Daily Market Lookup

• The dollar edged lower in early European trade Thursday as renewed U.S. stimulus hopes boosted risk appetite, prompting gains in equity markets and risker currencies. This move followed President Donald Trump rowing back from previous comments, and tweeting Wednesday he was ready to sign off on piecemeal measures, including support for individuals, small businesses and airlines. That said, a great deal of volatility has been injected into the foreign exchange market of late as uncertainty has increased - there has been a second wave of Covid-19 cases (France and Spain posted record numbers of new infections on Wednesday), the economic recovery has become more patchy and the important U.S. elections and Brexit deadlines are approaching. With this in mind, Nordea sees a clear risk of EUR/USD trading above $1.25 in 2021, and this dollar weakness is likely to be broad-based against most peers. The ECB's Luis de Guindos, Isabel Schnabel and Yves Mersch are all due to speak in the course of the day., with de Guindos the likeliest to express concern about the euro's strength. In addition. the European Central Bank is scheduled to release the minutes from its last rate-setting meeting later in the session. Investors will be studying to see if the central bank is preparing the ground for additional bond buying later in the year, particularly as the region’s economic recovery looks more shaky given the second wave of the Covid-19 outbreak. Additionally, the weekly U.S. employment data are due early in the U.S. session, and are likely to show the recovery in the world's largest economy is slowing, especially after Friday’s disappointing nonfarm payrolls release. Federal Reserve officials, including Chairman Jerome Powell, have made great play over the last few weeks of the need for additional stimulus from the U.S. lawmakers to try and cement the country’s economic recovery.
• The dollar crept up on Thursday morning in Asia, with revived hopes for some U.S. spending improving sentiment and whetting investor appetite for riskier currencies. After shaking markets by halting the talks between Democrats and Republicans over the latest stimulus measures, U.S. President Donald Trump suggested via Twitter on Tuesday that he would be open to gradual spending measures. However, doubts remain that any measures will be passed before the Nov. 3 presidential elections, now just weeks away, despite House of Representatives Speaker Nancy Pelosi continuing to advocate a standalone bill for aid to airlines. Investor sentiment also improved with hints of even more spending from the U.S. Federal Reserve in its minutes from its September meeting. The notes matched expectations that the Fed would unleash more fiscal spending, but some investors would be open to further debate about the Fed’s bond buying program. Fed officials Eric Rosengren and Raphael Bostic will be delivering speeches later on in the day, these could potentially provide further clues about the Fed’s internal debates. The pound was dogged by concerns over the latest informal Brexit talks between the U.K. and the European Union. Bank of England Governor Andrew Bailey joined a panel discussion on the impact of COVID-19 later in the day, where he is expected to cover negative rates or other policy considerations. Investors are also looking to the debate between U.S. Vice President Mike Pence and Democrat vice presidential nominee Kamal Harris, currently underway. Hopes for stimulus were restored somewhat after President Donald Trump said he was ready to sign off on piecemeal measures, including support for individuals, small businesses and airlines. The minutes of the Federal Reserve’s September meeting, meanwhile, showed the members generally agreed that the central bank should no rush to raise rates and also reiterated the importance of additional stimulus.
• Oil prices rose on Thursday as oil workers evacuated rigs in the U.S. Gulf of Mexico ahead of Hurricane Delta, though fuel demand concerns persisted on fading chances for an economic stimulus deal in the United States, the world's biggest oil consumer. With Hurricane Delta forecast to intensify into a Category 3 storm with winds of up to 120 miles per hour (193 km per hour), oil producers have evacuated 183 offshore facilities and halted nearly 1.5 million barrels per day (bpd) of oil output. The Gulf of Mexico produced 1.65 million bpd in July, according to the U.S. government. The region, which accounts for 17% of U.S. crude output, has been hit by several storms over the past few months, each of which only briefly dented oil output. Hopes for a further pick-up in U.S. fuel demand faded as White House officials reiterated on Wednesday that "stimulus negotiations are off" a day after President Donald Trump halted talks on a broad relief package. The possibility that there will be no upcoming economic support measures comes as government data on Wednesday showed demand for oil at U.S. refineries is 13.2% lower than a year earlier, underscoring the plunge in fuel demand from the disruptions caused by the coronavirus pandemic. The Energy Information Administration data on Wednesday did show U.S. gasoline stocks fell more than expected last week to their lowest since November, and distillate stockpiles also declined. However, crude oil supplies rose by 501,000 barrels, as production and imports climbed.

Gold – XAU

Gold on Wednesday made its intraday high of US$1897.91/oz and low of US$1872.86/oz. Gold up 0.554% at US$1886.47/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 1890-1810 with risk below 1810, targeting 1916-1934-1944 and 1955-1964-1976. Sell below 1900-1955 keeping stop loss closing above 1955, targeting 1882-1869-1862 and 1850-1842-1820.

Silver - XAG

Silver on Wednesday made its intraday high of US$23.97/oz and low of US$22.98/oz settled up by 3.298% at US$23.77/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 24.00-21.05 targeting 24.00-24.50-25.10 and 26.00-26.50, stop breakage below 21.50. Sell below 24.00-28.00 with stop loss above 28.00; targeting 24.00-23.30-22.90 and 22.20-21.50.

Oil - WTI

Crude Oil on Wednesday made an intra‐day high of US40.49/bbl, intraday low of US$39.45/bbl and settled up by 0.573% to close at US$40.13/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 39.70-34.50 with risk daily closing below 34.50 and targeting 39.70-40.60 and 41.60-42.00. Sell in between 40.60-42.00 with stop loss at 42.00; targeting 40.60-37.50 and 36.40-35.90-34.70.

EUR/USD

EUR/USD on Wednesday an intraday low of US$1.1724/EUR, high of US$1.1780/EUR and settled the day up by 1.1724% to close at US$1.1759/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 1.1750-1.1460 with risk below 1.1460, targeting 1.1800-1.1860 and 1.1900-1.1955-1.2010. Sell below 1.1800-1.2000 targeting 1.1690-1.1635-1.1570 and 1.1500-1.1460 with stop-loss at daily closing above 1.2050.

GBP/USD

GBP/USD on Wednesday made an intra‐day low of US$1.2843/GBP, high of US$1.2928/GBP and settled the day up by 0.763% to close at US$1.2912/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 1.2900-1.2820-1.2735 and 1.2650-1.2600-1.2510 stop-loss should be 1.3270. Buy above 1.2940-1.2450 with targets 1.2900-1.3000 and 1.3050-1.3100-1.3210 with stop loss closing below 1.3000.

USD/JPY

USD/JPY on Wednesday made intra‐day low of JPY105.59/USD and made an intraday high of JPY106.10/USD and settled the day up by 0.330% at JPY105.95/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 105.90-108.00 with risk above 108.00 targeting 104.90-104.50-103.90 and 103.50-103.10. Long positions above 105.50-103.00 with targets of 106.90-107.50 and 107.90-108.40-109.40 with stop below 105.00.