Daily Market Lookup

• Asian stock markets skidded on Tuesday and Europe was expected to follow, pressured by sharp losses on Wall Street as technology firms tumbled on worries about slackening demand. The dollar sagged after weak U.S. data further sapped confidence in the currency, while oil prices slipped despite expected OPEC supply cuts. Conflicting signals between the United States and China on their trade dispute added to caution. Global stock markets have suffered a sharp shakeout in the past two months, pressured by worries of a peak in corporate earnings growth, rising borrowing costs, slowing global economic momentum and international trade tensions. Trillions of dollars were wiped off equities in a particularly torrid October month. In currencies, the dollar struggled at a near two-week low against a basket of currencies. Data released on Monday showed U.S. home builder sentiment recorded its steepest one-month drop in over 4-1/2 years in November. The dollar had also been weighed down after Fed Vice Chair Richard Clarida and Dallas Fed President Robert Kaplan late last week raised concerns over a potential global slowdown. The U.S. currency has rallied strongly this year, buoyed by three Fed rate hikes and a robust economy, though some expect the bull run may be nearing an end.
• The dollar was flat while the Aussie slipped on Tuesday. Comments by New York Fed President John Williamsreceived some focus as he said the Federal Reserve “will be likely raising interest rates somewhat.” His comments came after Richard Clarida, the Fed’s newly appointed vice chair, expressed caution over the global growth outlook last Friday and said "that's something that is going to be relevant" for the outlook for the U.S. economy. Federal Reserve Bank of Dallas President Robert Kaplan also said in a separate interview with Fox Business last week that he expected a growth slowdown in Europe and China. The Federal Reserve is still expected to raise interest rates again next month and three times next year, but a strong majority of economists polled by Reuters over the past week say the risk is it will slow that pace down. The probability of a U.S. recession in the next two years, while still low, also nudged up to a median 35 percent from 30 percent in the latest monthly Reuters survey of economists taken Nov 13-19. It held at 15 percent for the next 12 months. While many developed economies are already slowing, growth in the world’s largest economy is still solid, riding the tail-end of a $1.5 trillion tax cut boost, and official unemployment is the lowest in nearly half a century. But that shine is forecast to start coming off this quarter, with growth slowing more by the end of next year as a trade stand-off with China shows no signs of letting up. Gross domestic product (GDP) will expand at an annualized rate of 2.7 percent this quarter, down from 4.2 percent in the second quarter and 3.5 percent in the third. GDP growth is then forecast to slow to 2.0-2.5 percent throughout 2019 and then down to 1.8 percent by mid-2020, about half the latest reported rate. The trade war U.S. President Donald Trump launched with No. 2 world economy China has already started to hit export-sensitive economies like Germany and Japan. And an Asia-Pacific Economic Cooperation summit ended on Sunday with leaders failing to agree on a final statement for first time in the forum’s history. That has lowered expectations Trump and Chinese President Xi Jinping will make a breakthrough when they meet at a G20 summit later this month. The recent sell-off on Wall Street had some expecting the Fed to soften its tone on policy tightening at its November meeting, but the central bank did no such thing. Economists in the latest poll unanimously said the Fed will raise the federal funds rate by 25 basis points to 2.25-2.50 percent in December. Twelve respondents in the latest poll said there was a greater than 50 percent chance of a recession in the next two years. But only one, Fathom Consulting, has actually put down a point forecast for GDP to contract in the full year 2020.
• Oil markets lost steam on Tuesday as a deteriorating economic outlook and a surge in U.S. production outweighed expected supply cuts by the OPEC. The dips followed price increases earlier in the session. Oil prices are almost a quarter below their recent peaks in early October, weighed down by surging supply, especially from the United States. U.S. crude oil production has soared by almost 25 percent this year, to a record 11.7 mn bpd. That comes amid widespread market expectations of an economic slowdown, which saw Asian stock markets tumble on Tuesday, adding to sharp losses on Wall Street the previous day. As a result, financial traders have become wary of oil markets, seeing further price downside risks from the growth in U.S. shale production as well as the deteriorating economic outlook. Portfolio managers have sold the equivalent of 553 million barrels of crude and fuels in the last seven weeks, the largest reduction over a comparable period since at least 2013. Funds now hold a net long position of just 547 mn barrels, less than half the recent peak of 1.1 billion at the end of September, and down from a record 1.484 billion in January. Concerned about an emerging production overhang similar to the one that led to a price slump in 2014, OPEC is pushing for a supply cut of 1 mn to 1.4 mn bpd. The International Energy Agency (IEA), which represents the interest of oil consumers, on Monday warned OPEC and other producers of the "negative implications" of supply cuts, with many analysts fearing that a spike in crude prices could erode consumption.

Gold – XAU

Gold on Monday made its intraday high of US$1225.13/oz and low of US$1217.95/oz. Gold up by 0.111% at US$1223.69/oz.

Technicals in Focus:

In daily charts, prices are below 100DMA (1228) and breakage above will call for 1240-1260. 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 overbought 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 1214-1238 keeping stop loss closing above 1244, targeting 1214-1200-1195 and 1189-1180. Buy above 1205-1180 with risk below 1180, targeting 1207-1214-1221 and 1238-1244.

Silver - XAG

Silver on Monday made its intraday high of US$14.42/oz and low of US$14.33/oz. Silver settled up by 0.069% at US$14.41/oz.

Technicals in Focus:

On daily charts, silver is sustaining below 100DMA (15.45), breakage above will lead to16.05-16.30. 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 14.00-12.40 targeting 14.30-14.90-15.10 and 15.60-16.35; stop breakage below 12.40. Sell below 14.30-17.00 with stop loss above 17.00; targeting 13.90-13.50 and 13.00-12.40.

Oil - WTI

Crude Oil on Monday made an intra‐day high of US$57.56/bbl, intraday low of US$55.28/bbl and settled up by 0.631% to close at US$57.34/bbl.

Technicals in Focus:

On daily charts, oil is sustaining above its 50DMA i.e. 69.62 which is a support level 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 overbought 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 57.80-60.50 with stop loss at 60.50; targeting 57.00-56.00-54.80 and 54.05-53.40. Buy above 57.00-53.40 with risk daily closing below 53.40 and targeting 57.80-58.50 and 59.00-60.50.

EUR/USD

EUR/USD on Monday made an intraday low of US$1.1393/EUR, high of US$1.1463/EUR and settled the day up by 0.341% to close at US$1.1451/EUR.

Technicals in Focus:

On daily charts, prices are sustaining below 100DMA (1.1621), which become immediate resistance level, break below will target 1.1690-1.1730. MACD is below zero line but histograms are increasing mode which will bring bullish view. Stochastic is in overbought 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 sell.

Trading Strategy: Neutral to Buy

Buy above 1.1350-1.1160 with risk below 1.1160, targeting 1.1430-1.1490 and 1.1540-1.1610. Sell below 1.1430-1.1620 targeting 1.1350-1.1300-1.1260 and 1.1160-1.1100 with stop-loss at daily closing above 1.1620.

GBP/USD

GBP/USD on Monday made an intra‐day low of US$1.2792/GBP, high of US$1.2883/GBP and settled the day up by 0.023% to close at US$1.2846/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 100DMA (1.3096) 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 positive crossover to confirm bullish stance. MACD is above zero line but histograms are increasing lead to downward movement.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; sell below 1.2855-1.3000 with targets at 1.2780-1.2700 and 2660-1.2600. Buy above 1.2780-1.2600 with targets 1.2880-1.2845-1.2900 and 1.3000-1.3050 with stop loss closing below 1.2600.

USD/JPY

USD/JPY on Monday made intra‐day low of JPY112.41/USD and made an intraday high of JPY112.86/USD and settled the day down by 0.203% at JPY112.54/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 50DMA (111.82), which is major support on the daily chart. 14-D RSI is currently in overbought region and chances of downward are expected based on RSI. 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 Sell

Sell below 113.50-115.50 with risk above 115.50 targeting 113.00-112.00-111.50 and 111.20-110.70. Long positions above 113.00-110.70 with targets of 113.50-114.00 and 114.70-115.50 with stop below 110.50.