Daily Market Lookup

• The dollar was steady in early European trade Tuesday, after some volatile trading in Asian hours on the back of uncertainty surrounding the standing of the U.S.-China trade agreement. The dollar surged higher, and risk-sensitive currencies like the Australian dollar weakened, after White House trade adviser Peter Navarro said the trade deal with China is "over". These moves didn’t last long however, as Navarro quickly backtracked, stating that his comments had “been taken wildly out of context.” U.S. President Donald Trump provided further assurance by tweeting that the deal was “still intact.” Tensions between Washington and Beijing are already fraught, and Navarro’s comments revived memories of the trade war between the two countries, which roiled financial markets and dented global growth before being partially settled with the deal in January. Another currency in the spotlight of late has been sterling. The Bank of England added to its quantitative easing program last week, but it also suggested that the pace of its asset purchases is set to decline in the remainder of the year. However, sterling failed to gain any support from this due to fears about the depth of the economic downturn, which means the market remains focused on the odds of the Bank cutting rates below zero in future. In addition, negotiations with the EU over post-Brexit trading relationships have produced little hope for a breakthrough. The dollar was up on Tuesday morning, steadying an earlier surge after White House trade advisor Peter Navarro clarified his statements concerning the U.S.-China trade deal. Investors were taken on a roller-coaster ride earlier in the session after Navarro said that the deal was “over” on Monday, only to issue a clarification shortly afterwards stating that his comments had “been taken wildly out of context.” The U.S. Dollar Index that tracks the greenback against a basket of other currencies was up 0.01% to 96.998 by 12:07 PM ET (5:07 AM GMT). Investors rushed to the safe-haven asset after Navarro’s initial comments over fears of rising U.S.-China tensions, only to slowly retreating after the clarifications.
• Asian equity markets bounced on Tuesday after U.S. President Donald Trump said the U.S.-China trade pact was “fully intact”, clarifying earlier confusing statements from the White House over the fate of the deal. Jitters emerged early in the Asian day after White House trade adviser Peter Navarro said the trade deal with China was “over”, linking the breakdown in part to Washington’s anger over Beijing not sounding the alarm earlier about the coronavirus outbreak. The statement prompted a selloff across equities markets but sentiment quickly recovered when Navarro, an outspoken critic of China, said his remarks had been taken out of context. Trump also soothed nerves when he tweeted: “China trade deal is fully intact. Hopefully they will continue to live up to the terms of the agreement.” Asian stocks have rallied hard since hitting a low in March amid worries about the jolt to the global economy from the coronavirus-driven shutdown. Ord Minnett investment advisor John Milroy said equity market sentiment was positive despite ongoing bursts of volatility across regional markets. Safe-haven gold, which initially rose on Navarro’s remarks, sold off on the clarification, while risk sensitive currencies staged a recovery. Menon expects U.S.-China tensions to escalate in the run-up to the U.S. elections. China on Tuesday reported 22 new coronavirus cases, of which 13 were located in the capital, and the city’s government has started to restrict people from moving to help contain the outbreak. New infections have spiked in Latin America, Brazil in particular, while New York City, the epicentre of the U.S. outbreak, eased restrictions after 100 days of lockdown.
• Oil was down on Tuesday morning in Asia, giving up its earlier gains from the session. Investors were spooked after White House trade adviser Peter Navarro told the press on Monday that the U.S.’s trade deal with China is “over”, crushing hopes of salvaging the hard-won phase one trade deal reached earlier this year. China, one of the world’s biggest oil importers, has yet to respond to Navarro’s comments, but an escalation of U.S.-China tension threatens a delay in the global economic recovery from COVID-19, in turn increasing the risks of an oversupply. The statement put a damper on the optimism seen in the previous session, where Brent futures gained 2.1% and WTI futures rose almost 2%. Some U.S. states emerged from extended lockdown, with New York clogged with traffic as the city reopens after over three months of lockdown. Investors are now awaiting the predictions in crude oil supply from the American Petroleum Institute (API) and the U.S. Energy Information Administration (EIA), due later in the day and on Wednesday respectively.

Gold – XAU

Gold on Monday made its intraday high of US$1763.09/oz and low of US$1720.55 /oz. Gold up 0.0935% at US$1754.30/oz.

Technicals in Focus:

In daily charts, prices are above 50DMA (1642) and breakage below will call for 1600. MACD is above zero line and histograms are also increasing trend and it will bring upward stance in the upcoming sessions. RSI is in neutral region and more upside is expected before it gets stretched. Stochastic Oscillator is in oversold 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 1748-1690 with risk below 1690, targeting 1654-1660-1770 and 1780-1790. Sell below 1760-1790 keeping stop loss closing above 1800, targeting 1740-1729-1704 and 1690-1674.

Silver - XAG

Silver on Monday made its intraday high of US$18.02/oz and low of US$17.63/oz settled up by 0.339% at US$17.73/oz.

Technicals in Focus:

On daily charts, silver is sustaining above 200DMA (16.93), breakage below will lead to 16.30. MACD is above zero line and histograms are increasing trend and it will bring bullish stance in the upcoming sessions. RSI is approaching 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 17.50-15.55 targeting 18.00-18.40-18.95 and 19.60-20.10; stop breakage below 15.00. Sell below 18.00-20.10 with stop loss above 20.10; targeting 16.90-16.50-16.10 and 15.80-15.40.

Oil - WTI

Crude Oil on Monday made an intra‐day high of US40.75/bbl, intraday low of US$39.135/bbl and settled down by 0.216% to close at US$40.48/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 40.50-34.00 with risk daily closing below 34.00 and targeting 38.90-39.50-40.10 and 41.00-42.00. Sell in between 38.90-42.10 with stop loss at 42.10; targeting 38.00-37.10-36.00 and 34.90-33.90-33.00.

EUR/USD

EUR/USD on Monday an intraday low of US$1.1167/EUR, high of US$1.1269/EUR and settled the day up by 0.691% to close at US$1.1259/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 oversold 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 1.1250-1.1030 with risk below 1.1030, targeting 1.1300-1.1360-1.1400 and 1.1450-1.1495. Sell below 1.1300-1.1495 targeting 1.1235-1.1190-1.1150 and 1.1090-1.1020 with stop-loss at daily closing above 1.1500.

GBP/USD

GBP/USD on Monday made an intra‐day low of US$1.2334/GBP, high of US$1.2476/GBP and settled the day up by 1.029% to close at US$1.2467/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 1.2470-1.2900 with targets at 1.2410 and 1.2320-1.2250-1.2165 stop-loss should be 1.2900. Buy above 1.2550-1.2200 with targets 1.2650-1.2700 and 1.2770 -1.2800-1.2850 with stop loss closing below 1.2200.

USD/JPY

USD/JPY on Monday made intra‐day low of JPY106.72/USD and made an intraday high of JPY107.00/USD and settled the day up by 0.168% at JPY106.90/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 107.50-111.00 with risk above 111.00 targeting 106.90-106.20-105.60 and 105.00-104.50. Long positions above 106.90-104.00 with targets of 107.90-108.40 and 109.40-110.20-110.90 with stop below 105.00.