Daily Market Lookup

• The dollar held onto gains against the yen on Wednesday ahead of data expected to show U.S. manufacturing activity and hiring continued to recover from the economic shock caused by the coronavirus pandemic. The euro was hemmed into a narrow range as traders awaited data on Germany's manufacturing sector, retail sales, and the jobless rate to gauge the health of the eurozone economy. A surge in coronavirus infections in the U.S. south and southwest has worried some market participants, but most investors are betting this will not be enough to derail a broader rebound in the global economy Sterling bought $1.2394 as it held on firmly to the previous session's gains, but traders may be reluctant to buy the pound further due to worries about Britain's trade negotiations with the European Union. The U.S. Institute for Supply Management's purchasing managers' index (PMI) for manufacturing due later on Wednesday is forecast to show that activity in June continued to recover from an 11-year low marked in April, when the coronavirus paralysed large swathes of the global economy. Investors also await the closely-watched U.S. nonfarm payrolls report on Thursday, which is expected to show the economy added 3 million jobs in June. The dollar has managed to remain strong against the yen due to signs of economic revival, but the greenback has failed to make headway against commodity currencies, showing that some investors remain wary of downside risks. Normally Treasury yields would rise due to an improving economy, but benchmark 10-year yields (US10YT=RR) have moved in a narrow range around 0.65% since mid June, when Federal Reserve Chairman Jerome Powell said policymakers discussed yield curve control, which can be used to cap bond yields. The Swiss franc , a currency traditionally sought as a safe haven during times of heightened risk, also perked up against the greenback, which shows that positive economic data alone is not enough to support broad-based dollar gains. The euro has lacked conviction amid mixed signals about the eurozone economy and limited progress in talks on the future trade relationship between Britain and the EU. Data due later on Wednesday from Germany are expected to show retail sales in Europe's largest economy fell at a slower pace but the manufacturing sector continued to contract, which could hurt sentiment for the euro.
• The dollar has drifted in early European trade Wednesday, with worries over the resurgence of the Covid-19 virus competing with encouraging economic data for prominence. The U.S. recorded 47,000 infections on Tuesday, its biggest single-day spike since the pandemic began. That said, the foreign exchange market has traded in tight ranges Wednesday, with investors wary ahead of some closely-watched economic data. German retail sales soared 13.9% in May, data showed Wednesday, rebounding strongly after the fall of a revised 6.5% in April, while the Chinese manufacturing sector showed promising signs of recovery, according to the Caixin manufacturing PMI. Later Wednesday, the U.S. Institute for Supply Management's purchasing managers' index for manufacturing is expected to show that activity in June continued to recover from the 11-year low marked in April, while Thursday’s closely-watched U.S. nonfarm payrolls report is forecast to show the economy added 3 million jobs in June. Also of interest will be the release of the FOMC minutes from the June meeting. Elsewhere, Sweden’s Riksbank is set to make its latest rate announcement later Wednesday, but market participants are not expecting a policy change. Elsewhere, the Russian ruble fell to its lowest in over a month after fresh allegations in the U.S. press that it offered Afghan militia bounties for killing U.S. servicemen. The reports have heightened fears that the U.S. will broaden existing sanctions on Russia.
• Oil prices rose more than 1% on Wednesday after data showed crude inventories in the United States fell much more than expected, suggesting demand is improving even as the coronavirus outbreak spreads around the world. U.S. crude and gasoline stocks declined more than expected last week, while distillate inventories rose, data released by the American Petroleum Institute (API) late on Tuesday showed. Crude inventories dropped by 8.2 million barrels to 537 million barrels, against analysts' forecasts for a draw of 710,000 barrels. Official inventory data from the U.S. government's Energy Information Administration is due out later on Wednesday. Also supporting prices was a drop in output from the Organization of the Petroleum Exporting Countries (OPEC) to the lowest in two decades in June. The 13-member grouping produced an average of 22.62 million barrels per day (bpd) in June after they agreed to cut output, a Reuters survey found, down 1.92 million bpd from May's revised figure. Those producers agreed to more cuts during June than other OPEC members. Prices for later this year are likely to be capped, analysts said, as the world is awash with oil after the coronavirus caused demand for fuel to drop by around a third A Reuters poll of analysts indicated that oil prices will consolidate at around $40 a barrel this year, with a recovery potentially picking up in the fourth quarter. The coronavirus continues to spread around the world with ever increasing rates of infection. Cases now total more than 10 million with more than half a million people dying after catching COVID-19.

Gold – XAU

Gold on Tuesday made its intraday high of US$1785.80/oz and low of US$1764.48/oz. Gold up 0.547% at US$1779.43/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 1780-1720 with risk below 1720, targeting 1790-1805 and 1810-1820-1830. Sell below 1790-1830 keeping stop loss closing above 1830, targeting 1780-1770-1760 and 1754-1740.

Silver - XAG

Silver on Tuesday made its intraday high of US$17.94/oz and low of US$17.67/oz settled up by 0.0673% at US$17.82/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 18.00-15.55 targeting 18.40-18.95 and 19.60-20.10; stop breakage below 15.00. Sell below 18.50-20.10 with stop loss above 20.10; targeting 18.00-17.25-16.90 and 16.50-16.10-15.80.

Oil - WTI

Crude Oil on Tuesday made an intra‐day high of US40.06/bbl, intraday low of US$38.72/bbl and settled up by 0.590% to close at US$39.72/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 39.10-34.00 with risk daily closing below 34.00 and targeting 39.50-40.60 and 41.20-42.00-43.40. Sell in between 39.50-43.40 with stop loss at 43.40; targeting 38.00-37.10-36.00 and 34.90-33.90-33.00.

EUR/USD

EUR/USD on Tuesday an intraday low of US$1.1190/EUR, high of US$1.1261/EUR and settled the day up by 0.0676% to close at US$1.1233/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 Tuesday made an intra‐day low of US$1.2257/GBP, high of US$1.2400/GBP and settled the day up by 0.833% to close at US$1.2399/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 1.2320-1.2600 with targets at 1.2250-1.2165-1.2100 and 1.2050-1.2000 stop-loss should be 1.2900. Buy above 1.2250-1.1200 with targets 1.2320-1.2410-1.2490 and 1.2550-1.2650-1.2700 with stop loss closing below 1.2100.

USD/JPY

USD/JPY on Tuesday made intra‐day low of JPY107.51/USD and made an intraday high of JPY107.97/USD and settled the day down by 1.505% at JPY107.91/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 107.90-111.00 with risk above 111.00 targeting 107.50-106.50-105.60 and 105.00-104.50. Long positions above 107.50-104.00 with targets of 107.90-108.40 and 109.40-110.20 with stop below 105.00.