Daily Market Lookup

• Oil prices eased slightly on Tuesday, a day after hitting 3-1/2 year highs, as investors braced for President Donald Trump's decision on whether to withdraw the United States from the Iran nuclear deal, a move that could disrupt global oil supply. Asian shares picked up, helped by technology stocks as generally upbeat earnings overcame weakness in the global smartphone market and concerns about more regulation. On Tuesday, some of those oil-price gains were pared as traders took profit after Trump said in a tweet he would announce his decision on the nuclear deal at 1800 GMT Tuesday. Adding to market pressures falls in Venezuelan oil production due to problems at the country's oil company PDVSA also added to the rally. While caution on Trump's statement kept investors edgy in early trade, technology firms helped to generate gains for Asian equities. Some analysts cautioned that the rally in technology shares could face a short-term correction as valuations soar. There is currently a "positive feedback loop", but if some sort of unforeseen negative event takes place, it "may turn into a negative feedback loop," he said. On Tuesday, China reported exports and imports jumped in April, beating forecasts, but the news did not impact markets. In currency markets, the dollar broadly held firm on the prospect of solid U.S. economic growth, helped partly by Trump's tax cuts and spending, pointed to further rises in U.S. interest rates down the road. That prompted investors to buy back dollars they had sold earlier this year on worries about Trump's protectionist trade policies. The combination of higher oil prices, a strong dollar and higher U.S. rates is risky for some emerging market assets as it could significantly worsen their trade balance and also encourage investors to shift funds to higher-yielding U.S. assets.
• The dollar gained against the other major currencies in Asia on Tuesday morning and reached this year’s high overnight. The Aussie was sent lower by the worse-than-expected retail sales data, and it reacted little to China trade data that came in broadly positive. Events to look out this week for the greenback’s movement include U.S. President Trump’s decision on whether to withdraw from the Iran deal later in the day. U.S. withdrawal would mean unclear geopolitical developments in the Middle East that can weigh down the dollar. The U.S. is also due to release its PPI and CPI data on Wednesday and Thursday respectively. China’s April exports denominated in yuan rose 3.7% from a year earlier, compared with a decline of 9.8% in March.
• As benchmark oil prices touched $70 a barrel, FED officials on Monday said that rising U.S. inflation and wage pressures are not enough yet to prompt a change in the central bank’s rate outlook. Speaking on the sidelines of an automation conference here, Atlanta Federal Reserve Bank President Raphael Bostic and Dallas Federal Reserve Bank President Robert Kaplan both said they would tolerate inflation a bit over the Fed’s two percent target, and were sticking with an outlook for two more interest rate increases this year. Kaplan said that tariffs on metals and more expensive oil were increasing costs for U.S. businesses, and labor markets were tight. Bostic said that if current trends continue, “we are going to see wages start to go up because we will truly have a scarcity of labor.” However, he said, “I am not sure there is a big signal” in how wage increases will feed through to inflation. Like other Fed officials, Bostic said he would tolerate “some overshoot” in the 2 percent inflation target, hewing to the Fed’s “symmetric” view that after years of price increases that were below target, the central bank should not overreact to inflation slightly over its goal. In separate comments in Virginia, new Richmond FED President Thomas Barkin would not comment on his rate views. But he did say that wage pressures do not seem out of hand, and that he feels inflation is being tempered by structural changes such as the influence of Amazon.com Inc and other e-commerce companies. The Fed raised interest rates in March and is expected to do so again when it meets in June.
• Oil prices retreated from 3-1/2 year highs on Tuesday as investors waited on an announcement by President Donald Trump on whether the United States will reimpose sanctions on Iran. Should Trump pull the United States out of a multi-nation agreement on Tehran's nuclear program, Iranian crude exports could be hit, adding to tightness in the oil market, which is coming back into balance after years of glut. Trump said on Monday that a decision on whether to remain in the Iran nuclear deal or to impose sanctions would be announced at 2:00 p.m. EDT (1800 GMT) on Tuesday, four days earlier than expected. Trump is likely to either announce he will not be renewing a waiver on sanctions or will restate his opposition to the nuclear agreement, Barclays Research analysts said in a report. If Trump restores core U.S. sanctions, under U.S. law he must wait at least 180 days before imposing their furthest-reaching measure, which is to target banks of nations that fail to significantly cut their purchases of Iranian oil. Under the deal to limit Iran's nuclear program, formally known as the Joint Comprehensive Plan of Action, the U.S. agreed to ease a series of sanctions on Iran and has done so under a string of "waivers" that effectively suspend them. Trump has repeatedly threatened to withdraw from the deal, unless France, Germany and Britain - which also signed the agreement - fix what he has called its flaws.

Gold – XAU

Gold on Friday made its intraday high of US$1325.16/oz and low of US$1312.08/oz. Gold was up by 0.230% at US$1323.44/oz.

Technicals in Focus:

In daily charts, prices are above 50DMA (1326) and breakage below will call for 1316-1300. 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 positive crossover to confirm bullish stance for intraday trade.

Trading Strategy: Sell on Strength

Based on the charts and explanations above; sell below 1321-1350 keeping stop loss closing above 1350 and targeting 1311-1303 and 1295-1289-1280. Buy above 1311-1280 with risk below 1280, targeting 1321-1331-1340 and 1350-1357.

Silver - XAG

Silver on Monday made its intraday high of US$16.55/oz and low of US$16.39/oz. Silver settled down by 0.242% at US$16.46/oz.

Technicals in Focus:

On daily charts, silver is sustaining below 200DMA (16.77), 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 negative crossover to show downside move for the intraday trade.

Trading Strategy: Neutral

Based on the charts and explanations above, buy above 16.50-15.00 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 16.50-16.00-15.60 and 15.00-14.50.

Oil - WTI

Crude Oil on Monday made an intra‐day high of US$70.73/bbl, intraday low of US$69.45/bbl and settled up by 0.172% to close at US$69.86/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 70.00-71.50 with stop loss at 71.50; targeting 69.60-68.90-68.10 and 67.50-66.50. Buy above 69.60-67.00 with risk daily closing below 67.00 and targeting 70.00-70.50-71.00 and 71.50-72.00.

EUR/USD

EUR/USD on Monday made an intraday low of US$1.1896/EUR, high of US$1.1977/EUR and settled the day down by % to close at US$1.1921/EUR.

Technicals in Focus:

On daily charts, prices are sustaining above 100DMA (1.2164), which become immediate resistance level, break below will target 1.2150-1.2000. MACD is below zero line but histograms are increasing mode which will bring bullish view. Stochastic is in neutral territory and giving positive crossovers to signal for bullish 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 1.1975-1.2200 targeting 1.1950-1.1915 and 1.1850-1.1800 with stop-loss at daily closing above 1.2300. Buy above 1.1950-1.1800 with risk below 1.1800 targeting 1.2000-1.2090-1.2150 and 1.2200-1.2250.

GBP/USD

GBP/USD on Friday made an intra‐day low of US$1.3514/GBP, high of US$1.3574/GBP and settled the day up by 0.177% to close at US$1.3554/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 50DMA (1.3953) 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 oversold 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 1.3550-1.3750 with targets at 1.3500-1.3450 and 1.3400-1.3320. Buy above 1.3500-1.3320 with targets 1.3550-1.3605 and 1.3700-1.3750 with stop loss closing below 1.3450.

USD/JPY

USD/JPY on Monday made intra‐day low of JPY108.63/USD and made an intraday high of JPY109.26/USD and settled the day down by 0.054% at JPY109.12/USD.

Technicals in Focus:

In daily charts, JPY is sustaining below 200DMA (111.15), which is major resistance 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 positive crossover to confirm bullish stance.

Trading Strategy: Neutral to Sell

Sell below 110.00-112.00 with risk above 112.00 targeting 109.60-109.00-108.40 and 107.50-107.00-106.70. Long positions above 109.00-106.00 with targets of 109.60-110.00 and 110.50-111.00 with stop below 106.00.