AAFX TRADING

Daily Market Lookup

  • The dollar slipped against peers on Monday, as traders placed bearish bets due to rising expectations that the Federal Reserve would put its policy tightening on pause in 2019. Risk appetites were strong in Asian trade, thanks to China's aggressive monetary easing on Friday to address a sharp economic slowdown and to hopes that Washington and Beijing can strike a comprehensive trade deal. McCarthy also said China's cuts in bank reserve requirements "are very important and have lifted commodities... this should be supportive for the Australian dollar." On Friday, Powell told the American Economic Association that the Fed is not on a preset path of interest rate hikes and that it will be sensitive to the downside risks markets are pricing in. Despite Friday's stronger than expected U.S. December jobs data, many analysts believe the world's largest economy is losing momentum and further rate hikes are the last thing it needs. Powell's comments that the central bank is "prepared to shift the stance of policy" boosted investor sentiment and sent U.S. stocks soaring on Friday. The dollar outperformed other currencies in 2018 due to the Fed being the only major central bank to hike rates. If the Fed holds rates in 2019, analysts see slim chances of further greenback appreciation. U.S. 2-year and 10-year Treasury yields fell sharply over the last couple of weeks indicating that bond traders see little chance of the Fed raising rates this year on the increased likelihood of a growth slowdown in the world's largest economy. However, few analysts still see scope for the Fed to raise rated in 2019. After a slew of weaker-than-expected manufacturing data, Chinese authorities on Friday cut reserve requirements for all banks by 100 basis points. The move frees up $116 billion for new lending as it tries to reduce the risk of a pronounced fall in the pace of economic growth. The size of the cut was at the upper end of market expectations, and the net funds released would be the largest amount in the five reserve requirement reductions since January 2018. Analysts expect further monetary stimulus from Beijing in 2019. Ray Attrill, head of currency strategy at National Australia Bank, thinks it may be reasonable to expect as many as four 100 bps cuts this year. Financial markets are also optimistic about U.S. officials meeting with their counterparts in Beijing this week for the first face-to-face talks since President Donald Trump and President Xi Jinping on Dec. 1 agreed to a 90-day truce in their trade war.
  • The safe-haven yen rose on Monday in Asia even after China’s aggressive monetary easing improved investor sentiment, while the U.S. dollar slipped ahead of Wednesday’s minutes of the Federal Reserve’s December meeting and a speech by Fed Chairman Jerome Powell a day later. People's Bank of China (PBOC) cut the reserve requirement ratio for banks by 1% last Friday as Beijing hoped to stimulate lending after weaker-than-expected PMI data released last week suggested a slowing economy. The cut will release a net 800 billion yuan ($117 billion) of liquidity, the central bank said in a separate statement, adding that the cut is still a "targeted" easing rather than wide-ranging stimulus. Meanwhile, the U.S. Dollar Index that tracks the greenback against a basket of other currencies fell 0.2% to 95.523 as traders tried to determine the Fed’s outlook on monetary policy. Last month the Fed voted to increase interest rates for the fourth time in 2018 and indicated that two more rate hikes this year are likely. While investors will be carefully scrutinising the minutes, they will probably be dated following remarks by Fed Chairman Jerome Powell last Friday. Powell pledged that the central bank would be watching how the economy performs this year and will adjust policy accordingly. Powell is due to deliver remarks at The Economic Club of Washington on Thursday, and U.S. inflation figures are due out on Friday.
  • Oil prices rose by more than 1 percent on Monday, lifted by optimism that talks could soon resolve the trade war between the United States and China, while supply cuts by major producers also supported the market. Financial markets were riding a relief rally on Monday on expectations that face-to-face trade negotiations between delegates from Washington and Beijing, due to start on Monday, would lead to an easing in tensions between the two biggest economies in the world. The United States and Beijing have been locked in an escalating trade spat since early 2018, raising import tariffs on each other's goods. The dispute has weighed on economic growth. Goldman Sachs (NYSE:GS) said in a note on Monday it had downgraded its average Brent crude oil forecast for 2019 from $70 per barrel to $62.50 a barrel because of "the strongest macro headwinds since 2015." J.P. Morgan, another U.S. bank, said in a note late last week that "the 3 percent global growth pace we have been anticipating for the next two quarters looks increasingly challenging. The bank also said that "bond and commodity markets appear to be pricing in on average close to a 60 percent chance of a U.S. recession over the coming year compared to a 40 percent chance by our economists and 27 percent chance by the consensus." Despite the likelihood of a slowdown, crude future prices were being supported by supply cuts started late last year by a group of producers around the Middle East-dominated OPEC well as non-OPEC Russia. OPEC oil supply fell in December by 460K bpd, to 32.68 min bpd, a Reuters survey found last week, led by cuts from top exporter Saudi Arabia. U.S. crude oil production stayed at a record 11.7 min bpd in the last week of 2018, according to weekly data by the EIA released on Friday. That makes the United States the world's biggest oil producer ahead of Russia and Saudi Arabia. Record output is also swelling U.S. fuel stockpiles. Crude oil inventories rose by 7k barrels in the week ending Dec. 28, to 441.42 million barrels Distillate and gasoline stocks, however, rose by a whopping 9.5 million and 6.9 million barrels, to 119.9 million and 240 million barrels respectively, the EIA data showed.

 

 
Intraday RESISTANCE LEVELS
7th January 2019 R1 R2 R3
GOLD-XAU 1,300-1,309 1,300-1,309 1,315
Silver-XAG 15.80-16.00 16.40 17.00
Crude Oil 48.50-49.50 50.20 51.00
EURO/USD 1.1420-1.1460 1.1490 1.1560-1.1600
GBP/USD 1.2760 1.2800 1.2850-1.2900
USD/JPY -108.50 109.00 109.60-110.20

Intraday SUPPORTS LEVELS
7th January 2019 S1 S2 S3
GOLD-XAU 1,282 1,27-4 1,266-1,260
Silver-XAG 15.60-15.40 15.10 14.90-14.75
Crude Oil 48.00-47.60 47.00 48.50-49.50
EURO/USD 1.1300 1.1300 1.1260-1.1215
GBP/USD 1.2700-1.2660 1.2600 1.2550-1.2490
USD/JPY 108.10 107.50-107.05 106.60

Intra-Day Strategy (7th January 2019)
GOLD-XAU Buy on Dips
Silver-XAG Neutral
Crude Oil Neutral
EUR/USD Neutral to Buy
GBP/USD Neutral to Buy
USD/JPY Neutral to Sell

Gold – XAU

AAFX TRADING

Gold on Friday made its intraday high of US$1298.47/oz and low of US$1276.62/oz. Gold down by 0.716% at US$1284.73/oz.

Technicals in Focus:

In daily charts, prices are above 200DMA (1251) and breakage below will call for 1246-1236. MACD is above zero line and histograms are increasing trend and it will bring upward stance in the upcoming sessions. RSI is in overbought region and more upside 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: Buy on Dips

Based on the charts and explanations above; buy above 1282-1260 with risk below 1260, targeting 1294-1300-1309 and 1315-1324. Sell below 1294-1321 keeping stop loss closing above 1321, targeting 1284-1274 and 1266-1260.

 
Intraday Support Levels
S1     1,282
S2     1,27-4
S3     1,266-1,260
Intraday Resistance Levels
R1     1,300-1,309
R2     1,300-1,309
R3     1,315

Technical Indicators

Name   Value Action
14DRSI  

68.171

Buy
20-DMA   1259.30 Buy
50-DMA  

1237.54

Buy
100-DMA   1220.00 Buy
200-DMA   1250.09 Sell
STOCH(5,3)   75.907 Sell
MACD(12,26,9)   15.891 Buy

Silver - XAG

AAFX TRADING

Silver on Friday made its intraday high of US$15.86/oz and low of US$15.57/oz. Silver settled down by 0.828% at US$15.68/oz.

Technicals in Focus:

On daily charts, silver is sustaining above100DMA (14.50), breakage below will lead to 14.30-13.60. 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 overbought 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 15.60-14.75 targeting 15.80-16.00 and 16.40-16.80-17.00.; stop breakage below 14.75. Sell below 15.80-17.00 with stop loss above 17.00; targeting 15.60-15.10-14.90 and 14.75 14.40.

 
Intraday  Support Levels
S1     15.60-15.40
S2     15.10
S3     14.90-14.75

Intraday  Resistance Levels
R1     15.80-16.00
R2     16.40
R3     17.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   76.570 Buy
20-DMA   14.89 Buy
50-DMA   14.58 Buy
100-DMA   14.52 Buy
200-DMA   15.38 Sell
STOCH(5,3)   87.742 Sell
MACD(12,26,9)   0.305 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Friday made an intra‐day high of US$49.37/bbl, intraday low of US$46.78/bbl and settled up by 3.19% to close at US$48.45/bbl.

Technicals in Focus:

On daily charts, oil is sustaining below its 50DMA i.e. 66.10 which is a resistance level and breakage above will call for 66.80-67.08. 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 48.00-50.20 with stop loss at 50.20; targeting 47.60-47.00-46.450 and 45.50-45.10. Buy above 47.60-45.10 with risk daily closing below 45.00 and targeting 48.10-49.00 and 49.50-50.20.

 
Intraday Support Levels
S1     48.00-47.60
S2     47.00
S3     48.50-49.50

Intraday Resistance Levels
R1     48.50-49.50
R2     50.20
R3     51.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   46.941 Sell
20-DMA   48.24 Sell
50-DMA   53.99 Sell
100-DMA   62.01 Sell
200-DMA   65.03 Sell
STOCH(5,3)   75.750 Buy
MACD(12,26,9)   -2.229 Buy

EUR/USD

AAFX TRADING

EUR/USD on Friday made an intraday low of US$1.1418/EUR, high of US$1.1418/EUR and settled the day up by 0.035% to close at US$1.1395/EUR.

Technicals in Focus:

On daily charts, prices are sustaining below 100DMA (1.1480), which become immediate resistance level, break below will target 1.1560-1.1600. 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 sell.

Trading Strategy: Neutral to Buy

Buy above 1.1390-1.1210 with risk below 1.1210, targeting 1.1420-1.1460-1.1490 and 1.1540-1.1600. Sell below 1.1420-1.1600 targeting 1.1390-1.1345 and 1.1300-1.1260-1.1215 with stop-loss at daily closing above 1.1600.

 
Intraday Support Levels
S1     1.1300
S2     1.1300
S3     1.1260-1.1215

Intraday  Resistance Levels
R1     1.1420-1.1460
R2     1.1490
R3     1.1560-1.1600

TECHNICAL INDICATORS
Name   Value Action
14DRSI   51.652 Buy
20-DMA   1.1378 Buy
50-DMA   1.1366 Sell
100-DMA   1.1476 Sell
200-DMA   1.1652 Sell
STOCH(5,3)   36.754 Sell
MACD(12,26,9)   0.0008 Buy

GBP/USD

AAFX TRADING

GBP/USD on Friday made an intra‐day low of US$1.2613/GBP, high of US$1.2743/GBP and settled the day up by 0.808% to close at US$1.2720/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 1.2760-1.2900 with targets at 1.2700-1.2660-1.2600 and 1.2550-1.2490. Buy above 1.2700-1.2490 with targets 1.2760-1.2800 and 1.2850-1.2900 with stop loss closing below 1.2490.

 
Intraday Support Levels
S1     1.2700-1.2660
S2     1.2600
S3     1.2550-1.2490

Intraday Resistance Levels
R1     1.2760
R2     1.2800
R3     1.2850-1.2900

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

45.9444

Buy
20-DMA   1.2642 Sell
50-DMA   1.2771 Sell
100-DMA   1.2893 Sell
200-DMA   1.3162 Sell
STOCH(5,3)   43.988 Sell
MACD(12,26,9)   -0.0033 Sell

USD/JPY

AAFX TRADING

USD/JPY on Friday made intra‐day low of JPY107.50/USD and made an intraday high of JPY108.58/USD and settled the day down by 1.129% at JPY108.50/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 108.10-110.20 with risk above 110.20 targeting 109.00-108.50-108.10 and 107.70-107.00. Long positions above 108.10-106.00 with targets of 108.10-108.50-109.00 and 109.60-110.20-111.00 with stop below 107.00.

 
Intraday Support Levels
S1     108.10
S2     107.50-107.05
S3     106.60

INTRADAY RESISTANCE LEVELS
R1     -108.50
R2     109.00
R3     109.60-110.20

TECHNICAL INDICATORS
Name   Value Action
14DRSI   30.045 Buy
20-DMA   111.51 Sell
50-DMA   112.52 Sell
100-DMA   112.28 Buy
200-DMA   110.05 Buy
STOCH(9,6)   45.250 Buy
MACD(12,26,9)   -1.151 Sell

AAFX TRADING
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