Daily Market Lookup

• Growth in China’s services sector softened slightly in February but remained robust, prompting companies to hire more workers for the 18th month in a row, a private business survey showed. The Caixin/Markit services PMI fell to 54.2 in February from January’s 68-month high of 54.7, but was still above recent trends and well above the 50-mark that separates growth from contraction. Despite the figures being seasonally adjusted, many economists think the Lunar New Year effect is so sweeping that it inevitably clouds China’s readings early in the year. This year the week-long holiday fell in February, which may have contributed to new business growing at the slowest pace in three months. Many businesses start to scale back operations ahead of time before shutting for the entire holiday or longer. However, spending on consumer services was likely to be boosted by the festivities. The retail and catering sectors posted sales of 926 bn yuan ($146 bn) during the holiday. The business outlook for the next 12 months picked up from a four-month low as new marketing strategies, upcoming projects and expectations that market conditions will continue to improve all supported optimism. The findings largely echoed those in an official gauge of the non-manufacturing sector released last week, and bode well for Beijing’s longer-term goal of overhauling and modernizing its economic growth model to one driven more by consumption than heavy industry, investment and exports. The government is counting particularly on growth in high value-added areas such as finance and technology. The services sector already accounts for over half of China’s economy, with rising wages giving its consumers more spending power at home and abroad. Like China’s factories, its services firms continued to face strong input cost pressures in February, though they have been able to pass on some of the burden to customers, raising output charges for a sixth month.
• The dollar opened in Asia morning at a low level as fears of a global trade war led to sell-off, despite its short-lived rally last week when new Federal Reserve head Powell confirmed the tightening policy. The U.S. President Donald Trump’s tariff policy on steel and aluminum worried investors worldwide, as the administration stressed there would be no exclusion for any country. The dollar has been sliding since Trump announced the tariff last Friday. The pair had been trading in red and oscillating at around the 105 level. Bank of Japan’s governor Kuroda confirmed to maintain the country’s monetary policy and expected to achieve the inflation target of 2% by 2020. The euro clawed back earlier losses on Monday but remained prone to volatility as early counts in Italian elections pointed to stronger-than-expected results for euroskeptic parties, with no major party blocs winning an outright majority. The common currency found some support as Germany's SPD decisively backed another coalition with Chancellor Angela Merkel's conservatives.
• Gold prices continued to gain momentum as U.S. President Donald Trump’s announcement regarding tariffs on imported steel and aluminum sparked a sell-off in equities and the dollar. U.S. President Donald Trump’s tariff policy on steel and aluminium caused concerns to global investors, as the administration stressed over the weekend that there would be no exclusion for any country. The dollar has been sliding since Trump announced the tariffs last Friday. The dollar opened in Asia morning at a low level despite its short-lived rally last week when new Federal Reserve head Powell confirmed the tightening policy. Dollar-denominated assets such as gold are sensitive to moves in the dollar, as a fall in the dollar makes gold cheaper for holders of foreign currency and thus, increases demand for the precious metal. Gold prices were under pressure last week following Federal Reserve chair Jerome Powell’s hawkish comments, but clawed back most of its weekly loss last Friday in reaction to a weaker dollar and lower equity prices.
• Oil prices rose Monday morning in Asia with expectations that oil producers would discuss further how to clear the global oil excess during a meeting between OPEC and U.S. shale companies. Oil ministers from the OPEC and other global oil players will gather in Houston for the event. On the sidelines of the conference, a dinner is expected to be held on Monday between OPEC officials and U.S. shale firms. Soaring shale oil production in the U.S. has hampered OPEC’s attempt to ease the global oversupply and prop up prices. OPEC has been reducing output by around 1.2 mn bpd since Jan-17, with output falling to a 10-month low in Feb-18. Meanwhile, U.S. crude inventories increased by 3 million barrels in the last week of February, putting a lid on prices. Since mid-2016, U.S production has increased more than 20%, exceeding 10 million bpd. The U.S. has already risen past top exporter Saudi Arabia, and is set to overtake Russia as the world’s largest oil producer by 2019 at the latest. This month, the number of oil rigs drilling for new production in the U.S. rose to 800 for the first time since Apr-2015, pointing to more increases in output to come. Meanwhile, OPEC President Suhail Mohamed Al Mazrouel, who is also the oil minister of the United Arab Emirates, said on Sunday that OPEC has not discussed rolling over production cuts until next year.

Gold – XAU

Gold on Friday made its intraday high of US$1325.36/oz and low of US$1315.12/oz. Gold was down by 0.418% at US$1322.36/oz.

Technicals in Focus:

In daily charts, prices are below 20DMA (1329) and breakage above will call for 1280-1290. MACD is below zero line and histograms are decreasing trend and it will bring upward stance in the upcoming sessions. RSI is in oversold region and more downside is expected before it gets stretched. Stochastic Oscillator is in oversold territory and giving negative crossover to confirm bearish stance for intraday trade.

Trading Strategy: Sell on Strength

Based on the charts and explanations above; sell below 1331-1350 keeping stop loss closing above 1350 and targeting 1324-1314-1306 and 1300-1287. Buy above 1320-1310 with risk below 1310, targeting 1331-1340 and 1350-1358-1366.

Silver - XAG

Silver on Friday made its intraday high of US$16.56/oz and low of US$16.37/oz. Silver settled up by 0.364% at US$16.50/oz.

Technicals in Focus:

On daily charts, silver is sustaining below 200DMA (16.82), breakage above will lead to 17.25-17.70. 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 neutral region and giving positive crossover to show upside move for the intraday trade.

Trading Strategy: Neutral

Based on the charts and explanations above, buy above 16.00-15.00 targeting 17.00-17.75 and 18.20-18.60; stop breakage below 15.00. Sell below 17.00-18.20 with stop loss above 18.20; targeting 16.20-15.60 and 15.00-14.50.

Oil - WTI

Crude Oil on Friday made an intra‐day high of US$61.46/bbl, intraday low of US$60.04/bbl and settled up by 0.195% to close at US$61.35/bbl.

Technicals in Focus:

On daily charts, oil is sustaining below its 50DMA i.e. 61.15 which is a major resistance and breakage above will call for 62.20-62.80. MACD is above zero line and histograms are in increasing mode will bring bearish stance in the upcoming sessions. The Stochastic Oscillator is in neutral region and giving positive crossover for confirmation of bullish 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 61.0-63.40 with stop loss at 64.00; targeting 61.00-60.50 and 59.90-59.00. Buy above 61.00-59.00 with risk daily closing below 59.00 and targeting 61.50-62.20-62.80 and 63.40-64.00.

EUR/USD

EUR/USD on Friday made an intraday low of US$1.2250/EUR, high of US$1.2335/EUR and settled the day up by 0.415% to close at US$1.2316/EUR.

Technicals in Focus:

On daily charts, prices are sustaining below 100DMA (1.1700), which become immediate resistance level, break above will target 1.1750-1.1800. MACD is below zero line but histograms are increasing mode which will bring bullish view. Stochastic is in neutral territory and giving negative crossovers to signal for bearish outlook for intraday. 14D RSI is currently approaching oversold region and giving wards directions to consider buy.

Trading Strategy: Neutral to Sell

Based on the charts and explanations above; sell below 1.2350-1.2560 targeting 1.2300-1.2210-1.2160 and 1.2090-1.2005 with stop-loss at daily closing above 1.2600. Buy above 1.2300-1.2090 with risk below 1.2090 targeting 1.2390-1.2450-1.2520 and 1.2571-1.2600.

GBP/USD

GBP/USD on Friday made an intra‐day low of US$1.3754/GBP, high of US$1.3816/GBP and settled the day up by 0.196% to close at US$1.3799/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 50DMA (1.3431) 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 neutral territory and giving negative crossover to confirm bearish 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 1.3800-1.3950 with targets at 1.3765-1.3700-1.3620 and 1.3550-1.3500. Buy above 1.3765-1.3550 with stop loss closing below 1.3550 targeting 1.3765-1.3855 and 1.3900-1.3950-1.4050.

USD/JPY

USD/JPY on Friday made intra‐day low of JPY105.24/USD and made an intraday high of JPY106.28/USD and settled the day down by 0.442% at JPY105.74/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 200DMA (111.69), which is major support on the daily chart. 14-D RSI is currently in neutral region and direction is difficult to predict on RSI bases 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 sell as it has given negative crossover to confirm bearish stance.

Trading Strategy: Neutral to Sell

Sell below 107.50-110.00 with risk above 110.00 targeting 106.90-106.00-105.50 and 104.90-104.20. Long positions above 106.90-104.90 with targets of 107.50-107.90-108.45 and 109.00-110.10 with stop below 104.90.