Daily Market Lookup

• Asian shares rose to near two-month highs on Monday on hopes of a thaw in U.S.-China trade tensions as U.S. President Donald Trump pledged to help ZTE Corp "get back into business, fast" after a U.S. ban crippled the Chinese technology company. Trump's comments on Sunday came ahead of a second round of trade talks between U.S. and Chinese officials this week to resolve an escalating trade dispute. China had said last week its stance in the negotiations would not change. The United States has said it will lift sanctions on Pyongyang if North Korea agrees to completely dismantle its nuclear weapons program. Elsewhere in Asia, the Malaysian ringgit slipped 1 percent to a four-month trough against the dollar in the first onshore trade since a shock election upset last week. It has come off lows since then, while Malaysian stocks sank as much as 2.7 percent at one point but have bounced back to be last up 0.7 percent. Some investors were concerned that populist promises such as repealing an unpopular goods and services tax and restoring a petrol subsidy could undermine the country's finances. But some analysts on Monday said Mahathir's proposals could be positive for the economy. While tensions in the Korean peninsula have eased, U.S. plans to reintroduce sanctions against Iran have stoked anxiety in the Middle East. Iran pumps about 4 percent of the world's oil, and the latest development has sent oil prices near multi-year highs. The United States threatened on Sunday to impose sanctions on European companies that do business with Iran, as the remaining participants in the Iran nuclear accord stiffened their resolve to keep that agreement operational. That leaves the Fed as the only major central bank in the world committed to rate increases although recent data showing moderate inflation reading has cast doubt over the pace of any hikes.
• The dollar edged lower against a basket of the other major currencies on Monday after its recent rally to multi-month highs stalled amid diminished expectations for an aggressive pace of monetary tightening by the Federal Reserve this year. The rally in the dollar lost momentum after tame U.S. inflation data tempered expectations for a faster pace of rate hikes by the Fed. The Fed raised rates in March and projected two more rate hikes this year, although many investors had seen three hikes as possible. Sterling hit four month lows against the dollar on Thursday after the Bank of England left interest rates on hold as expected, but its cut growth and inflation forecasts for this year and next. Last Friday, the U.S. released softer than expected consumer inflation data that curbed expectations for a third rate hike by the Federal Reserve later this year. The news pressured United States 10-Year that had risen to above the 3% last week, widening the interest rate gap between the U.S. and other countries. However, with the yields dropping to 2.96%, the dollar also lost the support. The USD/JPY pair lost 0.09% at 109.30. Investors will have more cues for the yen following Japan’s GDP on Wednesday and CPI data on Friday.
• Oil prices edged lower for the second session in a row on Monday, moving further away from more than three-year highs touched recently, as a rise in U.S. drilling for new production dampened sentiment. U.S. drillers added 10 oil rigs in the week to May 11, bringing the total count to 844, the highest number since March 2015, General Electric (NYSE:GE)'s Baker Hughes energy services firm said in its closely followed report on Friday. That was the sixth consecutive weekly increase in the rig count, underscoring worries about rising U.S. output Indeed, domestic oil production - driven by shale extraction - rose to an all-time high of 10.70 mn bpd last week, the EIA said. Only Russia currently produces more, at around 11 million bpd. The relentless increase in U.S. production marked one of the few factors tamping back crude in an otherwise bullish environment in recent weeks. U.S. President Donald Trump walked away from an international nuclear deal with Iran and reimposed “the highest level of economic sanctions” against the country. Some analysts have said the reinstatement of sanctions could lead to tighter global oil supplies as they make it more difficult for Iran to export oil. Iran, which is a major Middle East oil producer and member of the Organization of the Petroleum Exporting Countries (OPEC), resumed its role as a major oil exporter in January 2016 when international sanctions against Tehran were lifted in return for curbs on Iran's nuclear program. Exiting the deal leaves the U.S. at odds with Europe and other parties to the deal, who will try to keep it in place. It may also increase tensions in the Middle East, especially between Israel and Iran Oil traders looked ahead to the OPEC monthly report due later in the global day to assess global supply and demand levels. The data will give traders a better picture of whether a global rebalancing is taking place in the oil market. Fresh weekly data on U.S. commercial crude inventories on Tuesday and Wednesday to gauge the strength of demand in the world’s largest oil consumer and how fast output levels will continue to rise will also capture the market's attention in the week ahead.

Gold – XAU

Gold on Friday made its intraday high of US$1325.85/oz and low of US$1317.23/oz. Gold was up by 0.241% at US$1318.07/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 1321-1340 keeping stop loss closing above 1340 and targeting 1311-1303-1295 and 1289-1280. Buy above 1311-1280 with risk below 1280, targeting 1321-1331-1340 and 1350-1357.

Silver - XAG

Silver on Friday made its intraday high of US$16.81/oz and low of US$16.63/oz. Silver settled down by 0.359% at US$16.65/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 Friday made an intra‐day high of US$71.54/bbl, intraday low of US$70.41/bbl and settled up by 1.219% to close at US$70.49/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 71.50-73.50 with stop loss at 73.50; targeting 71.00-70.50 and 70.00-69.60-68.90. Buy above 71.00-68.90 with risk daily closing below 68.50 and targeting 71.50-72.00 and 72.80-73.50.

EUR/USD

EUR/USD on Friday made an intraday low of US$1.1890/EUR, high of US$1.1967/EUR and settled the day up by 0.218% to close at US$1.1940/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 1.1975-1.2150 targeting 1.1950-1.915-1.1850 and 1.1800-1.1730-1.1650 with stop-loss at daily closing above 1.2150. Buy above 1.1950-1.1730 with risk below 1.1700 targeting 1.1975-1.2000-1.2070 and 1.2150.

GBP/USD

GBP/USD on Friday made an intra‐day low of US$1.3501/GBP, high of US$1.3595/GBP and settled the day up by 0.199% to close at US$1.3542/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 Friday made intra‐day low of JPY109.14/USD and made an intraday high of JPY109.14/USD and settled the day up by 0.009% at JPY109.38/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.