rise on Friday. It should be noted though that the commodity’s prices could start dropping again, given that the possibility of a global economic slowdown and the prospect of a reviving of the Iran nuclear deal increasing downward pressure. USD/CAD dropped yesterday breaking the 1.2915 (R1) support line, now turned to resistance. We tend to maintain a bearish outlook for the pair given also that the RSI indicator below our 4-hour chart is actively aiming for the reading of 30.
On the other hand we must note though that the price action has reached the lower Bollinger band which could support the price action preventing further movement downwards. Should the bears actually maintain control over the pair we may see it breaking the 1.2755 (S1) support line and aim for the 1.2615 (S2) level. Should the bulls take over, we may see USD/CAD reversing course breaking the 1.2915 (R1) resistance line and take aim of the 1.3075 (R2) resistance level.
WTI prices were on the rise after bouncing on the 103.00 (S1) support line. We tend to maintain a bias for a sideways movement initially for the commodity’s price action as the RSI indicator below our 4-hour chart runs along the reading of 50, which may imply a rather indecisive market. Should the commodity find fresh buying orders along its path we may see it breaking the 110.30 (R1) resistance line and aim for the 116.00 (R2) level. Should a selling interest be expressed by the market, we may see it breaking the 103.00 (S1) support line aiming for lower grounds.    

As for the rest of the week

On Tuesday we note the release of Germany’s forward looking GfK Consumer Sentiment for July and the US consumer confidence for June. On Wednesday we note the release of Australia’s retail sales growth rate for May, Eurozone’s business climate for June and the highlight is the release of the final US GDP rate for Q1. On a packed Thursday we get Japan’s preliminary industrial output growth rate for May, China’s NBS manufacturing PMI figure for June, UK’s final GDP rate for Q1, UK’s Nationwide house prices for June, France’s and Germany’s preliminary HICP rate for June, Switzerland’s KOF indicator also for June, Canadas’ GDP rate for April and from the US the weekly initial jobless claims figure as well as the consumption rate for May. Also on the monetary front, we note from Sweden, Riksbank’s interest rate decision on Thursday. On Friday, we get from Japan Q2’s Tankan indexes and Tokyo’s CPI rates, Chinas’ Caixin manufacturing PMI, Eurozone’s preliminary HICP rate and in the American session, from the US the ISM manufacturing PMI figure, all of the releases being for June.

USD/CAD H4 Chart

Support: 1.2755 (S1), 1.2615 (S2), 1.2515 (S3)

Resistance: 1.2915 (R1), 1.3075 (R2), 1.3240 (R3)

WTI H4 Chart

Support: 103.00 (S1), 97.40 (S2), 92.60 (S3)

Resistance: 110.30 (R1), 116.00 (R2), 121.00 (R3)

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