Daily Market Lookup

• Asian shares drifted lower on Monday as markets anxiously counted down to a likely cut in U.S. interest rates this week with much riding on whether or not the Federal Reserve signals yet more are in the pipeline U.S. and Chinese trade negotiators also meet in Shanghai this week for their first in-person talks since a G20 truce last month, but expectations are low for a breakthrough Data on the weekend showed profits earned by China’s industrial firms contracted in June, fuelling concerns that the bruising trade war will drag on economic growth. Interest rate futures are fully priced for a quarter-point rate cut from the Fed on Wednesday, with only a small chance of a half-point move More important will be what the central bank flags for the future, given the market implies 100 basis points of easing over the next year or so. He noted the solid reading on second-quarter U.S. economic growth out last week would support those at the Fed arguing for just one or two cuts. The dollar had got a helping hand from White House economic adviser Larry Kudlow who on Friday said the Trump administration had “ruled out” intervening to push it lower.
• The U.S. dollar was near flat on Monday in Asia as traders remained cautious ahead of the highly anticipated U.S. Federal Reserve decision due later this week. Policymakers are widely expected to deliver their first rate cut in more than a decade amid concerns over slowing growth and subdued inflation. The central bank has faced repeated criticism from President Donald Trump over its rate increases and the ongoing reduction of its balance sheet. Trump believes the measures are holding back growth. The greenback was near two-month highs last week. Last Friday, data showed U.S. GDP grew at a 2.1% annualized rate in the second quarter, weaker than the 3.1% pace in the first quarter but stronger than the 1.8% forecast by economists Looking ahead, U.S. job report for July is due later this week. Analysts expect the economy to add 160,000 jobs, slowing from 224,000 in June. The unemployment rate is expected to tick down to 3.6%. The pound has now fallen more than 5% against the U.S. dollar since May, largely on fears of a no-deal Brexit. The Bank of England is expected to keep rates on hold at its meeting on Thursday. The Bank of Japan is expected to hold rates unchanged on Tuesday when it meets. Governor Haruhiko Kuroda’s briefing will follow the meeting on the same day. Chinese and U.S. officials will meet on Tuesday for two days of trade talks, according to reports. It is suggested neither side is expecting much hope for a breakthrough. Vice Premier Liu He is expected to lead the talks for China The talks will come after a truce reached by President Donald Trump and Chinese leader Xi Jinping on the sidelines of the G-20 summit Japan in June.
• The dollar held firm on Monday, staying near a two-month high against a basket of currencies after better-than-expected U.S. GDP data last week boosted its yield attraction against rival currencies. The U.S. Federal Reserve is widely expected to cut interest rates for the first time in more than a decade this week, but such a move is being widely seen as a pre-emptive one to protect the economy from global uncertainties and trade pressures. U.S. gross domestic product increased at a 2.1% annualized rate in the second quarter, above forecast of 1.8%, as a surge in consumer spending blunted some of the drag from declining exports and a smaller inventory build. The data pushed up U.S. bond yields and cemented expectations that the Fed will go for a smaller interest rate cut of 25 basis points, rather than 50 basis points, to 2.0-2.25 percent. While U.S. money market futures price in a total of almost 75 basis points of cuts by the end of the year to 1.5-1.75 percent, that still leaves the dollar with the highest interest rates among major currencies The European Central Bank signaled last week that it is likely to cut interest rates deeper into negative and adopt more easing measures in September to shore up the sagging euro zone economy. Ahead of the Fed, the Bank of Japan is starting its two-day policy meeting later on Monday. Market players expect the BOJ to send dovish messages and it could try to put on a semblance of easing by changing its forward guidance but refrain from rate cuts and other major policy moves given its lack of policy ammunition. U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer will meet with Chinese Vice Premier Liu He for talks in Shanghai starting on Tuesday, their first face-to-face meeting since U.S. President Donald Trump and Chinese President Xi Jinping agreed to revive talks late last month. But Trump on Friday offered a pessimistic view of reaching a trade deal with China, saying Beijing may not sign one before the November 2020 election in hopes a Democrat who will be easier to deal with, will win.
• Oil prices fell on Monday in Asia after Iran said an emergency meeting on its 2015 nuclear deal was constructive. However, citing Araqchi, Reuters reported that Tehran might continue to reduce its nuclear commitments if European fail to salvage the pact. Oil markets inched up last week, with WTI ended the week up just 0.5% while the Brent 1.0%. Looking ahead, commodities traders will focus on the upcoming Federal Reserve meeting due on July 30-31. Markets expect the Fed to cut rates by at least 25 basis points at the meeting. U.S. July jobs report, due on Friday, and other macroeconomic data including the China manufacturing and non-manufacturing PMIs on Wednesday are also expected to receive some focus. On the Sino-U.S. trade front, Chinese and U.S. officials will meet Tuesday for two days of trade talks, according to reports. It is suggested neither side is expecting much hope for a breakthrough.

Gold – XAU

Gold on Monday made its intraday high of US$1424.67/oz and low of US$1413.40/oz. Gold up by 0.301% at US$1418.38/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 1413-1382 with risk below 1390, targeting 1429-1436-1450 and 1457-1464. Sell below 1424-1464 keeping stop loss closing above 1470, targeting 1424 and 1409-1400-1390.

Silver - XAG

Silver on Friday made its intraday high of US$16.50/oz and low of US$16.31/oz. Silver settled down by 0.0976% at US$16.37/oz.

Technicals in Focus:

On daily charts, silver is sustaining below 200DMA (15.00), 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 16.20-14.50 targeting 16.50-16.90 and 17.50-17.90; stop breakage below 14.50. Sell below 16.50-17.90 with stop loss above 17.90; targeting 16.20-15.90-15.50 and 15.05-14.60.

Oil - WTI

Crude Oil on Friday made an intra‐day high of US$56.57/bbl, intraday low of US$55.70/bbl and settled up by 0.456% to close at US$56.17/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 56.50-60.50 with stop loss at 60.50; targeting 56.05-55.50 and 54.50-54.00. Buy above 56.05-54.00 with risk daily closing below 54.00 and targeting 56.50-57.50-58.10 and 59.20-60.50.

EUR/USD

EUR/USD on Friday made an intraday low of US$1.1111/EUR, high of US$1.1150/EUR and settled the day down by 0.172% to close at US$1.1126/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 1.1130-1.0905 with risk below 1.0905, targeting 1.1150-1.1210-1.1240 and 1.1280-1.1320. Sell below 1.1150-1.1280 targeting 1.1130-1.1105 and 1.0950-1.0905 with stop-loss at daily closing above 1.1105.

GBP/USD

GBP/USD on Monday made an intra‐day low of US$1.2375/GBP, high of US$1.2458/GBP and settled the day down by 0.543% to close at US$1.2382/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 1.2410-1.2790 with targets at 1.2350 and 1.2300-1.2250-1.2200 top should be below 1.2790. Buy above 1.2350-1.2200 with targets 1.2410-1.2500-1.2600 and 1.2650-1.2700 with stop loss closing below 1.2200.

USD/JPY

USD/JPY on Friday made intra‐day low of JPY108.55/USD and made an intraday high of JPY108.82/USD and settled the day up by 0.0478% at JPY108.67/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 109.00-111.00 with risk above 111.00 targeting 108.40-108.00-107.60 and 107.00-106.50. Long positions above 108.40-106.00 with targets of 109.05-109.50 and 110.00-111.00 with stop below 106.00.