Australia preliminary trade figures for January, exports drop 9% MoM.

Key statistics

Exports of goods in January 2021 declined $3,047m (-9%) to $32,126m.

Imports of goods in January 2021 declined $2,626m (-10%) to $23,372m.

For January 2021 there is a goods trade surplus of $8,754m (original, current price, merchandise trade basis).

There has been no reaction for the Aussie as the report is subject to revisions and there is a focus on the forthcoming Federal Reserve event in the US session where the Fed’s chair, Jerome Powell will be speaking. 

About the report

”This publication presents preliminary data on Australia’s international trade in goods on an original, current price, merchandise trade basis. These data are subject to revision as more complete and accurate information becomes available.”

  • Gold is consolidating the recent bullish impulse, but the 15-min reverse H&S is an extra conviction for prospects of a continuation.
  •  $1,817 and $1,820 are on the bulls map.

As per the prior analysis from the New York session, Gold Price Analysis: Bulls target $1,820, 1-hour Momentum points to meanwhile correction, the yellow metal did indeed decelerate to a measured target of the 38.2% Fibonacci retracement level. 

Prior analysis

Live market, 1-hour chart

The bulls can seek an optimal entry for a continuation at this juncture from a lower time frame, such as the 15 or 5-minute charts. 

15-chart setup

As illustrated on the 15-min chart, the price first needs to break the current resistance to confirm the bullish environment and commitment from the bulls at this juncture.

In doing so, this will have completed a bullish reverse head and shoulders pattern: 

A buy limit placed at the new support structure, old resistance and neckline of the H&S pattern, will offer a discount.

This will enable the bulls to $1,820 target the upside with a stop loss protected by two layers of the support structure for a 1:3 risk to reward (R/R) long position. 

A more conservative target, however, comes as the -61.8% Fibonacci retracement o the current correction’s range at $1,817 for a 1:2 R/R.

  • WTI rallied above the $62.00 prior to the 22:00GMT futures trade pause to close the session more than 5% higher.
  • Bullish bank forecasts, US/Iran tensions and still very positive demand picture all supported crude oil on Monday.

Front-month futures for the American benchmark for sweet light crude, West Texas Intermediary (WTI), surged back above the $62.00 level into the 22:00GMT close of futures trade, ending Monday’s session up more than $3.00, having rallied from below the $59.00 level. That’s a 5.5% intra-day rally, WTI’s biggest one day gain since 9 November, when Pfizer first released their data showing their vaccine was highly effective against Covid-19. Monday’s rally, impressive though it was, was not enough to take it back to cycle highs set last Thursday at $62.25, with WTI setting Monday highs at $62.19.

Bullish catalysts

The macro backdrop remains supportive for the crude oil complex; though the US passed the grim 500K Covid-19 deaths milestone on Monday, the rate of new infections, hospitalisations and deaths continues to drop, as is the case in other major developed market economies (such as the UK and EU). Meanwhile, global Covid-19 vaccine rollouts continue to accelerate and the trend seems to be towards reopening rather than locking down, with optimism in the UK after PM Boris Johnson unveiled the government’s four-stage “roadmap to recovery” reopening plan.

Bullish crude oil price forecasts from tier one US banks also seem to have helped. The latest comes from Morgan Stanley and seemed to help power WTI back to the north of $62.00 just before the futures trade pause at 22:00GMT; the bank expects WTI to average $62.50 in Q2 (upgraded from the previous forecast of $52.50) and then $67.50 in Q3 (upgraded from the previous forecast of $57.50). The bank commented that the oil market has been undersupplied by 2.8M barrels per day so far in 2021.

Separately, and earlier in the day, Goldman Sachs brought forward its bullish crude oil forecasts and now sees Brent crude oil reaching $70.00 in Q2 and then $75.00 in Q3 (Brent currently trades just under $65). The bank upgraded its forecast for global crude oil demand to 100M barrels per day by late-July and stated that its base case for the March OPEC+ meeting is for the cartel to agree to increase production by 500K and for the Saudis to reverse confirm that they will be reversing their 1M barrel per day voluntary cut.

Elsewhere, last week’s optimism that officials from the US and Iran might be able to find themselves together on an informal negotiations table, perhaps mediated by the EU, seems to have waned and this seems to have been another factor helping crude oil markets (given it lowers expectations that a deal will be made that unlocks restricted Iranian crude oil exports). The two sides seem stuck; the US wants to talk before it eases current sanctions while Iran wants sanctions eased before it will agree to talk. Iranian officials have also indicated that the country plans to enrich uranium to 60%, souring the prospects for talks.

Meanwhile, the notion that US supply will take a little longer to return back to normal than expected following last week’s extraordinary weather-related disruptions seems to have been one another factor supporting crude oil markets on Monday; about 15% of the country’s output remains offline, according to S&P Global Platts. An exact timeline for the return of this production is as of yet unclear, though according to sources cited by Reuters, a full return could take more than two weeks.

Looking ahead, weekly US inventory data will be closely watched by crude oil traders, as is typically the case, though this week’s release will reflect last week’s weather-related disruptions and exactly how this will affect the data is as of yet unclear. Chatter is also doing the rounds about a potential clash between Saudi Arabia and Russia regarding production cuts and thus it is worth continuing to monitor commentary from energy officials from both countries.

  • USD/CAD stays depressed near multi-month low, inside short-term symmetrical triangle.
  • Sustained trading below key HMAs, trendline resistances favor sellers.

USD/CAD sellers attack 1.2600, currently around 1.2608, during the initial Asian session on Tuesday. In doing so, the quote remains depressed near the lowest level since April 2018, marked the previous day.

Although the immediate symmetrical triangle restricts short-term moves of the USD/CAD prices, the pair’s trading below 50 and 200-HMA, not to forget a downward sloping trend line from February 12, keep favoring the bears.

However, fresh declines await confirmation from the downside break of the stated triangle’s support, at 1.2595 now. The south-run may also get extra strength if successfully breaking below the latest low of 1.2580, also the 34-month bottom.

Following the quote’s sustained weakness past-1.2580, April 2018 low near 1.2525 and the 1.2500 round-figure will lure the USD/CAD sellers.

Meanwhile, 50-HMA joins the triangle’s resistance line to guard immediate upside moves around 1.2635, a break of which will accelerate the run-up towards a 200-HMA level of 1.2675.

In a case USD/CAD bulls remain dominant past-1.2675, the 1.2700 threshold and a short-term resistance line around 1.2715 will be the key upside hurdles to watch.

USD/CAD hourly chart

Trend: Bearish