Daily Market Lookup

• Asian stocks fell to their lowest levels in two and a half weeks on Tuesday as hopes dwindled for a hefty interest rate cut by the U.S. Federal Reserve at the end of the month, while technology companies were pulled lower by Apple Inc’s overnight slump. Investors have rushed to scale back Fed rate cut expectations following unexpectedly strong gains in U.S. jobs for June, with U.S. stock markets falling for a second straight day. Money market futures are still fully pricing in a 25 basis point (bps) cut at the Fed’s next policy meeting on July 30-31, but have almost priced out a larger 50 bps reduction. Global equities will likely remain under pressure after last month’s outperformance, Pictet Wealth Management said in a memo on Tuesday. Investors’ focus is shifting to Fed Chairman Jerome Powell’s testimony before Congress later in the week for clues on monetary policy.
• The U.S. dollar was flat on Tuesday in Asia as expectations of aggressive interest rate cut reduced following a strong jobs report released late last week. As many as 10 U.S. central bankers, including Federal Reserve chairman Jerome Powell, are set to speak this week. The Fed’s June meeting minutes are also due on Wednesday. Data released last Friday showed a sharp rebound in U.S. job growth in June and reduced expectations that the Fed will cut interest rates by 50 basis points when it meets at the end of July. The GBP/USD pair was little changed at 1.2509. On the data front, U.K. gross domestic product and industrial output figures are due Wednesday, while the Bank of England will release its financial stability report on Thursday. Boris Johnson, who has vowed to take the U.K. out of the EU on Oct. 31 even without transitional arrangements to mitigate the shock, is reportedly on course for a clear victory in the Conservative Party leadership contest, according to a Reuters report. Tension between Japan and South Korea remained after Japan’s Industry Minister Hiroshige Seko said today that Japan was “not thinking at all” of withdrawing restrictions on Japanese high-tech exports to South Korea. Last Monday, Japan’s Ministry of Economy, Trade and Industry issued a statement that Tokyo “will apply updated licensing policies and procedures on the export and transfer of controlled items and their relevant technologies to (South Korea).” The National Bureau of Statistics will release the official June CPI and PPI data on Wednesday, while Q2 GDP is due over the weekend. The dollar traded near a three-week high on Tuesday against its peers, as investors reduced bets on aggressive U.S. interest rate cuts ahead of the Federal Reserve chairman's testimony to Congress on the economy. Sterling was pinned near a six-month low versus the dollar on speculation the Bank of England will soon join other major central banks in easing monetary policy in response to growing worries about the global economy and Britain's exit from the European Union. Fed chief Jerome Powell's comments in two-day testimony to Congress beginning on Wednesday will be closely watched to determine whether traders will continue to pare bets for deep interest rate cuts, which could help the dollar continue its rebound against major currencies.
• Oil prices dipped on Tuesday on demand concerns following the latest signs the U.S.-China trade war is dragging on the global economy, although the potential for conflicts in the Middle East offered support. Oil prices are being pressured by worries about demand as the U.S.-China trade war, heading into its second year, dampens prospects for global economic growth, which affects oil demand. The countries are the world's two largest oil consumers. Japan's core machinery orders fell by the most in eight months, data showed on Monday, in a sign the global trade tensions are taking a toll on corporate investment. Japanese government figures on Tuesday also showed that real wages in the country fell for a fifth straight month. The country is the world's fourth-largest user of crude. Hedge funds sold more Brent futures and options last week as concerns about the global economy trumped the decision by the OPEC and its allies to extend output cuts. Iran on Monday threatened to restart deactivated centrifuges and step up its enrichment of uranium to 20% in a move that further threatens the 2015 nuclear agreement that Washington abandoned last year. Washington has imposed sanctions that eliminate benefits Iran was meant to receive in return for agreeing to curbs on its nuclear program under the 2015 deal with world powers. The confrontation has brought the United States and Iran close to conflict. Last month, U.S. President Donald Trump called off air strikes at the last minute in retaliation for Iran shooting down a U.S. drone over the Gulf. Meanwhile, Goldman Sachs (NYSE:GS) said growth in U.S. shale production was likely to outpace that of global demand at least through 2020, limiting gains in oil prices despite output curbs led by OPEC. Meanwhile, U.S. Federal Reserve Chair Jerome Powell will testify before Congress on monetary policy and the state of the U.S. economy on Wednesday and Thursday. Traders will be looking to find out if Powell is still leaning toward a rate cut after Friday’s stellar U.S. jobs report for June suggested the economy may be too strong to justify an easing. On the data front, Industry and government reports due later in the week are expected to show that U.S. crude stockpiles dropped 3.6 million barrels, according to a preliminary Reuters poll. In other news, tensions in the Middle East remained in focus after Iran admitted over the weekend that it had increased uranium enrichment beyond the purity threshold agreed in a nuclear deal. Speaking on Sunday, U.S. President Donald Trump warned that Tehran “better be careful” on the decision, which he claims to be a step towards the development of nuclear weapons.

Gold – XAU

Gold on Monday made its intraday high of US$1407.59/oz and low of US$1391.67/oz. Gold down by 0.243% at US$1395.09/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 oversold territory and giving negative crossover to confirm bearish stance for intraday trade.

Trading Strategy: Buy on Dips

Based on the charts and explanations above; buy above 1390-1366 with risk below 1366, targeting 1400-1411-1425 and 1433-1440. Sell below 1400-1450 keeping stop loss closing above 1450, targeting 1388-1380 and 1374-1366.

Silver - XAG

Silver on Monday made its intraday high of US$15.11/oz and low of US$14.94/oz. Silver settled up by 0.133% at US$15.01/oz.

Technicals in Focus:

On daily charts, silver is sustaining below 200DMA (14.93), 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 15.25-13.90 targeting 15.60-15.90 and 16.20-16.50; stop breakage below 13.20. Sell below 15.35-16.90 with stop loss above 16.90; targeting 15.35-15.05-14.60 and 14.30-13.90.

Oil - WTI

Crude Oil on Monday made an intra‐day high of US$58.47/bbl, intraday low of US$57.34/bbl and settled down by 0.477% to close at US$57.54/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 58.10-59.20 with stop loss at 59.20; targeting 57.35-56.80-56.05 and 55.50-54.90 and 54.00-53.50. Buy above 56.00-53.50 with risk daily closing below 53.50 and targeting 56.90-57.35-58.10 and 58.70-59.50-60.20.

EUR/USD

EUR/USD on Monday made an intraday low of US$1.1206/EUR, high of US$1.1233/EUR and settled the day down by 0.0682% to close at US$1.1213/EUR.

Technicals in Focus:

On daily charts, prices are sustaining below 200DMA (1.1349), 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 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 1.1210-1.1120 with risk below 1.1120, targeting 1.1220-1.1280-1.1320 and 1.1390-1.1420. Sell below 1.1220-1.1390 targeting 1.1220-1.1180 and 1.1150-1.1120 with stop-loss at daily closing above 1.1400.

GBP/USD

GBP/USD on Monday made an intra‐day low of US$1.2499/GBP, high of US$1.2538/GBP and settled the day down by 0.065% to close at US$1.2516/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 1.2550-1.12760 with targets at 1.2500-1.2475-1.2450 and 1.2405-1.2350 top should be below 1.2800. Buy above 1.2500-1.2350 with targets 1.2550-1.2600-1.2650 and 1.2700-1.2750-1.2790 with stop loss closing below 1.2350.

USD/JPY

USD/JPY on Friday made intra‐day low of JPY108.79/USD and made an intraday high of JPY108.79/USD and settled the day up by 0.279% at JPY108.71/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 109.05-111.00 with risk above 111.00 targeting 108.50-107.60-107.00 and 106.50-106.00. Long positions above 108.50-106.00 with targets of 109.05-109.50-110.00-110.60 with stop below 106.00.