Fri, Jun 24, 2022 @ 22:05 GMT
HomeContributorsTechnical AnalysisWeekly Report: Energy, Commodities, Indices, Forex

Weekly Report: Energy, Commodities, Indices, Forex


ENERGY

WTI Oil rallied for the third consecutive week and hit fresh five-week high at $53.74, gaining 1.15% for the week. Oil price was supported by heightened geopolitical tensions in the Middle East, the region that provides more than a quarter of world’s oil output. Crude oil price accelerated higher last week after United States fired missiles on Syrian air base that raised tensions with Russia and threatened of further escalation. Another hot point was North Korea which made several missile tests that prompted the US to send their warships in the region. Tensions were further heated after North Korea threatened of launching their nuclear weapons if being attacked. Additional support to the oil prices were hopes that agreement between OPEC and non-OPEC oil producers for production cut by 1.8 million barrels per day would extend for additional six months. Reactions in oil markets on initial decision to cut oil output until June were good, as oil price recovered strongly, but extended action is needed to sustain current recovery in oil prices. US Crude oil hit its five-week high on Wednesday but pulled back despite unexpected fall in US weekly crude inventories by 2.2 million barrels against forecasted build of 87.000 barrels. Oil price dipped around $1 on Wednesday, as increase in US shale oil production weighed on support from Crude stocks draw and geopolitical tensions. Oil price remained steady despite closing below $53.00 handle, supported by fundamentals as well as bullish technical studies. However, overbought studies warn of deeper correction before oil price resumes rally, as key short-term barriers at $55.00 zone remain in focus. Oil may extend correction towards $ 52.20 where initial support lies, with strong technical support at $51.70 zone required holding and keeping bullish structure intact. Conversely, loss of the latter support would signal stronger correction of the recent $47.07/$53.74 rally. Brent oil hit five week high at $56.62, meeting its initial target, Mar 7 high, but was dragged down on by overbought technical studies.

Brent price accelerated higher at the beginning of the week, supported by shutdown of Libya’s largest oilfield and being supported by rising geopolitical tensions. Again, strong bearish signal is developing in daily technical studies where slow stochastic is emerging from overbought zone and also formed bearish divergence, which may signal stronger correction. Immediate support lies at $55.00, ahead of converged 55/100d Moving Averages at $54.40 and $54.00 Fibonacci 38.2% support, where extended correction should find support.

US Natural Gas futures rose over 1% on Thursday after data showed expected built in gas storage. Natural Gas contract for May delivery spiked to $3.230 per million BTU on Thursday, where it closed for the week. Recovery on Thursday was not enough to improve negative picture as gas price fell nearly 3% on Tuesday, ending week in red. Weekly report showed 10 billion cubic feet of natural gas added into storage in the week ended April 7, which was slightly above forecasted 9 billion cubic feet. Solid data prompted short-covering that boosted gas price to emerge above important technical barrier at $3.205, but the price stayed capped by daily Tenkan-sen at 3.228, break of which is needed for fresh bullish signal.

COMMODITIES

Spot gold was the top performer of the last week, gaining 2.55% for the week, marking the biggest weekly gains since the first week of June 2016. The yellow metal ended week just under fresh five-month peak at $1288, posted after strong bullish acceleration, boosted by rising tensions over US relations with Russia, after US attack at Syrian airbase and North Korean missile tests that both raised tensions in those regions. Adding to geopolitical concerns, the US military dropped its largest non-nuclear device ever-used in combat in Afghanistan on Tursday. Gold price was boosted by strong safe haven buying as investors abandoned riskier assets amid rising geopolitical tensions and moved into traditional safe haven gold. Last week’s gold rally was also boosted by sharp fall of the dollar, caused by comments from US President Trump on Thursday, who said that the US currency is too strong, adding that he prefers low interest rates. Gold is very sensitive to the changes in US interest rates and reacted in swift acceleration after Trump’s comment which added to existing support from geopolitical tensions. Rally took out Fibonacci 76.4% barrier at $1286 and now eyes next strong obstacle at $1293, top of weekly Ichimoku cloud, break of which would open way towards psychological $1300 barrier. Strong bullish sentiment is supported by firmly bullish technical studies, however, gold price may ease in coming sessions, in corrective action, signalled by overbought technical studies. Initial support lies at $1281, followed by $1279/70 support zone which should contain corrective dips.

Spot Silver was up over 3% last week and hit fresh five-month high at $18.594 on Thursday, boosted by increase demand for precious metals in rising geopolitical tensions. Along with strong fundamentals Silver is supported by bullish technical studies, as last week’s rally exceeded previous peak of Feb 27 at $18.478, on completion of $18478/$16817 corrective phase that signals continuation of bull-leg from $16817, Mar 15 correction low. Last week’s rally has dented another strong technical resistance at $18.534 (weekly Ichimoku cloud top), firm break of which would trigger bullish extension towards psychological / Fibonacci barrier at $19.000.

Copper contract for May delivery fell 2.76% last week and hit three-month low at $2.5345 on Wednesday, on steady descend last week, after Peru increased copper output, upstaging top producer Chile. The world’s second biggest producer Peru has benefited from lower production costs and untapped reserves. In addition, persistent concerns about weak demand from top metal consumers, such as China, kept copper price under pressure last week, extending broader weakness from mid-February’s 2.8215 peak, the highest in nearly two years. Copper managed to recover some losses on Thursday, supported by weaker dollar and upbeat trade data from China that increased hopes for stronger demand. Technical studies remain bearish and see strong risk of further fall in copper price, as last week’s fall also dented key technical supports at $2.5580 and $2.5400, firm break of which would trigger fresh bearish acceleration towards round-figure $2.5000 level and another strong technical support at $2.4530. On the flip side, $2.6345 marks strong resistance, regain of which would ease bearish pressure.

Copper contract for May delivery fell 2.76% last week and hit three-month low at $2.5345 on Wednesday, on steady descend last week, after Peru increased copper output, upstaging top producer Chile. The world’s second biggest producer Peru has benefited from lower production costs and untapped reserves. In addition, persistent concerns about weak demand from top metal consumers, such as China, kept copper price under pressure last week, extending broader weakness from mid-February’s 2.8215 peak, the highest in nearly two years. Copper managed to recover some losses on Thursday, supported by weaker dollar and upbeat trade data from China that increased hopes for stronger demand. Technical studies remain bearish and see strong risk of further fall in copper price, as last week’s fall also dented key technical supports at $2.5580 and $2.5400, firm break of which would trigger fresh bearish acceleration towards round-figure $2.5000 level and another strong technical support at $2.4530. On the flip side, $2.6345 marks strong resistance, regain of which would ease bearish pressure.

INDICES

Wall Street ended week in red as US sticks fell on global risks that increased safe haven demand. Uncertainty amid growing crisis over Middle East and North Korea that brought relations between USA and Russia to the lowest levels since cold war, as news of a massive bomb being dropped by the United States in eastern Afghanistan on Thursday added to uncertainty and kept investors away from riskier assets and moving into safe haven. Dow Jones index fell almost 1% last week on return to strong 20400/20350 support zone; S&P 500 index was 1.02% down and Nasdaq100 dropped 1.16% for the week. Banking and tech sectors were among top negative drivers. Wells Fargo shares fell 3.3% and pulled down S&P 500 after the bank reported a drop in mortgage banking revenue. Berkshire Hathaway also reported that it had cut the stake in the bank. JP Morgan fell 1.2%; Citigroup was down 0.8% as banks revealed more evidence of a slowdown in loan growth that offset better-than-expected quarterly profits. The S&P 500 banks index closed at its lowest level since early December. Dow Jones extended its pullback from fresh record high at 21160, posted in March, after strong post US elections rally, signalling deeper correction of 17418/21160 Nov / Mar rally, which may accelerate in case current tensions escalate into conflict. S&P 500 index ended second week in red and approaches key short-term support at 2317, which could spark further weakness on break lower, as fragile geopolitical situation keeps stock indexes under pressure. Japanese stocks continued to move lower and slumped to fresh four-month low at 18295 last week, dragging Nikkei 225 index into fifth consecutive week in red. Nikkei was down 2.29% for the week, marking the biggest weekly loss since early Oct 2016. Firmer yen on strong safe haven buying kept the index under pressure. Strongly bearish technical studies threaten of further weakness, along with fragile geopolitical situation which keeps investors in firm risk-off mode.

FOREX

Another turbulent week for the money market is behind. Highlights of the week were comments from US President Donald Trump who described the dollar as too strong, saying that he prefers low interest rates and hinted he may keep Fed Chair Janet Yellen after her mandate ends in 2018. This sent dollar sharply lower against the basket of major currencies in late Wednesday, early Thursday’s trading. Another event that shook markets was rising tensions between USA and Russia over the Middle East, after US army fired missiles on Syrian airbase and threatened of further attacks that triggered strong reaction from Moscow. Also, North Korea made several missile tests that brought US warships into region, with China also being involved, rising threats of escalation of the conflict. Tensions were raised after North Korea announced that they will respond with nuclear weapons on any attack. All these prompted investors to migrate from riskier assets into traditional safe haven instruments, such as Gold and Japanese yen, which were top gainers of last week.

The dollar fell to the lowest levels since mid-November against Japanese yen, on strong bearish acceleration which broke below initial strong support at 110.00 zone and took out next key level at 108.70 (200SMA), below which weekly trading ended. The pair was down 2.6% for the week and seeing scope for further weakness on persisting geopolitical tensions and strong bearish technical studies.

British pound benefited from strong economical data from UK released last week and rallied above 1.2500 against the dollar, gaining around 1.25% for the week. Cable bounced from weekly low at 1.2365 boosted by inflation data on Tuesday. Inflation remained steady in March, coming unchanged from the previous month at 2.3% but above forecasted 2.2%. Inflation is holding above BoE’s 2% target which would gives good argument to those advocating for early rate hike. UK labour data, released on Wednesday, also showed good signals of stable growth, as average earnings jumped to 2.3% in March, beating forecast at 2.1% and February’s 2.2% release. Although the unemployment rate remained unchanged at 4.7%, strong jump in jobless claims) 25.5K in Mar vs -10.2K forecast and -11.3K in Feb) suggests that UK employment have peaked and labour market may weaken as two-year Brexit process started.

EURUSD ended week around the mid-point of last week’s rally from 1.0570 to 1.0677, but maintained positive sentiment, as the week ended positively. The single currency received initial support from release Eurozone’s investors confidence that rose to 23.9 in March, beating forecast at 20.1. On Tuesday, ZEW economic sentiment showed that German investor morale brightened in April, hitting its highest level since August 2015, buoyed by a strong Q1 performance of the bloc’s largest economy. Economic sentiment surged to 19.5 points in April from 12.8 in March and beating forecast at 13.2 points. In addition, fresh weakness of the dollar triggered by remarks from President Trump, pushed the Euro to the week’s high at 1.0677, but the pair was unable to hold gains and rally stalled ahead of pivotal barrier at 1.0700, keeping hopes of stronger advance sidelined for now. Profit-taking on strong dollar shorts dragged the Euro back to 1.0625 zone where it ended weekly trading.

Australian dollar was among top winners, gaining 1.15% for the week, on bullish acceleration from week’s low at 0.7472 to the highest traded at 0.7595. The Aussie received strong boost from Australian data that showed strong rise in Australian business condition which jumped in March to highs not seen since before the global financial crisis. Australia’s NAB monthly survey showed index of business conditions climbed 6 points to +14 in March, which is well above long-run average at +5. The AUD USD pair broke above strong technical barriers at 0.7517 and 0.7550, generating strong bullish signal and managed to close for the week above 0.7550 (200SMA), after being additionally boosted by remarks of Donald Trump which undermined the US currency.

Henyep Capital Marketshttps://www.hycm.com/en
Risk Warning: Forex and CFDs are leveraged products which carry a high level of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risk involved. You should ensure you understand all of the risks and seek independent advice if necessary.

Featured Analysis

Learn Forex Trading