Daily Market Lookup

• Global financial markets reeled on Monday after U.S. President Donald Trump unexpectedly jacked up pressure on China to reach a trade deal in the midst of negotiations, saying he would hike U.S. tariffs on Chinese goods this week. Equity markets, which have been largely expecting the two sides to reach a trade agreement soon, fell sharply as further talks to end their bruising trade war were thrown into doubt. The trade war has resulted in billions of dollars of losses for both sides, while inflicting collateral damage on export-reliant economies and companies from Japan to Germany. Chinese shares plunged more than 5 percent, while U.S. stock market futures fell 2 percent. Oil prices sank and the Chinese yuan weakened sharply. Trump sharply escalated tensions between the world’s two largest economies with tweeted comments on Sunday that trade talks with China were proceeding “too slowly”, and that he would raise tariffs on $200 billion of Chinese goods to 25 percent on Friday from 10 percent. The tweets upended the previously calm market mood that had benefited from signs of improving economic growth in China and the United States, and from comments from Trump and other senior U.S. officials that trade talks were going well. Activity in China’s services sector further improved in April, with export sales rising at a record pace, a private business survey showed on Monday, although the longer-term outlook for new orders stayed subdued due to global economic uncertainties. The Caixin/Markit services purchasing managers’ index (PMI) climbed to 54.5, the highest since January 2018 and slightly up from 54.4 in March. The 50-mark separates growth from contraction. Export orders increased the most since the survey began measuring this in September 2014. While the growth contrasts with a slight slowdown suggested by official data last week, both readings indicated China’s services sector remained firmly in expansionary territory. The strength in services, which account for more than half of China’s economy, would help to counter any volatility in the country’s manufacturing sector, which is still searching for firm footing. Caixin’s composite manufacturing and services PMI slipped to 52.7 in April from 52.9 a month earlier, weighed down by the slowing expansion of factory activity.
• The safe-haven yen climbed and the yuan slid on Monday after U.S. President Donald Trump threatened to increase tariffs on China, sending riskier assets into a spin and slamming stock futures. Trump on Sunday increased pressure on China to reach a trade deal by announcing he will hike U.S. tariffs on $200 billion worth of Chinese goods this week and target hundreds of billions more soon. The announcement via Twitter marked a major shift in tone from Trump, who has cited good progress in trade talks and praised his relationship with Chinese President Xi Jinping. The Wall Street Journal reported sources saying Beijing might cancel talks with their U.S. counterparts in Washington planned for Wednesday. Investors responded by bidding up the yen, which is considered a safe harbor in times of stress given Japan's status as the world's largest creditor and its huge hoard of assets abroad. The U.S. dollar had already softened on Friday when jobs data beat expectations but a soft reading for wages meant the Federal Reserve could afford to stay patient on policy. The futures market on Monday moved to price in an even greater chance of a rate cut this year as Trump's tariff warnings was seen as a risk to the global economy and business sentiment. This week investors will be turning their attention to U.S. inflation reports after the Federal Reserve said last week that it is likely to keep interest rates steady for an extended period. President Donald Trump has cited low inflation in his calls for the Fed to cut interest rates. Fed Chair Jerome Powell however played down recent weakness in U.S. inflation as "transitory”. Market watchers will also be keeping an eye on U.S.-China trade talks amid hopes that that a deal to end the months-long trade conflict between Washington and Beijing is getting closer. The dollar was lower against a currency basket on Friday as traders focused on the weaker aspects in the April U.S. payrolls report, brushing aside stronger-than-forecast hiring and a drop in the jobless rate to the lowest in more than 49 years. The modest 0.2% monthly pace of wage growth and the drop in the job participation rate prompted some to sell the greenback, analysts said.
• Oil prices tumbled on Monday after U.S. President Donald Trump on Sunday said he would sharply hike tariffs on Chinese goods this week, risking the derailment of trade talks between the world's two biggest economies. Trump said on Twitter on Sunday that he would drastically hike U.S. tariffs on Chinese goods this week, pulling down global financial markets, including crude oil futures. Trump's move triggered reports that China may cancel trade talks scheduled with Washington, but the South China Morning Post later reported that Chinese Vice Premier Liu He would still travel to the United States this week, although his trip would be shortened. Within the oil industry, there are signs of a further rise in output from the United States, where crude production has already surged by more than 2 million barrels per day (bpd) since early 2018, to a record 12.3 million bpd. That has made the United States the world's biggest producer ahead of Russia and Saudi Arabia. The number of rigs drilling for gas in the United States fell by 3 to 183 in the week to May 3, while oil-directed drilling rigs rose by 2 to 807, data from oil services firm Baker Hughes showed on Friday. Looking ahead, risk trends are likely to overshadow a quiet offering on the economic data front. A revised set of April’s Eurozone PMI data takes top billing and is expected to confirm flash estimates showing manufacturing- and service-sector growth slowed after a shallow uptick in March. Any such outcome is likely to dissolve into broader risk-off dynamics.

Gold – XAU

Gold on Friday made its intraday high of US$1282.49/oz and low of US$1268.22/oz. Gold up by 0.672% at US$1279.02/oz.

Technicals in Focus:

In daily charts, prices are above 100DMA (1283) and breakage below will call for 1254-1247. MACD is above zero line and histograms are decreasing trend and it will bring downward stance in the upcoming sessions. RSI is in neutral region and more upside is expected before it gets stretched. Stochastic Oscillator is in neutral territory and giving psoitive crossover to confirm bullish stance for intraday trade.

Trading Strategy: Buy on Dips

Based on the charts and explanations above; buy above 1278-1244 with risk below 1244, targeting 1286-1294 and 1300-1309. Sell below 1286-1309 keeping stop loss closing above 1310, targeting 1269-1261 and 1251-1244.

Silver - XAG

Silver on Friday made its intraday high of US$14.96/oz and low of US$14.58/oz. Silver settled up by 2.344% at US$14.92/oz.

Technicals in Focus:

On daily charts, silver is sustaining below200DMA (15.12), breakage above will lead to 15.60. 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 oversold region and giving negative crossover to show downside move for the intraday trade.

Trading Strategy: Buy on Dips

Based on the charts and explanations above, buy above 14.70-13.50 targeting 15.05-15.30 and 15.60-15.90; stop breakage below 13.50. Sell below 14.90-16.00 with stop loss above 16.00; targeting 14.50-14.20 and 14.00-13.50.

Oil - WTI

Crude Oil on Friday made an intra‐day high of US$62.53/bbl, intraday low of US$61.87/bbl and settled up by 0.483% to close at US$61.87/bl.

Technicals in Focus:

On daily charts, oil is sustaining above its 100DMA i.e. 55.88 which is a resistance level and breakage above will call for 59.60. MACD is above zero line and histograms are in decreasing mode will bring bearish stance in the upcoming sessions. The Stochastic Oscillator is in oversold 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 60.80-63.65 with stop loss at 63.65; targeting 60.10-59.60-59.00 and 58.60-58.00. Buy above 60.00-58.00 with risk daily closing below 58.00 and targeting 60.80-61.50-62.00 and 63.00-63.65.

EUR/USD

EUR/USD on Friday made an intraday low of US$1.1134/EUR, high of US$1.1204/EUR and settled the day up by 0.277% to close at US$1.1201/EUR.

Technicals in Focus:

On daily charts, prices are sustaining below 100DMA (1.1364), which become immediate resistance level, break above will target 1.1560-1.1600. MACD is below zero line but histograms are increasing mode which will bring bullish view. Stochastic is in oversold territory and giving positive crossovers to signal for bullish outlook for intraday. 14D RSI is currently in neutral region and giving no directions to consider.

Trading Strategy: Neutral to Buy

Buy above 1.1175-1.1020 with risk below 1.1020, targeting 1.1200-1.1230 and 1.1280-1.1305-1.1350. Sell below 1.1200-1.1360 targeting 1.1175-1.1140-1.1100 and 1.1070-1.1020 with stop-loss at daily closing above 1.1020.

GBP/USD

GBP/USD on Friday made an intra‐day low of US$1.2987/GBP, high of US$1.3175/GBP and settled the day up by 1.128% to close at US$1.3178/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 200DMA (1.2960) 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 approaching overbought 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 Sell

Based on the charts and explanations above; sell below 1.3150-1.3300 with targets at 1.3100-1.3060-1.3010 and 1.2970-1.2920 stop should be below 1.3300. Buy above 1.23100-1.2920 with targets 1.3150-1.3210and 1.3250-1.3300 with stop loss closing below 1.2800.

USD/JPY

USD/JPY on Friday made intra‐day low of JPY111.06/USD and made an intraday high of JPY111.68/USD and settled the day down by 0.349% at JPY111.09/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 50DMA (110.42), which is initial 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 in oversold territory and signaling to sell as it has given negative crossover to confirm bearish stance.

Trading Strategy: Neutral to Sell

Sell below 111.50-113.70 with risk above 113.70 targeting 110.60-110.10 and 109.55-109.05. Long positions above 110.50-109.05 with targets of 111.50-111.90-12.25 and 113.00-113.70 with stop below 107.50.