Daily Market Lookup

• Global shares fell to one-month lows on Wednesday after U.S. manufacturing activity tumbled to more than a decade low, sparking worries that the fallout from the U.S.-China trade war is spreading to the U.S. economy. A slowdown in U.S. economic growth would remove one of the few remaining bright spots in the global economy and come just as Europe is seen as close to falling into recession. Data on Hong Kong September retail sales is due later on Wednesday. Adding to tensions in Asia, North Korea carried out at least one more projectile launch on Wednesday, a day after it announced it will hold working-level talks with the United States at the weekend. The data came after euro zone manufacturing data showed the sharpest contraction in almost seven years The poor data lifted the Fed funds rate futures price sharply, with the November contract FFX9 now pricing in about an 80% chance the U.S. Federal Reserve will cut interest rates on Oct. 30, compared to just over 50% before the data. U.S. President Donald Trump once again lashed out at the Federal Reserve on Tuesday, saying the central bank has kept interest rates “too high” and that a strong dollar is hurting U.S. factories. It is another question, however, whether the Fed will cut interest rates as hastily as Trump, and financial markets, want. Just on Tuesday, Chicago Fed President Charles Evans said the Fed can keep rates for now and there is scope to raise rates slightly over the next few years if the economy continues to grow. In the currency market, the U.S. dollar slipped from Tuesday’s two-year high against a basket of currencies as the ISM survey shook the notion that the U.S. economy will withstand the trade war.
• The U.S. dollar inched up on Wednesday in Asia despite worries about a slowing U.S. economy. Worries about a slowing U.S. economy and the possibility of further interest rate cuts in the wake of weak U.S. manufacturing data kept the dollar pinned down on Wednesday, as investors sought safety elsewhere. An apparent early-morning North Korean missile test only reinforced the flight, nudging the Japanese yen, Swiss franc and gold slightly higher. Data released overnight showed the U.S. manufacturing sector contracted in September to its weakest level in more than a decade and sent the greenback sharply lower from a more than two-year high.The U.S. dollar index inched up 0.1% even after a weak reading on American manufacturing added to concern about economic growth. The report from the Institute for Supply Management showed the ISM's manufacturing PMI fell to 47.8, its lowest level in 10 years. The weak data sent U.S. stocks lower overnight while Asian equities also traded lower in morning trade today. The USD/CNY pair was unchanged at 7.1477. Celebrations marking 70 years of Communist rule in China were largely overshadowed by protests in Hong Kong, as a demonstrator was shot by police with a live round for the first time since political unrest began in June. China’s leader Xi Jinping said on Tuesday that the “one country, two systems” principle under which Hong Kong is managed must be upheld, and that “there is no force that can shake the foundation of this great nation.” The GBP/USD pair fell 0.2% to 1.2280. In the latest episode of the Brexit saga, U.K. Prime Minister Boris Johnson is set to reveal his final Brexit offer to the European Union later in the day. He made it clear that Britain will not negotiate further should the deal is being rejected by EU, and will leave on October 31.
• Oil rebounded from several days of falling prices after industry data showed a surprise drop in U.S. crude inventories and offset weak economic readings in the United States that have depressed global stock markets. Front-month WTI prices settled down for a sixth straight session on Tuesday, their longest losing streak this year, after U.S. manufacturing activity dived to a 10-year low as U.S.-China trade tensions weighed on exports. Oil pared some losses in post-settlement trade on Tuesday after American Petroleum Institute (API) data showed U.S. crude stocks fell last week by 5.9 million barrels, against expectations for an increase of 1.6 million barrels. The Energy Information Administration's weekly oil inventories report is due at 10:30 a.m. EDT (1430 GMT) on Wednesday. Oil prices are now below levels from before the Sept. 14 attacks on Saudi oil facilities as the world's largest oil exporter has restored its full oil production and capacity Iranian Oil Minister Bijan Zanganeh said he would be willing to meet the oil minister of regional rival Saudi Arabia while in Moscow, but that the Saudis have a problem with meeting, according to the official IRNA news agency. Separately, Ecuador, one of the smallest members of the Organization of the Petroleum Exporting Countries (OPEC), said on Tuesday it will leave the 14-nation bloc from Jan. 1 due to fiscal problems. The South American oil producer will be the second to withdraw from OPEC in the last year after the departure of Qatar.

Gold – XAU

Gold on Tuesday made its intraday high of US$1487.18/oz and low of US$1459.04/oz. Gold up by 0.469% at US$1478.96/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 neutral 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 1466-1435 with risk below 1435, targeting 1474-1489-1500 and 1509-1520-1532. Sell below 1489-1520 keeping stop loss closing above 1520, targeting 1474-1466-1460 and 1454-1446.

Silver - XAG

Silver on Tuesday made its intraday high of US$17.31/oz and low of US$16.88/oz. Silver settled up by 1.479% at US$17.21/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 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 16.90-15.70 targeting 17.00-17.80-18.50 and 18.90-19.20; stop breakage below 15.60. Sell below 17.00-19.30 with stop loss above 19.50; targeting 16.70 and 16.25-16.00-15.70.

Oil - WTI

Crude Oil on Tuesday made an intra‐day high of US$54.76/bbl, intraday low of US$53.98/bbl and settled down by 0.543% to close at US$53.84/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 54.00-52.10 with risk daily closing below 53.90 and targeting 54.95-55.40-55.90 and 56.60-57.00. Sell below 55.00-57.40 with stop loss at 60.40; targeting 54.25-53.90-53.30 and 52.70-52.10.

EUR/USD

EUR/USD of Tuesday made an intraday low of US$1.0878/EUR, high of US$1.0942/EUR and settled the day up by 0.307% to close at US$1.0931/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 negative crossovers to signal for bearish 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 1.0900-1.0740 with risk below 1.0740, targeting 1.1030-1.1090-1.1130 and 1.1160-1.1200. Sell below 1.0960-1.1200 targeting 1.0910-1.0860 and 1.0805-1.0740 with stop-loss at daily closing above 1.1250.

GBP/USD

GBP/USD on Tuesday made an intra‐day low of US$1.2204/GBP, high of US$1.2338/GBP and settled the day up by 0.091% to close at US$1.2300/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 1.2310-1.2510 with targets at 1.2260-1.2205 and 1.2165-1.2100 stop-loss should be below 1.2510. Buy above 1.2260-1.2100 with targets 1.2310-1.2350-1.2400 and 1.2440-1.2505-1.2570 with stop loss closing below 1.2100.

USD/JPY

USD/JPY on Monday made intra‐day low of JPY107.73/USD and made an intraday high of JPY108.17/USD and settled the day up by 0.118% at JPY108.06/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 108.50-109.55 with risk above 110.00 targeting 107.50-107.00-106.50 and 106.10-105.50. Long positions above 107.50-105.00 with targets of 108.00-108.50-108.90 and 109.55-110.00 with stop below 105.00.