Daily Market Lookup

• Stock markets in Asia inched higher on Monday on hopes that U.S. and Chinese leaders will be able to get trade talks back on track this week, while oil prices bounced on political tensions between Tehran and Washington. Investors are nervously awaiting an expected meeting between presidents Donald Trump and Xi Jinping later this week for any signs of a de-escalation in a trade war that is damaging the global economy and souring business confidence. The leaders will meet on the sidelines of the G20 summit in Japan. China and the United States should be willing to make compromises in trade talks and not insist only on what each side wants, Vice Commerce Minister Wang Shouwen said on Monday. U.S. Vice President Mike Pence on Friday decided to call off a planned China speech, which also increased optimism ahead of trade talks. Pence had upset China with a fierce speech in October in which he laid out a litany of complaints ranging from state surveillance to human-rights abuses. Still, most analysts doubt the two sides will come to any meaningful agreement as the tensions have extended beyond tariffs, particularly after Washington put Huawei, the world’s biggest telecoms gear maker, on a blacklist that effectively bans U.S. firms from doing business with the company. The U.S. Commerce Department said on Friday it was adding several Chinese companies and a government-owned institute involved in supercomputing with military applications to its national security “entity list” that bars them from buying U.S. parts and components without government approval. Also potentially becoming a factor in the equation, Arab politicians and commentators greeted Trump’s $50 billion Middle East economic vision with a mixture of derision and exasperation, although some in the Gulf called for it to be given a chance. The combination of heightened geopolitical worries and likely U.S. interest rate cuts encouraged investors to seek the safety of gold. In the foreign exchange market, the euro rose to a three-month high of $1.1386 against the dollar on Monday as bearish bets on the greenback remained solid on prospects of a near-term interest rate cut by the Federal Reserve.
• The dollar was on the back foot on Monday after sustaining its biggest weekly drop in four months last week as traders remained cautious about the prospects of trade talks between the United States and China at this week’s G20 summit. The greenback has been on the receiving end of a broad market selloff in major currencies as global central banks led by the U.S. Federal Reserve signaled a dovish outlook on monetary policy due to growing signs of a weak global economy. But the selloff has raised concerns that markets have turned excessively bearish against the dollar, especially since the Fed has the most room to cut interest rates relative to its peers, such as the European Central Bank, where rates are already in negative territory. Latest weekly positioning data confirmed that view. While hedge funds have turned mildly bearish on the outlook for the dollar in the latest weekly positioning figures, they have ramped up bearish bets against currencies such as the Australian dollar on fears of rising challenges for the global economy. Investors focused on whether Washington and Beijing can resolve their trade dispute at a summit in Japan this week. Both China and the United States should make compromises in trade talks, Chinese Vice Commerce Minister Wang Shouwen said on Monday. The euro rose to its highest level in three months against the U.S. dollar on Monday as the greenback remained on the back foot amid expectations for the Federal Reserve to cuts interest rates later this year. That weighed on the dollar and in turn reinvigorated its counterparts such as the euro, which has had troubles of its own including Italy's debt problem and the possibility of the European Central Bank having to ease policy. "It is true that the ECB may have to ease policy especially with the Fed having shifted to an easing bias," said Yukio Ishizuki, senior currency strategist at Daiwa Securities. "But the ECB already employs a negative interest rate policy and does not have much further room to ease even if they wanted to, unlike the Fed. It is factors like these which have seemingly supported the euro."
• Oil prices rose on Monday to extend gains from last week, bolstered as tensions remain high between Iran and the United States after U.S. Secretary of State Mike Pompeo said "significant" sanctions would be announced on Tehran. U.S. President Donald Trump said last week that he called off a military strike to retaliate for Iran's downing of an unmanned U.S. drone, and he said on Sunday that he was not seeking war with Iran. But Pompeo also said "significant" sanctions on Iran would be announced on Monday aimed at further choking off resources that Tehran uses to fund its activities in the region Oil is usually priced in dollars, so a weaker greenback makes it cheaper for holders of other currencies. The U.S. Federal Reserve is expected to cut interest rates soon to bolster the U.S. economy, while the European Central Bank President Mario Draghi last week called for additional stimulus to boost growth. Oil prices surged last week after Iran shot down a drone that the United States claimed was in international airspace and Tehran said was over its territory. Amid the escalating tensions, Brent racked up a gain of about 5% last week, its first weekly gain in five weeks, and WTI jumped about 10%, its biggest weekly percentage gain since December 2016 Trump said he had aborted a military strike on Iran because such a response to Tehran's downing of the unmanned U.S. surveillance drone would have caused a disproportionate loss of life Iranian officials told Reuters that Tehran had received a message from Trump through Oman overnight warning that a U.S. attack on Iran was imminent. Meanwhile, U.S. energy companies last week increased the number of oil rigs operating for the first time in three weeks. Companies added one oil rig in the week to June 21, bringing the total count to 789, Baker Hughes said in a closely followed report on Friday.

Gold – XAU

Gold on Friday made its intraday high of US$1411.76/oz and low of US$1382.49/oz. Gold up by 0.825% at US$1399.31/oz.

Technicals in Focus:

In daily charts, prices are above 100DMA (1303) and breakage below will call for 1296-1288. MACD is above zero line and histograms are decreasing trend and it will bring downward 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 trad.

Trading Strategy: Buy on Dips

Based on the charts and explanations above; buy above 1400-1362 with risk below 1360, targeting 1405-1412 and 1425-1433. Sell below 1400-1433 keeping stop loss closing above 1433, targeting 1400-1392-1380 and 1370-1362-1357.

Silver - XAG

Silver on Friday made its intraday high of US$15.54/oz and low of US$15.14/oz. Silver settled down by 0.402% at US$15.33/oz.

Technicals in Focus:

On daily charts, silver is sustaining below200DMA (14.94), 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 15.05-13.20 targeting 15.30-15.60 and 15.90-16.20; stop breakage below 13.20. Sell below 15.30-16.20 with stop loss above 16.20; targeting 15.05-14.60-14.30 and 13.90-13.50.

Oil - WTI

Crude Oil on Friday made an intra‐day high of US$57.95/bbl, intraday low of US$56.62/bbl and settled up by 0.270% to close at US$57.55/bbl.

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 58.10-60.20 with stop loss at 60.20; targeting 57.35-56.90-56.00 and 55.50-54.80-54.00. Buy above 56.60-55.00 with risk daily closing below 55.00 and targeting 58.10-58.70 and 59.50-60.20.

EUR/USD

EUR/USD on Friday made an intraday low of US$1.1282/EUR, high of US$1.1377/EUR and settled the day up by 0.673% to close at US$1.1367/EUR.

Technicals in Focus:

On daily charts, prices are sustaining below 200DMA (1.1351), which become immediate resistance level, break above will target 1.1320-1.1280. 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 in neutral region and giving no directions to consider.

Trading Strategy: Neutral to Buy

Buy above 1.1350-1.1175 with risk below 1.1175, targeting 1.1390-1.1420-1.1450 and 1.1500-1.1550. Sell below 1.1390-1.1540 targeting 1.1350-1.1320-1.1280 and 1.1220-1.1175 with stop-loss at daily closing above 1.1540.

GBP/USD

GBP/USD on Friday made an intra‐day low of US$1.2641/GBP, high of US$1.2746/GBP and settled the day up by 0.506% to close at US$1.2742/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 in oversold territory and giving positive crossover to confirm bearish 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 1.2700-1.2870 with targets at 1.2650-1.2600 and 1.2500-1.2475 stop should be below 1.2870. Buy above 1.2650-1.2400 with targets 1.2700-1.2750-1.2790 and 1.2830-1.2870 with stop loss closing below 1.2400.

USD/JPY

USD/JPY on Wednesday made intra‐day low of JPY107.04/USD and made an intraday high of JPY107.72/USD and settled the day down by 0.023% at JPY107.30/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 100DMA (110.64), 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 108.00-113.00 with risk above 113.00 targeting 107.70-107.00 and 106.50-106.00. Long positions above 108.00-106.00 with targets of 108.00-109.05-109.50 and 110.00-110.60-111.5 with stop below 106.00.