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Daily Market Lookup

  • The pound rose on Wednesday to remain on course for a third-straight weekly win against the dollar, shrugging off weaker-than-expected economic data ahead of the Bank of England meeting on Thursday. Services, the backbone of the UK economy, improved to a reading of 56.5 last month from 47.1 in June, though just missed economists' forecasts of 56.6. The data suggest the U.K. recovery accelerated in July, but that was partly driven by pent-up demand, which will soon fade, Pantheon Macroeconomics said, flagging job cuts and higher savings as economic headwinds to come. The pound's march higher comes just a day ahead of the Bank of England meeting. The U.K. central bank is expected to keep interest rates unchanged but will roll out its forecasts on a range of economic measures including inflation, GDP and unemployment. In recent weeks, investors have been debating when the BoE will cut rates below zero, but Thursday's meeting is unlikely to offer detailed insight. Some investors are worried the U.S. response to the coronavirus pandemic is dealing a body blow to the dollar, potentially accelerating what has so far been slow erosion in the greenback's status as the world's dominant reserve currency. Investors and analysts, including billionaire hedge fund manager Ray Dalio and Goldman Sachs Group (NYSE:GS) strategists, are among those who have warned that massive U.S. government spending in recent months could hurt the dollar. At the same time, rock-bottom U.S. interest rates for the foreseeable future and concerns over a potential rise in inflation are denting the dollar’s appeal. These factors are already weighing on the dollar (=USD), which stands 9% below its high of the year and notched its worst monthly performance in a decade in July. Treasury Secretary Steven Mnuchin told CNBC last month that the dollar’s status as the world’s reserve currency is in the U.S. interest and the administration wants to maintain it. The Treasury declined to comment further. The dollar’s dominance endows the U.S. with many benefits, ranging from an outsized influence over the world’s financial system to giving it the power to flex its muscle abroad by punishing rivals and bringing errant foreign players to heel. For the world’s central bankers, the dollar remains the reserve currency of choice by far. The dollar's share of global central bank reserves stood at around 62% in the first quarter, compared with about 20% for the euro and 1.9% for the yuan, according to the International Monetary Fund. Past concerns about the dollar’s top-dog status, including those that cropped up after Standard & Poor's in 2011 downgraded its credit rating of the United States, have proven short-lived, due in part to the lack of a credible replacement. The main challenger, the euro, has struggled in the face of existential crises and years of subpar growth in the euro zone. Indeed, during the throes of the coronavirus panic in March, the dollar’s dominance was on full display, with investors and governments scrambling for the greenback as they looked for a haven against extreme volatility and uncertainty. Mohamed El-Erian, chief economic adviser at Allianz, believes there is little imminent danger to the dollar’s reserve currency status. Nevertheless, the dollar has seen its status slowly degrade over the past two decades, with its share of global central bank reserves falling by about 10 percentage points, IMF data shows. Some market participants worry that recent U.S. actions may tarnish the currency's appeal. One concern is the state of U.S. finances.
  • Oil exports from OPEC’s Middle East producers rose in July after Saudi Arabia and key Persian Gulf allies reversed the voluntary production cuts they had made the previous month. The figures exclude Iran. Kuwait and the United Arab Emirates led the gain in last month’s oil supplies to international markets, with Saudi Arabia increasing less quickly and Iraq barely changed. Saudi producers boosted shipments by 190,000 barrels a day, far less than its increase in production, possibly signaling domestic crude use has soared with summer temperatures. The four nations boosted crude and condensate shipments last month by 758,000 barrels a day, or 6%, to a combined 13.68 million barrels a day, tanker-tracking data compiled by Bloomberg show. The increase reversed the previous month’s drop, as the region’s producers restored more than 1 million barrels a day of production that they removed from the market in June. Flows from the four producers -- which account for about 72% of production among members of the Organization of Petroleum Exporting Countries -- rose to India and China. Shipments to South Korea slumped, possibly due to refiners opting for supply from the U.S. Gulf Coast. Exports from Kuwait jumped in July, rising by 294,000 barrels a day, or 18%. Last month’s flows included a first shipment of crude from the Mina Saud terminal since the restart of the Wafra field in the Neutral Zone shared with Saudi Arabia. Production from the field halted in 2015 due to a dispute between the two countries. Shipments from the U.A.E., which include condensates that are outside the scope of the OPEC+ deal, rose by 263,000 barrels a day, or 10%, in July. Shipments from Iraq, which has come under pressure from Saudi Arabia after failing to meet its target in May and June, slid by just 11,000 barrels a day. Observed flows from Iran have been excluded, as tankers often disappear from tracking for weeks. In July, signals from eight tankers carrying an estimated 11 million barrels of Iranian crude or condensate appeared. The time and position at which the ships appeared suggest that two of them departed in June, with the other six leaving in July. With nearly 16 million barrels of oil on ships from OPEC’s Middle East exporters yet to signal a final destination, estimates of flows to individual countries are subject to revision.

 

 
Intraday RESISTANCE LEVELS
6th August 2020 R1 R2 R3
GOLD-XAU 2,055-2,079 2,090 2,105
Silver-XAG 27.90-28.50 29.00 29.35-30.00
Crude Oil 43.15 44.10 45.00-46.30
EURO/USD 1.1900-1.1950 1.2000 1.2060
GBP/USD 1.3160 1.3210 1.3290-1.3350
USD/JPY 106.00 106.50 106.90-107.50

Intraday SUPPORTS LEVELS
6th August 2020 S1 S2 S3
GOLD-XAU 2,045-2,037 2,031 2,020-2,002
Silver-XAG 27.00-26.55 26.10 25.50-24.90
Crude Oil 42.00-41.00 40.60 39.50-38.50
EURO/USD 1.1850-1.1800 1.1750 1.1700-1.1650
GBP/USD 1.3100-1.3015 1.2950 1.2900-1.2840
USD/JPY 105.50-104.90 104.30 103.90-103.10

Intra-Day Strategy (6th August 2020)
GOLD-XAU Buy on Dips
Silver-XAG Buy on Dips
Crude Oil Neutral to Buy
EUR/USD Neutral to Buy
GBP/USD Neutral to Sell
USD/JPY Neutral to Sell

Gold – XAU

AAFX TRADING

Gold on wednesday made its intraday high of US$2055.61/oz and low of US$2009.53/oz. Gold up 0.964% at US$2037.52/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 2045-2000 with risk below 2000, targeting 2055-2079 and 2090-2105. Sell below 2055-2105 keeping stop loss closing above 2100, targeting 2045-2031 2020 and 2002-1990.

 
Intraday Support Levels
S1     2,045-2,037
S2     2,031
S3     2,020-2,002
Intraday Resistance Levels
R1     2,055-2,079
R2     2,090
R3     2,105

Technical Indicators

Name   Value Action
14DRSI  

92.982

Buy
20-DMA   1888.23 Buy
50-DMA  

1801.77

Buy
100-DMA   1737.79 Buy
200-DMA   1636.71 Buy
STOCH(5,3)   92.503 Buy
MACD(12,26,9)   61.894 Sell

Silver - XAG

AAFX TRADING

Silver on Tuesday made its intraday high of US$26.02/oz and low of US$24.11/oz settled up by 6.630% at US$25.90/oz.

Technicals in Focus:

On daily charts, silver is sustaining above 20DMA (21.60), breakage below will lead to 19.40. 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 neutral region and giving positive crossover to show upside move for the intraday trade.

Trading Strategy: Buy on Dips

Based on the charts and explanations above, buy above 27.00-23.55 targeting 27.90-28.50 and 29.00-29.35-30.00; stop breakage below 21.50. Sell below 27.90-30.00 with stop loss above 30.00; targeting 27.00-26.10-25.50 and 24.00-23.50.

 
Intraday  Support Levels
S1     27.00-26.55
S2     26.10
S3     25.50-24.90

Intraday  Resistance Levels
R1     27.90-28.50
R2     29.00
R3     29.35-30.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   84.514 Buy
20-DMA   22.48 Buy
50-DMA   19.69 Buy
100-DMA   17.48 Buy
200-DMA   17.38 Buy
STOCH(5,3)   95.268 Buy
MACD(12,26,9)   2.097 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Wednesday made an intra‐day high of US43.59/bbl, intraday low of US$41.57/bbl and settled up by 1.59% to close at US$42.42/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 42.00-38.50 with risk daily closing below 36.65 and targeting 43.10-44.10-45.00 and 46.30. Sell in between 43.00-46.30 with stop loss at 46.30; targeting 42.00-41.00-40.60 and 39.50-38.50.

 
Intraday Support Levels
S1     42.00-41.00
S2     40.60
S3     39.50-38.50

Intraday Resistance Levels
R1     43.15
R2     44.10
R3     45.00-46.30

TECHNICAL INDICATORS
Name   Value Action
14DRSI   62.099 Sell
20-DMA   41.06 Buy
50-DMA   39.57 Buy
100-DMA   32.50 Buy
200-DMA   43.09 Sell
STOCH(5,3)   62.130 Buy
MACD(12,26,9)   0.738 Sell

EUR/USD

AAFX TRADING

EUR/USD on Wednesday an intraday low of US$1.1792/EUR, high of US$1.1904/EUR and settled the day up by 0.515% to close at US$1.1862/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 1.1800-1.1540 with risk below 1.1540, targeting 1.1850-1.1900-1.1950 and 1.2000-1.2050. Sell below 1.1850-1.2050 targeting 1.1800-1.1720-1.1650 and 1.1500-1.1450-1.1400 with stop-loss at daily closing above 1.1950.

 
Intraday Support Levels
S1     1.1850-1.1800
S2     1.1750
S3     1.1700-1.1650

Intraday  Resistance Levels
R1     1.1900-1.1950
R2     1.2000
R3     1.2060

TECHNICAL INDICATORS
Name   Value Action
14DRSI   73.032 Buy
20-DMA   1.1258 Buy
50-DMA   1.1381 Buy
100-DMA   1.1130 Buy
200-DMA   1.1096 Buy
STOCH(5,3)   45.758 Buy
MACD(12,26,9)   -0.0011 Buy

GBP/USD

AAFX TRADING

GBP/USD on Wednesday made an intra‐day low of US$1.3053/GBP, high of US$1.3160/GBP and settled the day up by 0.323% to close at US$1.3113/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 1.3160-1.3350 with targets at 1.3100-1.3015-1.2950 and 1.2870-1.2760-1.2680 stop-loss should be 1.3100. Buy above 1.3100-1.2840 with targets 1.3160-1.3200-1.3290 and 1.3350 with stop loss closing below 1.2400.

 
Intraday Support Levels
S1     1.3100-1.3015
S2     1.2950
S3     1.2900-1.2840

Intraday Resistance Levels
R1     1.3160
R2     1.3210
R3     1.3290-1.3350

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

80.904

Buy
20-DMA   1.2824 Buy
50-DMA   1.2641 Buy
100-DMA   1.2471 Sell
200-DMA   1.2704 Sell
STOCH(5,3)   72.940 Sell
MACD(12,26,9)   0.0305 Sell

USD/JPY

AAFX TRADING

USD/JPY on Wednesday made intra‐day low of JPY105.31/USD and made an intraday high of JPY105.86/USD and settled the day down by 0.111% at JPY105.59/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 106.00-111.00 with risk above 111.00 targeting 105.50-104.90-104.50 and 103.90-103.10. Long positions above 105.50-103.00 with targets of 106.00-106.50-106.90 and 107.90-108.40-109.40 with stop below 105.00.

 
Intraday Support Levels
S1     105.50-104.90
S2     104.30
S3     103.90-103.10

INTRADAY RESISTANCE LEVELS
R1     106.00
R2     106.50
R3     106.90-107.50

TECHNICAL INDICATORS
Name   Value Action
14DRSI   43.904 Buy
20-DMA   107.21 Sell
50-DMA   107.45 Sell
100-DMA   107.53 Sell
200-DMA   108.36 Sell
STOCH(9,6)   44.253 Sell
MACD(12,26,9)   -0.1448 Sell

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