Daily Market Lookup

• Most Asian stocks swung lower on Tuesday, weighed by Chinese markets after mainland factory-gate prices shrank at their fastest pace in three years while reports of German stimulus plans pushed global bond prices down. China’s producer price index fell 0.8% in August year-on-year, official data showed on Tuesday, its sharpest decline since August 2016 as flagging demand at home and abroad forced some businesses to slash prices. Investor focus shifts to the European Central Bank, which is widely expected to introduce a package of monetary easing and stimulus measures on Thursday to offset the effects of an ongoing U.S.-Sino trade war and a global economic slowdown. The U.S. Federal Reserve is also widely expected to cut interest rates next week as policymakers race to shield the global economy from risks, which also include Britain’s planned exit from the European Union. Germany is considering setting up independent public agencies that could take on new debt and invest in the economy, three people familiar with talks about the plan told Reuters. Europe’s largest economy is teetering on the brink of recession, but strict national spending rules have tied policymakers hands on fiscal policy. Elsewhere in currency markets, the pound GBP=D3 traded near a six-week high of $1.2385 after a law came into force demanding that Prime Minister Boris Johnson delay Britain's departure from the European Union unless he can strike a divorce deal.
• The yen slid to a five-week low against the dollar on Tuesday, while the British pound was hovering near one-and-a-half month highs amid diminishing chances of a no-deal Brexit and cautious hopes of a trade war breakthrough. Moves in the foreign exchange market remained subdued ahead of a key European Central Bank meeting on Thursday, where policymakers are widely expected to deliver a package stimulus measures to offset the effects of an ongoing U.S.-Sino trade war and a global economic slowdown. The U.S. Federal Reserve is also widely expected to cut interest rates next week as policymakers race to shield the global economy from risks, which also include Brexit. Data overnight showing that Chinese factory-gate prices shrank at their fastest pace in three years underlined arguments for more central bank stimulus. Market hopes for a trade breakthrough rested on confidence overnight from U.S. Treasury Secretary Steven Mnuchin, who told Fox television that there had been "a lot of progress" on a U.S-China trade deal and that the U.S. side was "prepared to negotiate". Sterling was holding just below a six week peak at 1.2331 after Britain's parliament voted, as expected, to stymie Prime Minister Boris Johnson's bid for an early election, which prompted him to vow that he would secure a Brexit deal at an EU summit next month. The dollar drifted lower on Tuesday as investor appetite for higher risk currencies found support on a report of German stimulus plans, diminishing chances of a no-deal Brexit and hopes of a breakthrough in the Sino-U.S. trade war. The safe-haven yen touched a five-week low of 107.46 per dollar as risk appetite rose. Moves were modest in early Asian trade, however, with traders broadly remaining on the sidelines ahead of a key European Central Bank meeting on Thursday, at which policymakers are expected to ease monetary policy. Investors also await Chinese inflation data due around 0130 GMT, which is expected to show another year-on-year decline in factory prices, adding to arguments for more central bank stimulus. Ratings house Fitch on Tuesday cut growth forecasts for Europe and China citing rising protectionism. Market hopes for a breakthrough rested on confidence overnight from U.S. Treasury Secretary Steven Mnuchin, who told Fox television that there had been "a lot of progress" on a U.S-China trade deal and that the U.S. side was "prepared to negotiate" Sterling, meanwhile, barely shifted when Britain's parliament voted, as expected, to stymie Prime Minister Boris Johnson's bid for an early election, which prompted him to vow that he would secure a Brexit deal at an EU summit next month.
• Oil futures rose for a fifth day, rising to their highest in almost six weeks, on optimism that OPEC and other producing countries may agree to extend output cuts to support prices. WTI gained more than 2% on Monday, while Brent finished the day 1.7% higher as the market reacted positively to the appointment by Saudi Arabia's king of his son, Prince Abdulaziz bin Salman, as energy minister on Sunday. Prince Abdulaziz, a long-time member of the Saudi delegation to the Organization of the Petroleum Exporting Countries (OPEC), said the pillars of Saudi Arabia's policy would not change and a global deal to cut oil production by 1.2 million barrels per day would be maintained. He added that the so-called OPEC+ alliance, made up of OPEC and non-OPEC producers including Russia, would be in place for the long term. The OPEC+ joint ministerial monitoring committee (JMMC), which reports on compliance with the cuts, is due to meet on Thursday in Abu Dhabi. There have been concerns about producers' adherence to the supply agreement as OPEC members Iraq and Nigeria, among others, exceeded their quota in August and Russia also did not fully comply as well. Should oil markets close higher on Tuesday it will be the longest run of gains since late July but headwinds remain as the U.S.-China trade war rumbles on. Executives at the annual Asia Pacific Petroleum Conference said on Monday they expect oil prices this year to be pressured by uncertainties surrounding the global economy, the U.S.-China trade war and increasing U.S. supplies In the United States, crude stockpiles are likely to have fallen for a fourth consecutive week last week, a preliminary Reuters poll showed on Monday. Five analysts polled by Reuters estimated, on average, that crude inventories fell 2.6 million barrels in the week to Sept 6.

Gold – XAU

Gold on Monday made its intraday high of US$1515.42/oz and low of US$1497.58/oz. Gold down by 0.591% at US$1498.83/oz.

Technicals in Focus:

In daily charts, prices are above 20DMA (1506) and breakage below will call for 1400. 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 negative crossover to confirm bearish stance for intraday trade.

Trading Strategy: Buy on Dips

Based on the charts and explanations above; buy above 1490-1460 with risk below 1460, targeting 1500-1509-1520 and 1532-1539. Sell below 1500-1539 keeping stop loss closing above 1539, targeting 1489-1480 and 1469-1460.

Silver - XAG

Silver on Monday made its intraday high of US$18.29/oz and low of US$17.92/oz. Silver settled up by 0.641% at US$17.97/oz.

Technicals in Focus:

On daily charts, silver is sustaining above 50DMA (15.70), breakage below will lead to 15.20. MACD is above zero line and histograms are increasing trend and it will bring bullish stance in the upcoming sessions. RSI is in overbought region, indicating buy signal for now. The Stochastic Oscillator is in overbought region and giving positive crossover to show upside move for the intraday trade.

Trading Strategy: Buy on Dips

Based on the charts and explanations above, buy above 17.90-16.70 targeting 18.20-18.60-18.90 and 19.50-20.00; stop breakage below 16.90. Sell below 18.20-20.50 with stop loss above 20.50; targeting 17.90-17.50-16.80 and 16.00.

Oil - WTI

Crude Oil on Monday made an intra‐day high of US$58.04/bbl, intraday low of US$56.05/bbl and settled up by 2.28% to close at US$57.90/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 58.00-60.30 with stop loss at 60.30; targeting 57.60-56.50-56.05 and 55.40-54.90-54.50. Buy above 57.60-53.60 with risk daily closing below 53.60 and targeting 58.00-58.80 and 59.50-60.30.

EUR/USD

EUR/USD on Monday made an intraday low of US$1.1014/EUR, high of US$1.1067/EUR and settled the day up by 0.2077% to close at US$1.1045/EUR.

Technicals in Focus:

On daily charts, prices are sustaining below 100DMA (1.1293), which become immediate resistance level, break above will target 1.1320-1.1350. MACD is below zero line but histograms are increasing mode which will bring bullish view. Stochastic is in overbought territory and giving negative crossovers to signal for bearish outlook for intraday. 14D RSI is currently in neutral region and giving no directions to consider.

Trading Strategy: Neutral to Buy

Buy above 1.1010-1.0815 with risk below 1.0815, targeting 1.1050-1.1070 and 1.1160-1.1200. Sell below 1.1050-1.1150 targeting 1.1020-1.0960-1.0910 and 1.0860-1.0815 with stop-loss at daily closing above 1.1150.

GBP/USD

GBP/USD on Monday made an intra‐day low of US$1.2232/GBP, high of US$1.2384/GBP and settled the day up by 0.603% to close at US$1.2341/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 1.2350-1.2525 with targets at 1.2310-1.2250-1.2190 and 1.2100-1.2065-1.2010 stop-loss should be below 1.2400. Buy above 1.2310-1.2065 with targets 1.2250-1.2300 and 1.2350-1.2400 with stop loss closing below 1.1800.

USD/JPY

USD/JPY on Monday made intra‐day low of JPY106.75/USD and made an intraday high of JPY107.26/USD and settled the day up by 0.388% at JPY107.22/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 50DMA (107.84), 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 107.60-109.55 with risk above 109.55 targeting 107.00-106.50-106.10 and 105.80-105.00-104.50. Long positions above 107.10-105.00 with targets of 107.60-108.20 and 108.90-109.55 with stop below 105.00.