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Dollar Bounce Halts Momentum Of Strong April Rally

  • A strong US dollar and heavy equity indices kept risk on the backfoot on Friday, weighing on energy prices. Oil prices succumbed to the poorer sentiment, with both WTI and Brent crude falling around 2% approaching the close, however, held on to 3% gains for the week.
  • Month end profit taking may have been a contributing factor as benchmarks are likely to post a rally in the region of 6% for the month of April. Analyst's views remain upbeat as Chinese and U.S. demand recovery in the next three months alone is likely to be above 1 million barrels per day and offset the widely expected drop in Indian demand.
  • Levels as we approach the close in active futures contracts: WTI $63.60 / Brent $67.33
  • Gold spent Friday in a narrow range, consolidating at marginally lower levels on the week around $1,770 an ounce. The firmer dollar has prompted some weakness, however underlying technical conditions remain bullish. Attention is on the key resistance at $1797.9, Apr 22 high where a break would confirm a resumption of the recent price rally.
  • Notably elsewhere, palladium prices breached $3,000/oz for the first time. This extends the rally to over 25% YTD, as the commodity tide continues to lift all boats.
  • Cycle highs have been posted in copper, iron ore, soy, corn, lumber and others this week - with Biden's infrastructure plan, the long-awaited post-pandemic economic recovery and a resurgence in Chinese demand all being cited as behind the recent rally and bolstered outlook for the commodity complex.

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