Daily Market Lookup

• U.S. job growth likely slowed in July after outsized gains in the prior month, with wages probably maintaining their moderate pace of increase, which could boost market expectations for another interest rate cut from the Federal Reserve next month. The Labor Department’s closely watched monthly employment report on Friday will come on the heels of Wednesday’s decision by the U.S. central bank to cut its short-term interest rate for the first time since 2008. Fed Chairman Jerome Powell described the widely anticipated 25-basis-point cut as insurance against downside risks to the 10-year old economic expansion, the longest in history, from trade tensions and slowing global growth. Powell said the move was “not the beginning of a long series of rate cuts,” but also added that he was not saying “it was just one. Nonfarm payrolls probably increased by 164,000 jobs last month after surging 224,000 in June, according to a Reuters survey of economists. The anticipated job gains would be below the monthly average of 172,000 in the first half. Financial market expectations for a rate cut in September jumped on Thursday after President Donald Trump announced an additional 10% tariff on $300 billion worth of Chinese imports starting Sept. 1 after negotiators failed to kick start trade talks between the world’s two largest economies. Fed funds futures implied traders now see a 70% chance the Fed would lower rates again in September, up from 51% late on Wednesday, CME Group’s FedWatch tool showed. The U.S.-China trade war is taking a toll on manufacturing, with production declining for two straight quarters. Business investment has also been hit, contracting in the second quarter for the first-time in more than three years and contributing to holding back the economy to a 2.1% annualized growth rate. The economy grew at a 3.1% pace in the first quarter. July payrolls would mark a further deceleration in job growth from an average of 223,000 per month in 2018.Still, the pace of job growth remains well above the roughly 100,000 needed per month to keep up with growth in the working-age population. The unemployment rate is forecast unchanged at 3.7% in July. Despite the lowest jobless rate in nearly 50 years, wage growth has remained moderate, contributing to a tame inflation environment, which could also lead to another rate cut next month. Inflation has undershot the Fed’s 2% target this year, rising 1.6% year-on-year in June after gaining 1.5% in May. Average hourly earnings are forecasting rising 0.2% in July, after a similar increase in June. That is expected to have kept the annual increase in wages at 3.1% in July for a third straight month. The trend in wage gains has slowed from late 2018 when wages were rising at their fastest rate in a decade. Even with the step-down in job and wage gains, the labor market is supporting the economy, which is slowing as the stimulus from last year’s $1.5 trillion tax cut package fades. Economic growth in the third quarter is seen at around a 1.5% rate The retreat in job growth in July is expected to have been concentrated in the goods producing sector of the economy and government, after strong gains in June, which were not supported by other data.
• The U.S. dollar fell back slightly from a two-year high after the excitement of the Federal Reserve's wait-and-see approach wore off. The Fed cut rates by 25 basis points on Wednesday, the first cut in a decade, but indicated it would not be aggressive on its approach to monetary policy. Fed Chairman Jerome Powell called the cut a small correction and “not the beginning of a long series of cuts.” The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.1% to 98.382 by 11:03 AM ET (15:03 GMT) after reaching an earlier high of 98.665. Sterling was still in the red, with GBP/USD down 0.1% to 1.2143, after the Bank of England kept rates steady. The bank voted unanimously to keep the rate at 0.75%, as expected, but downgraded its projections for growth for the next two years. The BoE did not warn against a no-deal scenario, but did say that "companies expect output, employment and investment to be much lower in a no-deal Brexit."
• Oil prices rose more than 2% on Friday, rebounding from their biggest falls in years after U.S. President Donald Trump imposed more tariffs on Chinese imports, intensifying the trade war between the world's two biggest economies and crude consumers. The collapse ended a fragile rally built on steady drawdowns in U.S. inventories, even as global demand looked shaky because of the trade dispute. Trump said on Thursday he would impose a 10% tariff on $300 billion of Chinese imports from Sept. 1 and could raise tariffs further if China's President Xi Jinping fails to move more quickly to strike a trade deal. The announcement extends Trump's tariffs to nearly all of China's imports into the United States and marks an abrupt end to a temporary truce in a trade war that has disrupted global supply chains and roiled financial markets. The gains may mean investors are reassessing the move by Trump and its effects, Stephen Innes, managing partner at VM Markets told Reuters by email. The U.S. economy expanded by 2.1% in the second quarter, government data showed on July 26, which beat economists' expectations; though it was lower than first quarter growth. Still, there are some signs of the economic toll of the trade dispute between the United States and China, which this week reported slowing manufacturing activity in July. U.S. manufacturing activity also slipped last month, dropping to a near three-year low, and construction spending fell in June as investment in private construction projects tumbled to its lowest level in 1-1/2 years, data showed on Thursday. The economic slowdown has translated into falling oil demand in the United States, the world's biggest oil consumer. The amount of crude processed at U.S. oil refineries averaged 17.2 million barrels per day over the past four weeks, down 1.3% from the same time a year ago, U.S. government data showed this week.

Gold – XAU

Gold on Thursday made its intraday high of US$1434.18/oz and low of US$1410.57/oz. Gold down by 0.521% at US$1412.33/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 1425-1380 with risk below 1374, targeting 1436-1444 and 1450-1457. Sell below 1431-1450 keeping stop loss closing above 1450, targeting 1425-1413-1409 and 1390-1380.

Silver - XAG

Silver on Thursday made its intraday high of US$16.59/oz and low of US$16.38/oz. Silver settled down by 0.816% at US$16.30/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 16.00-14.50 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 Thursday made an intra‐day high of US$57.99/bbl, intraday low of US$53.59/bbl and settled down by 5.907% to close at US$54.47/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 55.50-58.10 with stop loss at 58.10; targeting 54.50-53.65-53.00 and 52.50-51.50. Buy above 54.50-51.50 with risk daily closing below 51.50 and targeting 55.50-56.07-56.50 and 57.50-58.10.

EUR/USD

EUR/USD on Thursday made an intraday low of US$1.1026/EUR, high of US$1.1095/EUR and settled the day down by 2.10% to close at US$1.1084/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 1.1100-1.0905 with risk below 1.0905, targeting 1.1150-1.1210-1.1240 and 1.1280-1.1320. Sell below 1.1090-1.1210 targeting 1.1005-1.0950-1.0905 and 1.0850-1.0805 with stop-loss at daily closing above 1.1210.

GBP/USD

GBP/USD on Thursday made an intra‐day low of US$1.2078/GBP, high of US$1.2170/GBP and settled the day down by 3.158% to close at US$1.2118/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 1.2150-1.2410 with targets at 1.2100-1.2065 and 1.1980-1.1950-1.1900 top should be below 1.2410. Buy above 1.2100-1.1900 with targets 1.2140-1.2190-1.2250 and 1.2300-1.2350 with stop loss closing below 1.2200.

USD/JPY

USD/JPY on Thursday made intra‐day low of JPY107.24/USD and made an intraday high of JPY109.31/USD and settled the day down by 1.310 at JPY107.31/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.