Daily Market Lookup

• Asian central banks have not blinked since the Federal Reserve raised U.S. rates for the third time in six months last week. New Zealand, Taiwan and the Philippines are all expected to hold rates on Thursday. Indonesia and Japan stood pat last week, as Australia and India did earlier in June. China's central bank, which raised some interest rates after the Fed's March move, kept them unchanged this time. Unlike in past Fed tightening cycles, Asia is much more reliant on China than on the United States. In 2016, U.S. trade with 10 top Asian partners rose by roughly 25 percent from levels before the 2008-09 global financial crisis. But China's trade with the other nine grew almost 60 percent in the same period to $1.05 trillion, according to Reuters calculations. The United States' trade with those nine countries is about half as much. China has seen fairly solid first-half growth but momentum is expected to fade as crackdowns on riskier forms of financing take effect. Chinese demand remains subdued, placing a cap on growth and prices across Asia, where virtually no central bank is in danger of overshooting its inflation target.
• The dollar pulled back from one-month highs against a basket of currencies on Wednesday as tumbling oil prices pushed down U.S. yields, while the pound wobbled after Bank of England Governor Mark Carney shot down hopes of an interest rate hike. The greenback's advance, however, stalled as the dollar-supportive bounce in U.S. Treasury yields was cut short overnight. Following a big drop in oil prices, the 10-year Treasury note yield (US10YT=RR) fell sharply on Tuesday, reversing a large portion of the gains it made after the Fed left the door open for another rate increase this year. While the U.S. currency's advance may have stopped, some expected the losses to be limited, with the dollar seen eventually resuming its move higher. Sterling wobbled near two-month lows after BoE's Carney said on Tuesday that now was not the time to raise UK interest rates. Last week three out of eight BoE policymakers voted in favor of a rate hike and raised hopes for a near-term tightening Commodity-linked currencies were also on the back foot after U.S. crude oil prices slumped to nine-month lows overnight on global oversupply fears. MSCI also said it would consult on adding Saudi Arabia to the emerging markets benchmark and that Nigeria will remain a frontier market, but it shocked many emerging market investors by declining to upgrade Argentina from the frontier market category. Sterling was still nursing losses at $1.2626. It took a spill after Bank of England Governor Mark Carney hosed down speculation that he might soon back higher interest rates, saying he first wanted to see how the economy coped with Brexit talks.
• A renewed slump in oil prices to seven-month lows put Asian investors on edge on Wednesday, overshadowing a decision by U.S. index provider MSCI to add mainland Chinese stocks to one of its popular benchmarks. The slide in energy costs boosted bond prices and flattened yield curves as investors priced in lower inflation for longer, while safe-haven flows underpinned the U.S. dollar. The spread between yields on U.S. five-year notes and 30-year bonds US5US30=TWEB shrank to the smallest since 2007 as investors wagered the Federal Reserve might have to delay further rate hikes. Oil had shed 2 percent on Tuesday as increased supply from several key producers overshadowed high compliance by OPEC and non-OPEC producers on a deal to cut global output. The drop took U.S. crude down 20 percent from its recent high and thus into official bear territory, a red flag to investors who follow technical trends. Adding to the uncertainty was news Saudi Arabia's Crown Prince Mohammed bin Salman had replaced his cousin in a sudden shift that made King Salman's 31-year-old son next ruler of the kingdom. MSCI estimated the change, due around the middle of next year, would drive inflows of between $17 billion and $18 billion. China's market cap is roughly $7 trillion. The U.S. Energy Information Administration will release its official weekly oil supplies report at 10:30AM ET Wednesday. Analysts expect crude oil inventories dropped by around 2.1 million barrels at the end of last week, while gasoline supplies are seen increasing by 443,000 barrels and distillates are forecast to gain about 465,000 barrels. After markets closed Tuesday, the American Petroleum Institute said that U.S. oil inventories fell by 2.72 million barrels in the week ended June 16. The API report also showed a gain of 346,000 barrels in gasoline stocks, while distillate stocks rose by 1.837 million barrels. There are often sharp divergences between the API estimates and the official figures from EIA. Oil prices have been under pressure in recent weeks as concern over rising U.S. shale output offset production cuts by OPEC and non-OPEC members. U.S. drillers last week added rigs for the 22nd week in a row, extending a year-long drilling recovery to the highest level since April 2015, implying that further gains in domestic production are ahead. The increase in U.S. drilling activity and shale production has mostly offset efforts by OPEC and other producers to cut output in a move to prop up the market. Last month, OPEC and some non-OPEC producers extended a deal to cut 1.8 million barrels per day in supply until March 2018.

Gold – XAU

Gold closed down on Wednesday and made its intraday high of 1247.93/oz and intraday low of US$1241.17/oz. Gold down by 0.066% at US$1242.98/oz.

Technicals in Focus:

In daily charts, prices are above 200DMA (1239) and breakage below will call for 1234-1224. MACD is below zero line and histograms are decreasing trend and it will bring downward stance in the upcoming sessions. RSI is approaching neutral region and more upside is expected before it touched overbought region. Stochastic Oscillator is in oversold territory and giving negative crossover to confirm bearish stance for intraday trade.

Trading Strategy: Neutral

Based on the charts and explanations above; sell below 1254-1286 keeping stop loss closing above 1300 and targeting 1246-1240 and 1231-1224. Buy above 1246-1224 with risk below 1224, targeting 1260-1270 and 1278-1286-1294.

Silver - XAG

Silver closed down Tuesday on made its intraday high of US$16.62/oz and intraday low of US$16.37/oz. Silver settled by down by 1.083% at US$16.44/oz.

Technicals in Focus:

On daily charts, silver is sustaining below 100DMA (17.47), breakage above will lead to 17.80-18.00. MACD is above zero line and histograms are increasing trend and it will bring bullish stance in the upcoming sessions. RSI is in oversold region, indicating buy signal for now. The Stochastic Oscillator is in oversold region and giving negative crossover to show downside move for the intraday trade.

Trading Strategy: Neutral

Based on the charts and explanations above, buy above 16.10-15.30 targeting 17.00-17.50-18.05 and 18.30-18.60; stop breakage below 15.30. Sell below 17.00-18.60 with stop loss above 18.60; targeting 16.60-16.30 and 16.10-15.65-15.30.

Oil - WTI

Crude Oil on Tuesday made an intra‐day high of US$45.04/bl and made an intraday low of US$44.00/bbl and settled down by 1.25% at US$44.09/bbl on session close.

Technicals in Focus:

On daily charts, oil is sustaining below its 200DMA i.e. 49.77 which is a major resistance and breakage above will call for 50.30-51.00. MACD is below zero line and histograms are in decreasing mode will bring bearish stance in the upcoming sessions. The Stochastic Oscillator is in oversold region and giving negative crossover for confirmation of bearish stance; while the RSI is in oversold region and more downside can be expected.

Trading Strategy: Neutral

Based on the charts and explanations above; sell below 44.45-47.50 with stop loss at 47.50; targeting 43.00-42.30 and 40.90-40.00. Buy above 43.00-40.00 with risk daily closing below 40.00 and targeting 44.450-45.22-46.00 and 46.95-47.50.

EUR/USD

EUR/USD on Tuesday made an intraday low of US$1.1118/EUR and made an intraday high of US$1.1164/EUR and settled the day down by 0.125% at US$1.1133/EUR on session close.

Technicals in Focus:

On daily charts, prices are sustaining above 50DMA (1.0877), which become immediate support level, break below will target 1.0626-1.0600. MACD is below zero line but histograms are increasing mode which will bring bullish view. Stochastic is in oversold territory and giving sell crossovers to signal for bearish outlook for intraday. 14D RSI is currently in neutral region and giving upwards directions to consider buy.

Trading Strategy: Neutral to Sell

Based on the charts and explanations above; sell below 1.1150-1.1400 targeting 11.1100-1.1054 and 1.0970-1.0900 with stop-loss at daily closing above 1.1400. Buy above 1.1100-1.0940 with risk below 1.0940 targeting 1.1150-1.1200-1.1250 and 1.1290-1.1365.

GBP/USD

GBP/USD on Tuesday made an intra‐day low of US$1.2602/GBP and made an intraday high of US$1.2757/GBP and settled the day down by 0.847% at US$1.2628/GBP on session close.

Technicals in Focus:

On daily charts, prices are sustaining above 200DMA (1.2616) is become major support level. 14-D RSI is currently in neutral region and direction is difficult to predict on RSI bases. The Stochastic Oscillator is in overbought territory and giving positive crossover to confirm bullish stance. MACD is below zero line and histograms are decreasing lead to downward movement.

Trading Strategy: Neutral to Sell

Based on the charts and explanations above; short positions below 1.2720-1.2950 with targets at 1.2670-1.2615 and 1.2570-1.2500, breakage above 1.2950 look for further upside with 1.300 as targets. Buy above 1.2720-1.2500 with stop loss closing below 1.2500 targeting 1.2720-1.2790 and 1.2845-1.2900

USD/JPY

USD/JPY on Tuesday made intra‐day low of JPY111.29/USD and made an intraday high of JPY111.59/USD and settled the day up by 0.062% at JPY111.44/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 200DMA (108.90), which is major support on the daily chart. 14-D RSI is currently is approaching oversold region. MACD is above zero line but histograms are in decreasing mode which might lead to downward movement. The Stochastic Oscillator is approaching overbought territory and signaling to buy as it has given positive crossover to confirm bullish stance.

Trading Strategy: Neutral to Buy

Long positions above 111.10-109.50 with targets of 111.60-112.30-113.00-113.95 with stop below 109.50. Sell below 111.60-113.95 with risk above 113.95 targeting 111.10-110.40 and 110.00-109.50-109.00.