US Open – Phase 2, Oil, Gold, Bitcoin Halving

Second Phase Fear Kicking In?

It’s been a bit of a tentative start to the week, with European stocks giving back earlier gains and US futures now pointing a little lower.

Investors have been growing in confidence in recent weeks as countries around the world have been preparing to ease lockdown measures. That will continue to be a tailwind for stock markets as those plans are implemented, assuming that it isn’t swiftly followed by another spike in cases and risk of the changes being reversed.

Fears of a second wave are already emerging in South Korea, China and maybe even Germany which should be a lesson to those countries preparing for looser restrictions. Of course, a rise in cases in unavoidable unless these restrictions remain in place until we have better testing, a vaccine and/or a cure. The scale is what is important and will be closely monitored.

Perhaps it’s second phase fears that’s weighing a little on stock markets today, although it is a very quiet session in general and that’s not expected to change with the ringing of the opening bell on Wall Street. Earnings season has passed us by with investors taking the dire scenario in their stride, in much the same way that the woeful economic numbers – the latest of which being the US jobs report on Fridya – have been given a free pass.

Oil pulls back as June contract approaches expiry

Oil’s good run has stalled in recent sessions, with prices off a few percent so far today. It remains a very impressive rebound, supported by planned production cuts from a variety of players and the prospect of demand picking up as economies around the world gradually reopen.

There is still a significant imbalance and lack of storage but the situation looks far less dire than it did a month ago. Still, a week tomorrow marks the expiry of the June contract, could we be in for another rollercoaster ride? We may see some nervousness creep in this week even if another remarkable scenario is avoided.

Gold not up to much

Once again there isn’t too much to add on the gold market. The price continues to hover around $1,700 where it’s bounced around the last month. The range is tightening which may mean we break out of this dull trend soon enough but there’s little sign of it just yet. Thursday’s rally may give hope to gold bulls, but unless the dollar gives up some ground, it could be an uphill struggle in the near-term.

Bitcoin hanging in there on halving day

Bitcoin halving day is upon us and rather than surging, it seems the crypto’s price is hanging on in there. Perhaps this is simply a good old case of “buy the rumour, sell the fact”, with the price peaking around $10,000 last week before plunging back towards $8,000 where it found some support. This new range could prove interesting, with the lower end looking shakier right now.

Should $8,000 break we could find ourselves back around early April lows given the size of this potential topping formation, further supporting the view that this entire rally was built on halving hype and nothing more. A break of $10,000 could change all of that.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst - UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam