Daily Market Lookup

• The dollar edged higher in early European trade Monday, with negotiations over the latest stimulus measures in the U.S. seemingly in difficulties as the election approaches. The dollar had been hard hit Friday on hopes that a deal for new U.S. stimulus would be reached, reducing the need for this safe haven currency, after the Trump administration proposed a new $1.8 trillion package. However, this offer ran into opposition from both sides, with the Democrats saying it was not comprehensive enough and the hard-line Republicans worried about the extent that this would increase the country’s debt pile. That said, this rebound in the dollar, limited as it is, may be short-lived if Goldman Sachs is to be believed. The influential investment bank suggested the greenback could well slump to its lows of 2018--when the dollar index fell below 89--on the rising likelihood of Joe Biden winning the U.S. election and progress on a coronavirus vaccine. Elsewhere, the Chinese yuan weakened Monday after the People's Bank of China said it will lower the reserve requirement ratio for financial institutions when conducting some foreign exchange forwards trading, a move which is seen keeping the yuan's strength in check.
• The dollar was up on Monday morning in Asia, with negotiations over the latest stimulus measures in the U.S. floundering and the yuan seeing a drop after the Chinese central bank announced measures to curb the currency’s strength earlier in the day. The greenback rebounded from losses on Friday, the biggest in six weeks, as investors hoped for Congress to reach consensus on the stimulus measures. Investor hopes rose after President Donald Trump proposed a $1.8 trillion package on Friday during talks with House of Representatives Speaker Nancy Pelosi, inching closer to the Democrats’ $2.2. trillion proposal. However, Trump’s offer irked his fellow Republics, many of whom are reluctant to add to a growing debt pile, and potentially costing his party critical support in the Nov. 3 presidential elections. As the election looms closer, investors are increasingly betting on the likelihood of Trump is losing to Democrat rival Joe Biden in the election, and Biden offering a package with a larger price tag as president. Some investors remained unconvinced. The offshore Chinese yuan fell in the wake of the People’s Bank of China’s decision to lower the requirement ratio for financial institutions when conducting some foreign exchange forwards trading. Some investors predicted that the move would encourage the use of forwards, thus keeping the yuan’s strength in check. The pound reached a one-month high on Friday as investors were cautiously optimistic about the U.K. and the European Union reaching a deal by Prime Minister Bori Johnson’s self-imposed deadline of Oct. 15.
• Oil prices dropped for a second straight session on Monday as U.S. producers began restoring output after Hurricane Delta weakened, while a strike that had affected production in Norway came to an end. Front-month prices for both contracts gained more than 9% last week, the biggest weekly rise for Brent since June, but fell on Friday after Norwegian oil firms struck a wage bargain with labour union officials, resolving a strike that threatened to cut the country's oil and gas output by close to 25% In the United States, Hurricane Delta, which dealt the greatest blow to U.S. offshore Gulf of Mexico energy production in 15 years, was downgraded to a post-tropical cyclone by Sunday. Workers headed back to production platforms on Sunday while Total SA continued restarting its 225,500 barrel-per-day Port Arthur, Texas, refinery on Sunday. However, Colonial Pipeline, the largest oil products pipeline in the United States, shut its main distillate fuel line after the hurricane disrupted power, the company said on Sunday Despite the storm's impact on offshore operations, oil prices holding around $40 a barrel over the past few months encouraged U.S. energy firms to add oil and natural gas rigs for a fourth week in a row last week, data from Baker Hughes showed. Elsewhere, production in Libya, one of the members of the Organization of the Petroleum Exporting Countries, is expected to rise to 355,000 barrels per day on Monday after force majeure was lifted on the Sharara field from Sunday. Oil was down on Monday morning in Asia, dropping for a second straight session as a Norwegian strike reached a conclusion and U.S. production resumed as Hurricane Delta weakened. But these gains were reversed on Friday, as a 10-day strike in Norway ended after oil firms reached a wages agreement with labor union officials. The strike had threatened to cut Norwegian oil and gas output by around 25% In the Gulf of Mexico, Hurricane Delta was downgraded to a post-tropical cyclone by Sunday after delivering the greatest impact to the area’s energy production in 15 years Workers were back at production platforms by Sunday, with Total SA continuing to restart 225,500 barrels worth of capacity at its Port Arthur, Texas facility on Sunday. However, the largest U.S. oil products pipeline, Colonial Pipeline, was forced to shut its main distillate fuel line after Delta disrupted the power.

Gold – XAU

Gold on Friday made its intraday high of US$1930.39/oz and low of US$1893.21/oz. Gold up 1.934% at US$1930.11/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 1916-1810 with risk below 1810, targeting 1934-1944 and 1955-1964-1976. Sell below 1934-1980 keeping stop loss closing above 1955, targeting 1916-1900-1882 and 1869-1862-1850.

Silver - XAG

Silver on Friday made its intraday high of US$25.16/oz and low of US$23.81/oz settled up by 5.584% at US$25.14/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 24.50-21.05 targeting 24.00-24.50-25.10 and 26.00-26.50, stop breakage below 21.50. Sell below 25.30-28.00 with stop loss above 28.00; targeting 24.00-23.30-22.90 and 22.20-21.50.

Oil - WTI

Crude Oil on Friday made an intra‐day high of US41.63/bbl, intraday low of US$40.60/bbl and settled down by 2.11% to close at US$40.68/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 40.10-37.50 with risk daily closing below 37.50 and targeting 40.80-42.00-42.50 and 43.10-43.85. Sell in between 40.80-43.85 with stop loss at 44.00; targeting 40.10-39.70-39.00 and 38.40-37.50-36.40.

EUR/USD

EUR/USD on Friday an intraday low of US$1.1750/EUR, high of US$1.1830/EUR and settled the day up by 0.572% to close at US$1.1825/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 Friday made an intra‐day low of US$1.2916/GBP, high of US$1.3049/GBP and settled the day up by 0.798% to close at US$1.3034/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 Friday made intra‐day low of JPY105.57/USD and made an intraday high of JPY106.03/USD and settled the day down by 0.376% at JPY105.61/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.