Daily Market Lookup

• Asian shares extended gains on Monday to hit a three-month high as risk assets got a fillip from hopes of a U.S.-China trade deal as soon as next month while the dollar marked time as focus shifts to a U.S. rate decision. The gains came after a positive session in U.S. and European markets on Friday. U.S. and Chinese officials are “close to finalising” some parts of a trade agreement after high-level telephone discussions on Friday, the U.S. Trade Representative’s office and China’s Commerce Ministry said, with talks to continue. U.S. President Donald Trump has said he hopes to sign the deal with China’s President Xi Jinping next month at a summit in Chile. The protracted trade war between the world’s largest economies has hurt manufacturing activity, exports and business confidence globally while denting profits of many major industrial firms. Strong results from companies including Intel (INTC.O) also boosted sentiment in equities markets. More than 81% of U.S. companies have beaten Wall Street expectations so far this earnings season despite concerns about the trade war. Activity later in the week will be dominated by the U.S. Federal Reserve, which markets expect is all but certain to lower interest rates at its Wednesday meeting. The Bank of Japan meets on Thursday. On Friday, indicators for Chinese and U.S. manufacturing will be released. The European Union agreed to London’s request for a Brexit deadline extension but set no new departure date. That gave Britain’s divided parliament time to decide on Prime Minister Boris Johnson’s call for a snap election. Earlier, sources told Reuters the 27 European Union countries that will remain after Brexit hope to agree on Monday to delay Britain’s divorce until Jan. 31 with an earlier departure possible.
• The U.S. dollar inched up on Monday in Asia as traders awaited the outcome of the U.S. Federal Reserve’s meeting due later this week. The Fed’s policy decision is due on Wednesday. While the central bank is widely expected to deliver its third rate cut this year, traders are eager to find out if that would be the end of the easing cycle, or if more cuts are on the cards. The Fed rate decision is due just hours after a report on U.S. third quarter GDP, which is expected to show that the economy grew 1.7% in the three month to September, slowing from 2% in the second quarter. The Bank of Japan is set to announce its latest policy decision on Thursday. The central bank is expected to keep policy on hold, but the decision is said to be a close call. The EU will reportedly make a decision this week on whether to delay Britain’s departure to Jan. 31. The dollar traded near the highest in more than two months versus the yen on Monday ahead of a U.S. Federal Reserve meeting this week where policymakers are expected to cut interest rates but emphasize their reluctance to ease policy further. Sterling edged lower versus the dollar and the euro, with an agreement expected later on Monday to delay Britain's divorce from the European Union to Jan. 31 after Prime Minister Boris Johnson failed to win approval for his Brexit timetable. The market focus will shift to the Fed meeting ending Oct. 30 and a Bank of Japan meeting ending Oct. 31. The Fed is expected to cut interest rates for a third time this year, but fixed income analysts say this is largely priced into the market. The BOJ is leaning toward keeping policy on hold next week, but the decision is a close call as policymakers struggle with threats to the global outlook from the U.S.-China trade war and Brexit. On Saturday China's Ministry of Commerce said "technical consultations" on some parts of a trade agreement were basically completed, but investors are likely to remain skeptical because even a partial deal would not eliminate risks posed by trade friction The Fed meeting this week is widely expected to result in a cut in interest rates of 25 basis points, and that has been priced in, but some analysts expect the Fed to sound "hawkish" by signaling it is reluctant to cut rates further. The EU bloc's 27 ambassadors will meet at 0900 GMT on Monday in Brussels to agree on a three-month delay from the current Brexit date of Oct. 31, diplomatic sources told Reuters. More than three years after Britons voted in a referendum to quit the EU, the country and its parliament remain divided over how, when and even whether to leave, and the matter has triggered a spiraling political crisis in the UK.
• Oil prices fell on Monday in Asia despite positive Sino-U.S. trade developments. The Office of the U.S. Trade Representative (USTR) said on Friday that Beijing and Washington are close to signing a partial trade deal. U.S. President Donald Trump said on the same day that negotiations between the two sides “are doing very well.” The gains last week came after the U.S Energy Information Administration surprised the market on Wednesday by announcing a 1.7-million-barrel drop in domestic crude stockpiles, versus analysts’ expectations for a 2.2-million-barrel build. Also receiving some attention today were comments by Russia that said it is continuing cooperation with Saudi Arabia and OPEC to enhance market stability and predictability. After strong gains last week, oil prices were slightly lower on Monday as data released in China reinforced signs that its economy is slowing, though progress in China-U.S. trade talks has supported prices. Profits at Chinese industrial companies fell for the second straight month in September as producer prices continued their slide, highlighting the toll a slowing economy and protracted U.S. trade war are having on corporate balance sheets. The two sides issued a statement on Friday saying they are close to finalizing some parts of a trade agreement. U.S. energy companies also reduced the number of oil rigs operating this week, leading to a record 11-month decline as producers follow through on plans to cut spending on new drilling. Russia's energy ministry said on Friday it is continuing close cooperation with Saudi Arabia and the OPEC and non-OPEC oil producers to enhance market stability and predictability. The statement came a day after Igor Sechin, CEO of Russian oil producer, Rosneft, said the September attacks on Saudi oil assets created doubts over its reliability as a supplier. The attacks temporarily shut down around half of the kingdom's oil output. OPEC+, an alliance of OPEC members and other major producers including Russia, has since January implemented a deal to cut output by 1.2 million bpd to support the market.

Gold – XAU

Gold on Friday made its intraday high of US$1517.90/oz and low of US$1500.56/oz. Gold up by 0.0625% at US$1504.37/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 1494-1447 with risk below 1447, targeting 1509-1524-1535 and 1546-1555. Sell below 1509-1546 keeping stop loss closing above 1546, targeting 1494-1489-1478 and 1470-1466.

Silver - XAG

Silver on Friday made its intraday high of US$17.76/oz and low of US$17.76/oz. Silver settled up by 1.349% at US$18.02/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 17.30-15.70 targeting 17.80-18.50 and 18.90-19.20; stop breakage below 15.60. Sell below 17.70-19.30 with stop loss above 19.50; targeting 17.30-16.90 and 16.25-16.00-15.70.

Oil - WTI

Crude Oil on Friday made an intra‐day high of US$56.72/bbl, intraday low of US$55.59/bbl and settled up by 0.954% to close at US$56.59/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 overbought region and giving positive crossover for confirmation of bullish 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 55.30-52.60 with risk daily closing below 50.40 and targeting 56.00-56.50 and 57.20-58.00. Sell below 56.50-58.70 with stop loss at 58.70; targeting 56.00-55.30-54.95 and 53.90-53.30.

EUR/USD

EUR/USD of Friday made an intraday low of US$1.1072/EUR, high of US$1.1122/EUR and settled the day down by 0.208% to close at US$1.1079/EUR.

Technicals in Focus:

On daily charts, prices are sustaining below 50DMA (1.1048), which become immediate resistance level, break above will target 1.1100. 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 1.1050-1.0850 with risk below 1.0900, targeting 1.1090-1.1180-1.1200 and 1.1250-1.1300. Sell below 1.1090-1.1300 targeting 1.1050-1.0960 and 1.0860-1.0805 with stop-loss at daily closing above 1.1300.

GBP/USD

GBP/USD on Friday made an intra‐day low of US$1.2803/GBP, high of US$1.2861/GBP and settled the day down by 0.161% to close at US$1.2827/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 neutral 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 1.2840-1.3170 with targets at 1.2790-1.2710 and 1.2650-1.2600-1.2510 stop-loss should be below 1.3000. Buy above 1.2790-1.2510 with targets 1.2840-1.2920-1.2990 and 1.3040-1.3100 with stop loss closing below 1.2500.

USD/JPY

USD/JPY on Friday made intra‐day low of JPY108.50/USD and made an intraday high of JPY108.76/USD and settled the day up by 0.0570% at JPY108.65/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 109.00-110.70 with risk above 110.00 targeting 107.80-107.00-106.50 and 106.10-105.50. Long positions above 108.50-105.00 with targets of 108.70-109.30 and 110.00-110.70 with stop below 105.00.