Daily Market Lookup

• Asian shares pared early losses on Thursday after Chinese exports proved far stronger than even bulls had imagined, while U.S. bond investors were still daunted by the staggering amount of new debt set to be sold in coming weeks. Beijing reported exports rose 3.5% in April on a year earlier, completely confounding expectations of a 15.1% fall and outweighing a 14.2% drop in imports. The surprise stoked speculation the Asian giant could recover from its coronavirus lockdown quicker than first thought and support global growth in the process. Markets had started cautiously with renewed Sino-U.S. tensions lurking in the background. U.S. President Donald Trump said he would be able to report in about a week or two whether China is meeting its obligations under a trade deal, as Washington weighed punitive action against Beijing over its handling of the coronavirus outbreak. The flow of economic data also remained grim, with U.S. private employers laying off 20 million workers in April. Figures due later on Thursday are forecast to show initial jobless claims rose a further 3 million last week, while Friday’s payrolls report is expected to see 22 million jobs lost and unemployment hit 16% or higher. Bond markets saw one of the largest shifts in a while after the U.S. Treasury said it would borrow an astonishing $2.999 trillion during the June quarter, five times larger than the previous single-quarter record. It will sell $96 billion next week alone and a surprising amount of that will be at longer tenors, which in turn pushed up long-term yields and steepened the curve. He noted that with rates across the globe falling to all time lows, the yen no longer had a large yield disadvantage. The yen was also cheap by many measures, he argued, with fair value put at around 85 per dollar.
• The dollar was up on Thursday morning in Asia with investor risk appetite soured by an onslaught of bad economic news. The U.S. said overnight that private employers laid off a record 20.2 million workers in April, and analyst forecasts prepared by Investing.com predict another 3 million Americans claimed unemployment benefits over the past week. Germany’s highest court earlier in the week gave the European Central Bank three months to justify the purchases under its bond-buying program or lose Bundesbank participation in one of ECB’s main stimulus schemes. U.S. Secretary of State Mike Pompeo renewed accusations that the COVID-19 virus originated in a Wuhan lab, despite admitting that there was no certainty in the claim. U.S. President Donald Trump added that he would be closely watching to see whether China was fulfilling its obligations under a Phase 1 trade signed between the two countries in January. The safe-haven yen flirted with a seven-week high against the dollar on Thursday as investors limited their exposure to riskier assets amid dire global economic data, rising trade tensions and concerns over the euro zone. Germany's highest court on Tuesday gave the European Central Bank three months to justify purchases under its bond-buying programme, or lose the Bundesbank's participation in one of its main stimulus schemes U.S. Secretary of State Mike Pompeo on Wednesday renewed his aggressive criticism of China, as the Trump administration weighs punitive actions against Beijing over its early handling of the virus outbreak. President Donald Trump said on Wednesday he was closely watching to see if China is fulfilling its obligations under a Phase 1 trade deal the two countries signed in January before the coronavirus spread globally. On the economic data front, U.S. private employers laid off a record 20.2 million workers in April in response to the novel coronavirus outbreak. The staggering number, while widely anticipated since 30.3 million people had filed claims for unemployment benefits since March 21, underscored the colossal damage to the economy. In Europe, euro zone business activity almost ground to a halt last month while retail sales suffered their largest decline on record in March amid government-imposed lockdowns. In the UK, British construction suffered its sharpest decline on record, more than twice as large as the previous month, even though general construction work was not ordered by the government to stop. The euro changed hands at $1.0799 (EUR=) after three straight days of falls so far this week, hit also by the German court decision challenging the country's participation in the European Central Bank's stimulus.
• Oil prices steadied on Thursday as data showed China's crude imports rebounded, but market watchers expect gains to be capped by the glut in supplies as the coronavirus pandemic crushes global fuel demand. Both contracts traded in an out of negative territory through the Asian morning on light trade with some markets on holiday. Oil prices were supported by data showing Chinese crude imports rose last month. Imports climbed to 10.42 mn bpd in April from 9.68 mn bpd in March, according to Reuters calculations based on customs data for the first four months of 2020. Overall exports from China also rose against expectations of a sharp drop. While prices have risen since late April as some countries have started easing lockdowns put in place to combat the worst pandemic in a century, oil continues to be pumped into storage, leaving a massive mismatch between demand and supply. U.S. crude inventories were up for a 15th straight week last week, rising by 4.6 mn barrels, the EIA said on Wednesday. That was less than analysts had forecast in a Reuters poll, which suggested a 7.8 mn-barrel rise, but the gain highlighted once again how much supply is being stored. Distillate inventories also rose sharply. There are also signs that some oil producers are struggling to comply with an agreement between the members of the OPEC and other suppliers, including Russia, to cut output by a record amount. Iraq, OPEC's second-largest producer after Saudi Arabia, has not yet informed customers of impending restrictions on its oil exports. OPEC and allied producers - a grouping known as OPEC+ - agreed to cut production from May 1 by around 10 million bpd to stabilise prices amid the plunge in demand in economies ravaged by the coronavirus outbreak.

Gold – XAU

Gold on Wednesday made its intraday high of US$1707.88/oz and low of US$1681.80/oz. Gold up 1.218% at US$1684.74/oz.

Technicals in Focus:

In daily charts, prices are above 50DMA (1596) and breakage below will call for 1550. MACD is below zero line but histograms are increasing trend and it will bring upward 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 bearish stance for intraday trade.

Trading Strategy: Buy on Dips

Based on the charts and explanations above; buy above 1690-1636 with risk below 1635, targeting 1710-1720-1729 and 1740-1748. Sell below 1700-1748 keeping stop loss closing above 1748, targeting 1690-1674 and 1660-1645.

Silver - XAG

Silver on Wednesday made its intraday high of US$15.14/oz and low of US$14.78/oz settled up by 0.736% at US$14.82/oz.

Technicals in Focus:

On daily charts, silver is sustaining above 100DMA (17.55), breakage below will lead to 17.30. 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 negative crossover to show upside move for the intraday trade.

Trading Strategy: Buy on Dips

Based on the charts and explanations above, buy above 14.60-13.00 targeting 14.90-15.60-16.10 and 16.70-17.00-17.40; stop breakage below 13.00. Sell below 14.90-17.40 with stop loss above 17.40; targeting 14.40 and 13.90-13.60-13.00.

Oil - WTI

Crude Oil on Wednesday made an intra‐day high of US27.32/bbl, intraday low of US$22.54/bbl and settled down by 7.16% to close at US$24.95/bbl.

Technicals in Focus:

On daily charts, oil is sustaining below its 50DMA i.e. 40.00 which is a resistance level and breakage above will call for 44.00. MACD is below 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 24.70-19.00 with risk daily closing below 19.00 and targeting 25.80-26.50-28.40 and 29.00-29.90. Sell in between 25.80-29.90 with stop loss at 30.00; targeting 24.70-23.50-22.55 and 22.00-20.80-20.00.

EUR/USD

EUR/USD on Wednesday an intraday low of US$1.0781/EUR, high of US$1.0845/EUR and settled the day down by 0.429% to close at US$1.0793/EUR.

Technicals in Focus:

On daily charts, prices are sustaining below 100DMA (1.1031), which become immediate resistance level, break above will target 1.1090. MACD is below zero line but histograms are increasing mode which will bring bullish view. Stochastic is in overbought 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 1.0820-1.0570 with risk below 1.0570, targeting 1.0900-1.0970-1.1030 and 1.1060-1.1150. Sell below 1.0900-1.1150 targeting 1.0820-1.0770-1.0700 and 1.0630-1.0570 with stop-loss at daily closing above 1.1100.

GBP/USD

GBP/USD on Wednesday made an intra‐day low of US$1.2334/GBP, high of US$1.2482/GBP and settled the day down by 0.071% to close at US$1.2339/GBP.

Technicals in Focus:

On daily charts, prices are sustaining below 200DMA (1.2647) is become major resistance 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 negative crossover to confirm bearish stance. MACD is above zero line but histograms are increasing lead to upward movement.

Trading Strategy: Neutral to Sell

Based on the charts and explanations above; sell below 1.2470-1.2740 with targets at 1.2400-1.2320-1.2250 and 1.2180-1.2130-1.2050 stop-loss should be below 1.2740. Buy above 1.2400-1.2180 with targets 1.2500-1.2590 and 1.2650-1.2700 with stop loss closing below 1.2100.

USD/JPY

USD/JPY on Wednesday made intra‐day low of JPY105.98/USD and made an intraday high of JPY107.06/USD and settled the day down by 0.375% at JPY106.06/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 200DMA (108.30), 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 neutral territory and signaling to sell as it has given negative crossover to confirm bearish stance.

Trading Strategy: Neutral to Sell

Sell below 106.90-110.50 with risk above 110.50 targeting 106.20-105.60-105.00 and 104.30. Long positions above 106.90-105.00 with targets of 106.90-107.50-108.30 and 109.40-110.20-110.90 with stop below 105.00.