Daily Market Lookup

• The dollar held its own on Thursday as rising Sino-U.S. tension put crushing pressure on the Chinese yuan and proved a counterweight to optimism about the coronavirus recovery. The escalating war of words between the world's two biggest economies also spilled over to the Australian and New Zealand dollars, as a far more cautious mood holds in currency markets compared with the ebullience rallying stocks. Hong Kong is the newest flashpoint, with U.S. Secretary of State Mike Pompeo saying on Wednesday that China's plan to impose laws there was "only the latest in a series of actions that fundamentally undermine" the city's autonomy and freedoms. The Chinese yuan , a barometer of U.S.-China relations, hit a record low of 7.1966 per dollar in offshore trade overnight and held close to that level on Thursday at 7.1805. A Financial Times report which said coal traders and analysts expect China to tighten import rules also weighed on the Australian dollar, he said. Tensions have flared between Australia and China over the COVID-19 pandemic, while U.S.-China relations have nosedived amid regular attacks from the Trump administration over China's handling of the virus. The United States is currently crafting a range of options to punish China over its tightening grip on Hong Kong, including sanctions, tariffs and restrictions on Chinese companies, according to people familiar with the discussions. Elsewhere, the dollar was marginally firmer against the Japanese yen , at 107.83 yen per dollar, and a touch weaker on the euro and pound.
• U.S. stocks will end this year around current levels as the coronavirus pandemic cripples the economy and eats into earnings, according to strategists polled by Reuters. The market has been on a tear in recent weeks, and stocks are up sharply from the March low of their coronavirus-fueled tumble, but the benchmark S&P 500 .SPX stock index is still down since the start of the year. Many strategists believe a return to the March lows is unlikely because of the substantial stimulus from the U.S. government and Federal Reserve, but they said there were still plenty of risks to derail the market. Several participants expect the second quarter to be the low point for corporate earnings this year. The market’s outlook will also depend on the progress in producing a vaccine against the new coronavirus. Scores of U.S. businesses have closed and workers have lost jobs and income following shelter-in-place orders since March to curb the spread of the disease.
• The euro has continued to show strength in early European trade Thursday, as traders continue to upside in the single currency following the announcement of a hefty plan to prop up the bloc's virus-hit economies. This follows the EU Commission announcing its plan for a European recovery fund Wednesday, with the proposal exceeding market expectations as it envisages 250 billion euros in loans on top of the 500 billion euros in grants, which were originally proposed by France and Germany last week. The blueprint, if ratified by all, would be a step towards mutualized debt as a major funding tool for the first time, paving the way for greater EU powers of taxation. Losses to the safe-haven greenback came despite tensions between China and the U.S. being stretched even more, after Secretary of State Mike Pompeo said that the Trump administration could no longer certify Hong Kong's political autonomy from China under the new national security law. This could open the door to options including visa restrictions, asset freezes and potential tariffs. That said, U.S. business groups have urged President Donald Trump to go slowly in responding to Beijing's planned imposition of new national security laws on Hong Kong. Another currency showing strength Thursday is sterling, after the U.K. government announced plans late Wednesday for its test and trace system to combat the coronavirus outbreak. The aim of the system is to lift national lockdown restrictions and move towards more localised, targeted measures.
• Oil was mixed on Thursday morning in Asia, with the black liquid clawing back some losses during the previous session. U.S.-China tensions heated up overnight as U.S. Secretary of State Mike Pompeo certified that Hong Kong no longer warrants special treatment under U.S. law, dealing a major blow to the city’s status as a major financial hub. National security laws proposed for both Hong Kong and Macau have been the latest flare-up point between the two countries, with U.S. President Donald Trump due to unveil the U.S. reaction to the laws by the end of the week. Investors also digested Wednesday’s report from the American Petroleum Institute (API) estimating a build of 8.7 barrels for the week ending May 22 This was in sharp contrast to analyst predictions of a 4.8-million-barrel draw in forecasts. Meanwhile, there was skepticism as Russia said that President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman agreed on further “close coordination” regarding production cuts during a telephone call on Wednesday. As OPEC prepares for its June meeting, due to take place in less than two weeks, some investors said that Russia was sending mixed signals even after the country announced that it had almost reached its cut target earlier in the week.

Gold – XAU

Gold on Wednesday made its intraday high of US$1715.93/oz and low of US$1693.57/oz. Gold down 0.081% at US$1707.82/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 1709-1660 with risk below 1660, targeting 1720-1740 and 1748-1754. Sell below 1709-1760 keeping stop loss closing above 1760, targeting 1700-1690 and 1674-1660.

Silver - XAG

Silver on Wednesday made its intraday high of US$17.33/oz and low of US$16.83/oz settled up by 0.678% at US$17.22/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 16.90-15.00 targeting 17.60-18.00 and 18.40-18.95; stop breakage below 15.00. Sell below 17.60-18.95 with stop loss above 18.50; targeting 16.90-16.50-16.10 and 15.60-14.40.

Oil - WTI

Crude Oil on Wednesday made an intra‐day high of US34.39/bbl, intraday low of US$31.87/bbl and settled down by 5.78% to close at US$32.24/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 32.00-27.70 with risk daily closing below 27.70 and targeting 33.00-35.20-36.00 and 36.60-37.10-37.70. Sell in between 33.20-37.70 with stop loss at 37.70; targeting 33.00-32.25-31.00 and 30.50-29.90-28.40-27.70.

EUR/USD

EUR/USD on Wednesday an intraday low of US$1.0933/EUR, high of US$1.1030/EUR and settled the day up by 0.199% to close at US$1.0933/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 1.0970-1.0630 with risk below 1.0630, targeting 1.0970-1.1030 and 1.1060-1.1150. Sell below 1.0970-1.1150 targeting 1.0900-1.0820-1.0770-1.0700 and 1.0630-1.0570 with stop-loss at daily closing above 1.1100.

GBP/USD

GBP/USD on Thursday made an intra‐day low of US$1.2203/GBP, high of US$1.2353/GBP and settled the day down by 0.591% to close at US$1.2257/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

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.

USD/JPY

USD/JPY on Wednesday made intra‐day low of JPY107.35/USD and made an intraday high of JPY107.94/USD and settled the day up by 0.210% at JPY107.73/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 107.90-110.50 with risk above 110.50 targeting 106.90-106.20-105.60 and 105.00-104.30. 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.