Daily Market Lookup

• The dollar edged lower in early European trade Friday, weighed down by disappointing employment and housing data and with the tech sector continuing to suffer strong selling in the equity markets. Employment data, released on Thursday, showed that initial jobless claims fell by less than expected. At the same time, data from the housing market showed that part of the economy cooling off after three months of an extremely strong rebound. So while the U.S. economy is recovering, the rebound seems to be slowing. This prompted the Federal Reserve to pledge to keep rates near zero until at least the end of 2023, but the central bank also called for more fiscal help from Congress, which still looks unlikely. Additionally, U.S. tech stocks suffered another rout Thursday, with the tech-heavy Nasdaq Composite index falling 1.3%, which contributed to a weak dollar. However, the focus of sterling traders is elsewhere as policymakers in the Bank of England indicated Thursday that they’re considering using negative interest rates as the central bank prepares for the possibility the U.K. government fails to reach a trade deal with the European Union by the end of this year. The dollar was down on Friday morning in Asia, with disappointing U.S. employment data dampening both the economic outlook and investor sentiment. The employment data, released on Thursday, showed that initial jobless claims fell slower than expected. 860,000 claims were filed over the past week against the predicted 850,000. Investors are still digesting the U.S. Federal Reserve’s policy decision, handed down on Wednesday, which pledged low interest rates for years to come while also upgrading its 2020 GDP forecast. Another rout in U.S. tech stocks on Thursday also contributed to a weak dollar. “For the dollar to regain its upward trend, it’s necessary for the market to make sure that the U.S. stocks take a pause from a correction in stock prices,” Yamamoto added. Although the yuan has risen more than 6% from late May’s lows against the greenback as the Chinese economy continues its recovery from COVID-19, some investors are raising concerns over the rapid rise. The GBP/USD edged down 0.10% to 0.1259. The Bank of England (BOE) announced its own policy decision on Thursday, dangling the possibility of negative interest rates to counter rising numbers of COVID-19 cases, higher unemployment and the possibility of a hard Brexit. However, European Commission President Ursula Von der Leyen indicating that she was “convinced a trade deal with Britain was still possible” gave the pound a boost.
• The safe-haven yen rose to a seven-week high against the dollar and a 1-1/2-month peak versus the euro, amid another batch of generally weak U.S. data and overall uncertainty about the economic outlook, backing the Federal Reserve's concern on Wednesday about the pace of recovery. The dollar index rose to a one-week high, but was last little changed on the day, as risk appetite diminished. Shares on Wall Street were lower and U.S. Treasuries were fairly well-supported. At Wednesday's policy meeting, the Fed pledged to keep rates near zero until the labor market reaches "maximum employment" and inflation is on track to "moderately exceed" the 2% target, with most policymakers seeing rates on hold through at least 2023. Wednesday's set of U.S. data also added to the gloom in risk sentiment. U.S. jobless claims remained elevated at 860,000, while both housing starts and the Philadelphia Fed business index fell. He added that against a soft economic backdrop, the Fed's commitment to hold rates near zero for some time appears well-justified. That said, with the new guidance from the Fed focused on keeping U.S. interest rates at current record lows until employment and inflation reach its targets, some strategists argue any dollar strength is likely to be temporary.

Gold – XAU

Gold on Thursday made its intraday high of US$1960.84/oz and low of US$1932.68/oz. Gold down 0.778% at US$1943.31/oz.

Technicals in Focus:

In daily charts, prices are above 50DMA (1882) and breakage below will call for 1805. 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 overbought territory and giving positive crossover to bullish stance for intraday trade.

Trading Strategy: Buy on Dips

Based on the charts and explanations above; buy above 1940-1870 with risk below 1890, targeting 1954-1971-1989 and 2010-2023. Sell below 1954-2010 keeping stop loss closing above 2010, targeting 1940-1924 and 1900-1889.

Silver - XAG

Silver on Thursday made its intraday high of US$27.19/oz and low of US$26.27/oz settled down by 0.556% at US$26.97/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 27.00-24.00 targeting 28.10-29.00 and 29.80-30.50-31.00, stop breakage below 24.00. Sell below 28.00-30.50 with stop loss above 30.50; targeting 27.10-26.55-26.10 and 25.00-24.30.

Oil - WTI

Crude Oil on Thursday made an intra‐day high of US41.45/bbl, intraday low of US$39.64/bbl and settled up by 1.741% to close at US$41.11/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 41.10-36.50 with risk daily closing below 36.50 and targeting 41.60-42.00 and 42.55-43.25-44.00. Sell in between 41.60-44.00 with stop loss at 44.00; targeting 41.10-40.60-39.50 and 39.00-38.55-37.10.

EUR/USD

EUR/USD on Thursday an intraday low of US$1.1736/EUR, high of US$1.1851/EUR and settled the day up by 0.273% to close at US$1.1847/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 1.1800-1.1600 with risk below 1.1600, targeting 1.1900 and 1.1955-1.2050-1.2100. Sell below 1.1860-1.2250 targeting 1.1800-1.1730-1.1690 and 1.1635-1.1600 with stop-loss at daily closing above 1.2250.

GBP/USD

GBP/USD on Thursday made an intra‐day low of US$1.2864/GBP, high of US$1.2998/GBP and settled the day up by 0.0563% to close at US$1.2972/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 20DMA (1.3134) is become immediate support 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 1.3000-1.3270 with targets at 1.2940-1.2900-1.2820 and 1.2735-1.2650 stop-loss should be 1.3210. Buy above 1.2940-1.2735 with targets 1.3180-1.3000-1.3050-1.3100 and 1.3210-1.3290 with stop loss closing below 1.3000.

USD/JPY

USD/JPY on Thursday made intra‐day low of JPY104.51/USD and made an intraday high of JPY105.16/USD and settled the day down by 0.180% at JPY104.73/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 105.50-108.00 with risk above 108.00 targeting 104.50-103.90-103.50 and 103.10-102.50. Long positions above 106.50-103.00 with targets of 106.90-107.50 and 107.90-108.40-109.40 with stop below 105.00.