Daily Market Lookup

• The euro struggled near five-month lows on Thursday as worries Italian populist parties might push for debt forgiveness from the European Central Bank triggered wider concerns about market disruption in the common currency region. Losses in Asian share markets, however, were limited after U.S. equities advanced on Wednesday, led by retail and technology shares, even as a rise in U.S. 10-year Treasury yields to an almost seven-year high suggested more competition for equities. The United States and China start trade talks on Thursday intended to avert a damaging tariff war, with the White House's harshest China critic relegated to a supporting role, senior Trump administration officials said on Wednesday. Worries about political risks had jolted Italian markets and pressured the euro on Wednesday following reports that Italy's anti-establishment 5-Star Movement and anti-immigrant League may ask the European Central Bank to forgive 250 billion euros of debt as the parties worked to draft a coalition programme. That was enough to spook Italian markets, even though the League's economic spokesman told Reuters that debt cancellation was never in an official draft of a government programme. The rise in U.S. bond yields have helped buoy the dollar, which has gained 1.5 percent against a basket of six major currencies so far in May.
• The dollar firmed on Thursday after the euro retreated to a five-month low on concerns political developments in Italy could cause wider disruptions in the euro bloc, while rising U.S. Treasury yields knocked emerging market currencies lower. Political uncertainty in Italy, where populist parties have jostled to forge a common platform in a bid to lead the next government, have been a major drag on the euro. The euro slid to the five-month low on reports Italy’s anti-establishment 5-Star Movement and anti-immigrant League may ask the European Central Bank to forgive 250 billion euros of debt as the parties worked to draft a coalition programme. For now the euro also faced pressure from a bullish dollar, which has been boosted this week as U.S. benchmark yields broke above the 3 percent threshold to a seven-year high. Other commodity-linked currencies like the Canadian dollar also advanced as equities bounced back overnight from the previous day’s losses caused by the spike in U.S. yields. Volatile emerging market currencies did not fare as well. Rising Treasury yields have enhanced the dollar’s appeal and also raised global borrowing costs - a blow for some currencies experiencing slower economic growth at home and in some cases political strife. Boosted by the better-than-expected building permits released on Wednesday evening, the greenback reached 93.50 overnight - a fresh new high for this year. A key indicator of demand in the housing market, building permits came in 1.352 million, beating the estimated 1.347 million. A report by the Federal Reserve on Wednesday also showed industrial production in the U.S. rose 0.7%, more than anticipated in April.
• Oil prices hit their highest level since November 2014 on Thursday, with Brent crude creeping ever closer to $80 per barrel as supplies tightened and demand remained strong ANZ bank said on Thursday that Brent was “now threatening to break through $80 per barrel ... (as) geopolitical risks continue to support prices, (and) an unexpected fall in inventories in the U.S. got investors excited.” U.S. crude inventories C-STK-T-EIA dropped by 1.4 million barrels in the week to May 11, to 432.34 million barrels. ANZ said the falling U.S. inventories were “raising concerns of tight markets heading into the U.S. driving season,” during which demand typically rises. U.S. bank Morgan Stanley said it had raised its Brent price forecast to $90 per barrel by 2020 due to a steady increase in demand Even at $80 per barrel, the costs of oil are huge, with Asia’s consumption costing $1 trillion a year, twice as much as during the price lull of 2015/2016. The International Energy Agency (IEA) said on Wednesday it had lowered its global oil demand growth forecast for 2018 from 1.5 million barrels per day (bpd) to 1.4 million bpd.
• The IEA said global oil demand would average 99.2 million bpd in 2018, although U.S. bank Goldman Sachs said consumption would cross 100 million bpd “this summer”. And although supplies currently only stand at 98 million bpd due to supply cuts led by the OPEC, the IEA said “strong non-OPEC growth ... will grow by 1.87 million bpd in 2018.” Leading production increases is the United States, where crude output C-OUT-T-EIA has soared by 27 percent in the last two years, to a record 10.72 million bpd, putting the United States within reach of top producer Russia’s 11 million bpd. Brokerage Marex Spectron said the surge in U.S. supplies was “strongly price-bearish”, adding the economic outlook was also “firmly bearish” as “short-term credit conditions have worsened which ... hasn’t been priced correctly by the market.” Goldman Sachs, though, said even with a slowdown in demand and soaring U.S. output, global oil markets would remain tight.

Gold – XAU

Gold on Wednesday made its intraday high of US$1296.82/oz and low of US$1286.33/oz. Gold was up by 0.0209% at US$1290.63/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 1300-1340 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 Wednesday made its intraday high of US$16.41/oz and low of US$16.17/oz. Silver settled down by 0.738% at US$16.36/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 16.05-14.90 targeting 16.50-17.00-17.75 and 18.20-18.60; stop breakage below 15.00. Sell below 16.50-18.20 with stop loss above 18.20; targeting 16.00-15.60 and 15.00-14.50.

Oil - WTI

Crude Oil on Wednesday made an intra‐day high of US$71.62/bbl, intraday low of US$70.73/bbl and settled up by 0.717% to close at US$71.56/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 71.90-73.90 with stop loss at 73.90; targeting 71.50-71.00-70.50 and 70.00-69.60-68.90. Buy above 71.50-68.90 with risk daily closing below 68.90 and targeting 72.00- 72.80 and 73.50-73.90.

EUR/USD

EUR/USD on Wednesday made an intraday low of US$1.1762/EUR, high of US$1.1853/EUR and settled the day down by 0.253% to close at US$1.1806/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 1.1850-1.2100 targeting 1.1800-1.1730 and 1.1650-1.1600 with stop-loss at daily closing above 1.2150. Buy above 1.1800-1.1600 with risk below 1.1600 targeting 1.1850-1.1915-1.1975 and 1.2000-1.2070.

GBP/USD

GBP/USD on Wednesday made an intra‐day low of US$1.3454/GBP, high of US$1.3520 /GBP and settled the day down by 0.103% to close at US$1.3486/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 1.3550-1.3850 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 Wednesday made intra‐day low of JPY110.03/USD and made an intraday high of JPY110.39/USD and settled the day up by 0.045% at JPY110.38/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

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.