Daily Market Lookup

• Asian shares fell on Wednesday to a six-week trough, rattled by fresh trade war concerns following threats from President Donald Trump to Beijing, while increasing worries about a no-deal Brexit kept the pound under pressure. Later in the day, the U.S. Federal Reserve is widely expected to cut interest rates for the first time since the financial crisis more than a decade ago. The expected easing has supported risk asset prices worldwide. As a new round of U.S.-China trade negotiations started in Shanghai, Trump tweeted that, if he wins re-election in November 2020, the outcome could be no agreement or a harsher one. U.S. consumer spending and prices rose moderately in June, pointing to slower economic growth and benign inflation that cemented expectations of Fed rate cuts. Trump on Tuesday reiterated his call for the Fed to make a large interest rate cut, saying he was disappointed in the U.S. central bank and that it had put him at a disadvantage by not acting sooner. In addition to worries about trade talks with the United States, Chinese shares suffered a further setback on Wednesday after the ruling Communist Party's top decision-making body said late on Tuesday it will not use the property market as a form of short-term stimulus. China will also step up efforts to boost demand, the Politburo said, which takes on more urgency after the country's official PMI on Wednesday showed factory activity shrank for a third straight month due to the trade war.
• British pound recovered slightly on Wednesday in Asia after falling to near two-year lows in the previous session amid the increasing likelihood of a disruptive Brexit on October 31. Incoming Prime Minister Boris Johnson reiterated earlier this week that he would not meet with other European leaders unless they first agreed to remove the contentious “Irish backstop” provisions from the Withdrawal Agreement negotiated by his predecessor, Theresa May. Johnson also said he wants to take the U.K. out of the European Union (EU) in October regardless of whether or not there is a deal by then. Meanwhile, EU officials continued to insist that the Withdrawal Agreement - which has been rejected three times by the U.K.'s parliament - won't be reopened. Negative news on the Sino-U.S. trade development were in focus. In a tweet overnight, U.S. President Donald Trump accused China of not purchasing more U.S.-made agricultural products as promised. The Global Times, China’s state-owned media, said the U.S. must show “sincerity” in trade talks to ease tensions between the two sides, adding that the U.S. side should hold "reasonable expectations" after making "unrealistic demands that infringe upon China's sovereignty and dignity". On the data front, China’s manufacturing PMI in July came in at 49.7, higher than the forecasted 49.6 and June’s 49.4. Non-Manufacturing PMI for the month was at 53.7, lower than the expected 54.0 and last month’s 54.2.
• The dollar held steady on Wednesday, largely in a wait-and-see mode as traders looked ahead to the outcome of the Federal Reserve's meeting later in the day when policymakers are expected to cut interest rates for the first time since 2008. With markets predicting the Fed to reduce its key rate by 25 basis points, the main focus was on whether it would leave the door open for further policy easing in a bid to insulate the world's largest economy from slowing global growth and the fallout of trade conflicts. The federal funds rate is currently set in a range of 2.25% to 2.50%. Traders of futures tied to the rate have priced in a full percentage-point drop by the end of next year. Troubles for the currency, which has lost 4.3% in July, were still seen to be far from over as Britain's new prime minister Boris Johnson took over with the explicit agenda of pulling the country out of the EU by Oct. 31, whether transitional trading agreements are in place or not.
• Oil prices gained on Wednesday in Asia after the release of weekly data that showed a decline in U.S. crude stockpile. Crude inventories fell by 6 million barrels in the week ended July 26 to 443 million barrels, compared with analysts' expectations in a Reuters poll for a decrease of 2.6 million barrels, the American Petroleum Institute data showed. Gasoline stocks fell by 3.1 million barrels, compared with analysts' expectations for a 1.4 million-barrel decline. The gains also came as traders await the expected first rate cuts by the U.S. Federal Reserve in a decade. The Federal Open Market Committee is meeting Tuesday and Wednesday and is expected to cut its federal funds rate to 2% to 2.25% on Wednesday. The rate is now 2.25% to 2.5%. Central bank policy easing is expected to put the brakes on a global economic slowdown and underpin demand for oil. For the month, however, both contracts were set to ease due to ongoing worri about oil demand, with Brent heading for a decline of about 2.3% and WTI down slightly. Still U.S. inventories have been falling in recent weeks suggesting demand concerns are overstated Stocks fell again last week, along with gasoline and distillate inventories, data from industry group the American Petroleum Institute (API) showed on Tuesday Crude inventories fell by 6 million barrels in the week ended July 26 to 443 million barrels, compared with analysts' expectations in a Reuters poll for a decrease of 2.6 million barrels, the API dta showed Gasoline stocks fell by 3.1 million barrels, compared with analysts' expectations for a 1.4 million-barrel decline. istillate fuels stockpiles, which include diesel and heating oil, fell by 890,000 barrels, compared with expectations for a 1 million-barrel gain, the API data showed. If confirmed by U.S. government data on Wednesday morning, the decline would put crude stocks down for a seventh week in a row. That would be longest stretch since they fell for a record 10 consecutive weeks ending in January 2018, according to Refinitiv data going back to 1982. Total crude stockpiles, however, would still be about 3% higher than the average for the five years between 2014-2018 average for this time of year.

Gold – XAU

Gold on Wednesday made its intraday high of US$1433.10/oz and low of US$1422.21/oz. Gold up by 0.272% at US$1430.41/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 1425-1382 with risk below 1390, targeting 1429-1436-1450 and 1457-1464. Sell below 1430-1464 keeping stop loss closing above 1470, targeting 1425-1413 and 1409-1390-1380.

Silver - XAG

Silver on Tuesday made its intraday high of US$16.59/oz and low of US$16.38/oz. Silver settled up by 0.816% at US$16.55/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 Tuesday made an intra‐day high of US$58.42/bbl, intraday low of US$55.96/bbl and settled up by 2.261% to close at US$58.32/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 59.20-61.80 with stop loss at 61.80; targeting 58.10-57.50-56.05 and 55.50-54.50. Buy above 58.10-55.00 with risk daily closing below 55.00 and targeting 59.20-60.50-61.00 and 61.80.

EUR/USD

EUR/USD on Tuesday made an intraday low of US$1.1131/EUR, high of US$1.1160/EUR and settled the day up by 0.0906% to close at US$1.1154/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 Thursday made an intra‐day low of US$1.2211/GBP, high of US$1.2225/GBP and settled the day down by 0.054% to close at US$1.2149/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 1.2190-1.2410 with targets at 1.2100-1.2065 and 1.1980-1.1950-1.1900 top should be below 1.2410. Buy above 1.2100-1.2900 with targets 1.2190-1.2250 and 1.2300-1.2350-1.2410 with stop loss closing below 1.2200.

USD/JPY

USD/JPY on Tuesday made intra‐day low of JPY108.44/USD and made an intraday high of JPY108.94/USD and settled the day down by 0.172% at JPY108.58/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.