Global equities rally
Global stock indices were supported by the US-China agreement on the phase 1 trade deal. Although that was just a preliminary deal and lots of negotiations are going to come in the future, many Traders and analysts noticed that the US and the global economy is going to get huge support from the deal. As a result, equity investors lost to buy stocks and shares as the overall optimism and risk appetite surged. Major stock indices were led by US benchmarks as the United States economy is one of the most gamers of the deal. The S&P 500 benchmark rallied by + 1.75%, reaching the highest level in the history of 3324.1 points. The tech-heavy NASDAQ index added +2.2% to its value and also registered the highest value ever (9161.0 points). The Dow Jones Industrial Average reflected the surge of the cost for 30 blue-chip companies adding more than +1.73% to a record-high value of 29314 points.
Overseas stock indices followed the world's economic leader on the back of overall trade optimism. Nikkei 225 gapped through the weekend and the continued climbing adding + 0.8% to its value. European stocks had a bullish performance with different achievements. German Dax 30 gained only +0.32% on the back of weak economic data. 40 had much better performance as the index surged by +1.05% renewing the all-time high. The British FTSE 100 index had one of the most important technical achievements recently as the benchmark hit the highest value since August 2018 adding more than +1% to the value of 7674.6 points. Besides the general trade optimism the British stocks where is supported by the Bank of England which announcement and interest rate car as early as this month.
The U.S. dollar index kept recovering
Although Inflationary data didn't show any support for the Federal Reserve to hike interest rates, and U.S. 10-year Treasury yields stuck in the same range as the previous week, dream back was supported by an expectation that the US-China trade deal would bring more profits to American corporations. One of the largest achievements of the US administration was that the volume of exports to China should soar in 2020. The U.S. dollar index measuring the greenback's strength versus the volume-weighted basket of 6 major currencies added plus 0.3% to each value in a second consecutive week of growth. The greenback's strength was smooth across the board as almost all the major peers depreciated vs the world's leading currency. The only exception was Swiss franc which kept strengthening and the back of Us charges to the Swiss Central bank that the country is manipulating their own currency. USD/CHF declined by - 0.5% closing the trading week at the lowest rate since September 2018. Moreover, the Swiss franc weakened versus the European currencies as well.
The single European currency and an attempt to recover from previous losses as EUR/USD were testing the weekly high level at 1.1173. However, the Bull's failed to maintain the momentum and the beers to the market on the control reversing the price action, pulling the chair forward to one point 1.1090. As a result, the pair lost - 0.3% of the exchange rate. The British pound declined by -0.42% versus the Greenback amid dovish Bank of England while the economic data didn't support the British currency. The Japanese yen also weakened versus the U.S. dollar, reflecting the overall risk appetite in global equities. USD/JPY was one of the most fast-moving currency pairs adding + 0.63% and the closing the trading week at 110.15, the highest level since April 2019.
All of the three commodity currencies failed to maintain the Buddha's beers and retrieved from local top levels. The Australian dollar was hit the hardest versus the U.S. dollar as AUD/USD - 0.39% on a weekly basis. The New Zealand dollar declined by -0.33% while the USD/CAD currency climbed + 0.11%. The Chinese yuan was leading the strength of emerging markets currencies thanks to the optimistic you on the trade deal with the United States. Chinese exports and GDP projections were revised up which helped the local currency to gain strength versus the Greenback. The rest of the emerging markets currencies were mixed. USD/MXN dropped buy - 0.79% reaching the lowest level seems October 2018. In contrast, South African Rand declined as USD/ZAR added + 0.70% to the exchange rate.
Commodities were mixed
Price of gold would not continue the bullish rally as the demand for safe-haven assets was lower thanks to the US-China trade deal. However, the past reading week did not bring a significant sell-off in gold. Price of the yellow metal managed to recover meet weight classes and close the week at $1,557.17 per ounce, drawing a large downside shadow on the weekly candlestick. The price of silver showed almost the same performance, declining by -0.54% but closed the week above $18 per ounce.
The most lucrative precious metal - Palladium - showed an impressive breakthrough as the continuation of its bullish rally. The price of palladium soared by +17.25% this past week. That was the largest weekly game as a registered. The price reached $2,450 per ounce which reflected the unprecedented cost of the metal.
WTI crude oil was consolidating its losses as the Black Gold price slid by only -0.7%. Positive data from US Inventories report helped oil Traders to stop the bearish sell-off, while the trade deal helped to increase the expectations for global consumption. Brent crude oil showed almost the same performance finishing the trading week unchanged in London.
USD/JPY weekly technical forecast: Bullish
The USD/JPY currency pair showed a significant breakthrough this past week. The Bulls were trying to overcome the defensive barrier of resistance at $110 several times recently. The largest achievement was noticed in December 2019 but the pair reversed from 109.73. However, the Bulls regained the momentum after a deep replacement towards 108.0 and pushed the exchange rate forward. If such a bullish performance was able to keep the momentum in the upcoming weeks then USD/JPY could reach the level of 112.0, never seen since April 2019.
Technically speaking, the pair is in a long-term uptrend started in August 2019. All the technical indicators went to a bullish continuation rather than on a bearish reversal. The only concern that could hurt the bulls is the momentum. The pace of the growth slowed down compared to the previous week when the pair was bouncing off the bottom of the Ichimoku cloud. The daily chart below shows that the bulls have managed to lift the pair above the uncertainty zone. The leading span turned bullish and the future support shifted towards 109.0. One of the reasons why the bulls had to delay the rally is that both support curves are lagging and still inside the cloud. On the other hand, the relative strength index with a period of 14 days shows the strong bullish momentum while its value is rather far from overbought territory, which leaves more room to go North.
There are two possible scenarios for the week ahead. The first one suggests that the Bulls will keep lifting the pair with a comparatively slow pace. Such an option doesn't come in line with the speed of the growth in global equities. Some of the currency Traders might expect the Bank of Japan to announce its future policy in terms of the monetary changes and support for local exporters. This is why a second scenario is more likely. The bears could have an attempt to retaliate and push the exchange rate lower towards the recent peak of 109.63. The level represents in technical support on the daily chart and it is attractive to renew long positions for those Traders who missed the opportunity to join the uptrend earlier.
WTI Crude Oil weekly technical forecast: Neutral
WTI crude oil seems to find local support and stop the bearish slide. Last week's performance shows that the bears couldn't push through the support level of $58.00 per barrel. Although the technical analysis on the daily chart below shows that there could be another leg of the downtrend, there are some signs of a potential bullish reversal. First and the main, the bearish momentum is getting exhausted.
Second, the fast and sensitive relative strength index bounced back up towards the middle line, which is the threshold dividing to bearish from bullish momentum. Williams alligator is still in the eating mode showing that the downside pressure will stay on the table. However, the bulls were able to push the price of the Black Gold above the level of $59.15 then and correction might be on hands.
The MACD trend indicator is negative but the histogram decreased the bearish surplus and started moving towards the zero levels. Both MACD lines have to cross each other before concluding that the decline is over. An aggressive trading strategy suggests going long above the level mentioned previously, targeting the recent peak of $65.62 per barrel. On the other hand, the price of oil could enter into a tight consolidation range with a sideways directionless action, so a stronger signal would be required to enter the market later.