The Bank of England (BoE) announced on Monday that it will continue to offer the Contingent Term Repo Facility (CTRF) on a weekly basis through April 2020, as reported by Reuters.

“Beginning this week, there will also be a 1-month term CTRF operation each week, with the final operation scheduled on May 1,” the BoE added and repeated that it stands ready to take additional action if necessary.

Market reaction

The GBP/USD largely ignored this announcement and was last seen trading near 1.2400, where it was down 0.45% on a daily basis.

Russia’s central bank announced that it will suspend gold purchases on the domestic market starting April 1st, Reuters reported on Monday, citing IFAX news agency.

“Further decisions on gold purchases will depend on how the situation develops,” the bank said.

Market reaction

This headline had little to no impact on the price for the troy ounce of the precious metal. As of writing, the XAU/USD pair was down 0.68% on a daily basis at $1,620. The upbeat market mood in the American session, as reflected by strong gains in Wall Street’s main indexes, seem to be making it difficult for safe-haven gold to find demand. 

  • Dallas Fed Manufacturing Index drops to all-time low of -70 in March.
  • US Dollar Index clings to gains above 99 after data.

The economic activity in Texas’ manufacturing sector contracted at a strong pace in March with the Federal Reserve Bank of Dallas’ Texas Manufacturing Outlook Survey’s headline General Business Activity Index plummeting to -70 from 1.2 in February. This record-low reading came in much worse than the market expectation of 6.2.

Further details of the publication revealed that the Company Outlook Index plunged to -65.6 from 3.6, the Production Index fell to -35.3 from 16.4 and the New Orders Index dropped to -41.3 from 8.4.

Market reaction

The US Dollar Indes largely ignored this data and was last up 0.8% on the day at 99.10. Additionally, Wall Street’s main indexes were up between 1.35% and 2.61%. 

Collin Martin, a strategist at Charles Schwaab, believes that investment-grade corporate bonds can play an important role in most investors’ portfolios. Prices are likely to remain volatile and additional price declines are possible.

Key quotes  

“Consider investment-grade corporate bonds for the yields they offer, not for near-term price appreciation. Prices may move modestly lower, and once stabilized, we don’t necessarily expect a sharp, v-shaped recovery.”

“Continue to move up in credit quality. We still favor credit ratings of A or above.”

“For those who hold individual bonds, we still suggest moving up in credit quality. We believe that many Baa rated corporate bonds will be downgraded to junk.”

“If you’re considering investment-grade corporate bonds today, you may want to use dollar-cost averaging to increase your exposure.”

  • USD/CHF finds decent support near 0.9500 mark and snaps four days of losing streak.
  • The set-up warrants some caution before positioning for any further recovery move.

The USD/CHF pair found a decent support near the key 0.9500 psychological mark and staged a goodish recovery on the first day of a new trading week, snapping four consecutive days of losing streak.

The positive move lifted the pair to a short-term descending trend-channel breakpoint, turned resistance, which coincides with 50-hour SMA and 23.6% Fibonacci level of the 0.9902-0.9502 downfall.

The mentioned confluence region might now act as a key pivotal point for short-term traders, above which the recovery momentum could further get extended towards 38.2% Fibo., around mid-0.9600s.

Given that oscillators on 4-hourly/daily charts are yet to confirm bullish bias, neutral technical indicators on the 1-hourly chart warrant some caution before positioning for any further appreciating move.

Hence, it will be prudent to wait for some strong follow-through buying before confirming that the pair might have already bottomed out in the near-term and stalled the recent pullback from multi-month.

On the flip side, the 0.9500 mark might continue to protect the immediate downside, which if broken might be seen as a fresh trigger for bearish traders and set the stage for an extension of the downtrend.

USD/CHF 1-hourly chart

fxsoriginal

Technical levels to watch

 

  • XAG/USD is reversing up from 2020 lows as the Federal Reserve launched its largest stimulus package in history last week.
  • The level to beat for bulls is the 15.00 resistance.
 

Silver daily chart

 
After the dramatic selloff to 2009 lows, XAG/USD bounced as the Fed announced unlimited Quantitative Easing (QE) to counter the coronavirus crisis.  
  

Silver four-hour chart 

 
XAG/USD is consolidating the advance just above the 14.00 support level and the 50 SMA on the four-hour chart. Bulls want a continuation up above the 15.00 handle en route to the 15.50 and 16.60 level on the way up while support can be expected near the 14.00 level.
 
 
 
Resistance: 15.00, 15.50, 16.60
Support: 14.00, 13.50, 13.00
 
 

Additional key levels

 

AUD/USD bullish potential is limited but the rally can continue on dollar’s weakness, according to FXStreet’s Chief Analyst Valeria Bednarik.

Key quotes  

“Chances of additional gains are limited, according to the daily chart. In the mentioned time-frame, technical indicators advance, recovering from extreme oversold levels, but still below their midlines.” 

“In the 4-hour chart, the pair has remained above a bullish 20 SMA but met sellers around a 100 SMA. Technical indicators hold within positive levels, skewing the risk to the upside without confirming further advances.”

“Support levels: 0.6125 0.6070  Resistance levels: 0.6200 0.6240”

  • WTI extends the drop to sub-$20.00 levels, or 17-year lows.
  • Demand shock led by COVID-19 panic weighs on sentiment.
  • US oil rig count dropped by 40 during last week.

Prices of the American benchmark for the sweet light crude oil dropped to fresh 17-year lows in the $19.90 region per barrel earlier in the session, just to regain mild traction afterwards.

WTI remains under heavy pressure

The barrel of WTI is receding for the fourth consecutive session at the beginning of the week, resuming the downside after the failed move beyond the $28.00 mark seen in mid-March.

Crude oil prices remain under heavy downside pressure amidst unremitting concerns over the demand for the commodity stemming from the impact of the coronavirus on the global growth, while the Russia-Saudi Arabia price war continues to hurt prices from the supply side. Later on Monday, President Trump is expected to speak with Russia’s V.Putin, with the oil crisis on top of the agenda.

Also reflecting the sour sentiment in the industry, driller Baker Hughes reported US oil rig count went down by 40 during last week, taking the total active oil rigs to 624. As usual, later in the week the API and the EIA will report on US crude oil inventories on Tuesday and Wednesday, respectively.

What to look for around WTI

Crude oil prices remain under unabated pressure in a context dominated by the lethal combination of supply and demand drivers. Also adding extra pressure, there is still the possibility that Saudi Arabia could carry on with its plans to increase oil exports by more than 12M bpd as soon as the next month. A potential relief to this low-lower-prices-scenario could come in the form of a US intervention, which is expected to morph into some sort of agreement between the US, Russia, Saudi Arabia and some other countries.

WTI significant levels

At the moment the barrel of WTI is retreating 7.77% at $20.11 and a breach of $19.95 (2020 low Mar.30) would expose $17.12 (monthly low November 2001) and finally $10.65 (monthly low December 1998). On the upside, the next resistance aligns at $25.20 (weekly high Mar.25) followed by $28.46 (high Mar.20) and then $31.32 (21-day SMA).

The prognosis for the Canadian dollar against the USD remains weak, in the opinion of FXSTreet’s analyst Joseph Trevisani. USD/CAD is sitting at 1.4179.

Key quotes  

“Friday’s emergency rate cut from the BoC and its plans to expand its balance sheet, left the overnight interest rate at 0.25%.” 

“Technically there is good support for the USD/CAD at 1.3950, 1.3800 and 1.3660 but more importantly the unresolved global health crisis does not play to the loonie’s strengths.” 

“As numbers are put to the collapse in GDP around the world crude could sink further and, as been amply demonstrated, risk-aversion is a US dollar specialty.”