Daily Market Lookup

• U.S. and Chinese officials will restart trade talks at the end of this week, but any agreement the world’s largest economies carve out is expected to be a superficial fix. The trade war has hardened into a political and ideological battle that runs far deeper than tariffs, trade experts, executives, and officials in both countries say. China’s Communist Party is unlikely to budge on U.S. demands to fundamentally change the way it runs the economy, while the U.S. won’t backtrack on labeling Chinese companies national security threats The conflict between the two countries could take a decade to resolve, White House economic advisor Larry Kudlow warned on Sept. 6. Yu Yongding, an influential former policy adviser to China’s central bank, told Reuters that China was in no rush to make a deal. Presidents Donald Trump and Xi Jinping may hammer out an interim agreement in October to soothe stock markets and claim political victory after this week’s lower-level talks. But any final agreement is “extremely unlikely to meaningfully address the Chinese structural reforms” sought by the U.S. and other countries, said Kellie Meiman Hock, a former U.S. Trade Representative official and managing partner with McLarty Associates, a policy and government consultancy. Negotiators have made little discernable progress on the many points of disagreement since negotiations broke down in May, sources briefed on the talks say Since trade negotiations between the world’s largest economies collapsed in May, both countries have also broken promises and traded public insults. The mood is upbeat, but a single Trump tweet could turn that around, analysts say. Trump’s “tough on China” stance has swept in a new way of thinking about Beijing in Washington, despite the unpopularity of many of his other policies. The U.S. Congress, bitterly divided along partisan lines on most issues, is united about the need for systemic reform in China. Trump faces a worsening economy and recession fears at home, thanks in part to the tariffs he has enacted, but key constituencies have stood by him so far. U.S. executives in China say Beijing is miscalculating if it thinks the trade war will undermine Trump’s political support China’s Communist Party also faces a slowing economy as it prepares to celebrate on Oct. 1 70 years of ruling the country.
• The Japanese yen stayed largely unchanged against the U.S. dollar on Tuesday in Asia despite news that Japan and the U.S. had reached an initial trade accord over tariffs. It is unclear whether the U.S. will maintain tariffs on Japanese auto imports as part of the agreement. Minutes of the Reserve Bank of Australia’s Sept 3 meeting showed the central bank would consider more rate cuts in order to support growth and also to reach its 2-3% inflation target. Meanwhile, the U.S. dollar index that tracks the greenback against a basket of other currencies was little changed at 98.160. Traders now await the U.S. Federal Reserve's two-day policy meeting later this week. The central bank is expected to lower rates by a quarter of a percentage point to support economic growth. Traders are also awaiting more news on the Sino-U.S. trade front. Tensions between the two sides eased somewhat following reports that they could reach an interim pact, although U.S. President Donald Trump said he preferred a comprehensive trade deal with China. China’s Commerce Ministry said today that Vice Finance Minister Liao Min will lead a delegation to visit the U.S. later this week for more trade discussions.
• Deep disagreements within the Federal Reserve over the economic outlook and how the U.S. central bank should respond will not stop policymakers from cutting interest rates at a two-day meeting that begins on Tuesday. While an oil price spike after attacks on Saudi Arabian oil facilities over the weekend added to the list of risks facing an economy already slowed by ongoing trade tensions and global weakness, the deep divide evident around the Fed’s policymaking table means further rate cuts could be far from a done deal. At one end of the Fed’s massive boardroom sit St. Louis Fed President James Bullard and Minneapolis Fed President Neel Kashkari, who are expected to argue for a steep reduction in borrowing costs to counter low inflation and an inverted Treasury yield curve. Pushback from the opposite end is likely to come from Cleveland Fed President Loretta Mester, who opposed the Fed’s rate cut in July, and Philadelphia Fed President Patrick Harker, who only reluctantly supported it and says he wants to leave rates where they are “to see how things play out.” Fed Chair Jerome Powell, seated midway down the table, faces the delicate task of taking on board those views and the disparate arguments of the other dozen policymakers to build consensus.
• Oil traded in the red on Tuesday in Asia, giving back some of its gains after surging as much as 20% in the previous session amid heightened tensions in the Middle East. All eyes are now on more updates regarding how fast Saudi Arabia can recover from a drone attack over the weekend that knocked out about 5% of global supply. State-run producer Saudi Aramco lost about 5.7 million barrels a day of output. Markets previously expected the kingdom to restore some of its major output facilities within days, but Saudi officials later said they face a “severe” disruption measured in weeks and months, according to Bloomberg. Oil prices surged on Monday on the news and recorded the biggest intraday gains since the 1991 Gulf War. Escalation of tensions in the Middle East looks certain after Saudi officials corroborated U.S. claims that the weapons used in the attacks were Iranian and not, as earlier reported, launched by Iranian-backed Houthi rebels in Yemen. U.S. President Donald Trump had indicated over the weekend that U.S. forces were prepared to strike Iran directly in retaliation, but later said that he is in no rush to respond to the drone attack.

Gold – XAU

Gold on Monday made its intraday high of US$1512.02/oz and low of US$1495.85/oz. Gold down by 0.556% at US$1498.08/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 1500-1460 with risk below 1460, targeting 1509-1520 and 1532-1539. Sell below 1509-1539 keeping stop loss closing above 1539, targeting 1489-1480 and 1469-1460.

Silver - XAG

Silver on Monday made its intraday high of US$17.99/oz and low of US$17.60/oz. Silver settled up by 0.865% at US$17.83/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 17.50-15.60 targeting 17.90-18.20 and 18.60-18.90; stop breakage below 16.90. Sell below 17.90-18.90 with stop loss above 18.90; targeting 17.50-16.90-16.70 and 16.00-15.60.

Oil - WTI

Crude Oil on Monday made an intra‐day high of US$63.074/bbl, intraday low of US$58.58/bbl and settled down by 0.739% to close at US$61.585/bbl.

Technicals in Focus:

On daily charts, oil is sustaining above its 200DMA i.e. 56.35 which is a resistance level and breakage above will call for 57.00-58.00. MACD is above zero line and histograms are in increasing mode will bring bullish 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 neutral region and more downside can be expected to reach the oversold region, which is highly probable.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; buy above 61.60-57.40 with risk daily closing below 57.40 and targeting 62.00-62.40 and 63.10-64.20. Sell below 62.40-64.00 with stop loss at 64.00; targeting 61.60-60.90-60.20 and 58.35-57.60-56.50.

EUR/USD

EUR/USD of Monday made an intraday low of US$1.0992/EUR, high of US$1.1085/EUR and settled the day down by 0.673% to close at US$1.0998/EUR.

Technicals in Focus:

On daily charts, prices are sustaining below 50DMA (1.1129), which become immediate resistance level, break above will target 1.1180-1.1260. MACD is below zero line but histograms are increasing mode which will bring bullish view. Stochastic is in neutral 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 right now.

Trading Strategy: Neutral to Buy

Buy above 1.1030-1.0815 with risk below 1.0815, targeting 1.1030-1.1090-1.1130 and 1.1160-1.1200. Sell below 1.1090-1.1200 targeting 1.1000-1.0940 and 1.0910-1.0860 with stop-loss at daily closing above 1.1200.

GBP/USD

GBP/USD on Monday made an intra‐day low of US$1.2398/GBP, high of US$1.2502/GBP and settled the day down by 0.352% to close at US$1.2424/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 1.2515-1.2710 with targets at 1.2490-1.2440-1.2400 and 1.2350-1.2310-1.2250 stop-loss should be below 1.2400. Buy above 1.2490-1.2300 with targets 1.2515-1.2570-1.2600 and 1.2650-1.2710 with stop loss closing below 1.2300.

USD/JPY

USD/JPY on Monday made intra‐day low of JPY107.44/USD and made an intraday high of JPY108.16/USD and settled the day up by 0.602% at JPY108.11/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 108.50-110.00 with risk above 110.00 targeting 108.00-107.60-107.00 and 106.50-106.10-105.80. Long positions above 108.00-105.00 with targets of 108.50-108.90-109.55 and 110.00-110.60 with stop below 106.00.