Daily Market Lookup

• The dollar edged higher in early European trade Thursday, as traders warily studied the ongoing negotiations in Washington over a potential new U.S. stimulus package. The dollar had weakened Wednesday on confidence that an agreement on stimulus was close, sparking demand for riskier assets, but this optimism has dissipated Thursday amid opposition from Senate Republicans over the size of the potential aid bill. Negotiations between House of Representatives Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin are set to continue on Thursday, but prospects remain dim for any substantial aid to be agreed before the Nov. 3 election, after negotiators on both sides acknowledged the possibility of a deal that only took effect after that date. The Federal Reserve’s Beige Book suggested Wednesday that the U.S. economy expanded at a "slight to modest" pace though employment trends were sluggish. With this in mind, traders will look to the release of weekly jobless claims data later Thursday for guidance. However, most eyes will be on the final presidential debate between President Trump and Democratic rival Joe Biden later in the day. Elsewhere, GBP/USD was down 0.1% at 1.3134 after climbing to a six-week high overnight after Britain’s chief Brexit negotiator said talks with the European Union will resume on Thursday afternoon. The central bank surprised the market last month with a 200-point hike, designed to combat double-digit inflation and a record-low lira. However, the currency has since dipped another 4% against the dollar since then.
• The dollar was up on Thursday morning in Asia, reversing losses from the previous session as the focus remains squarely on the U.S. Congress’ progress towards passing the latest stimulus measures. Both President Donald Trump and House of Representatives Speaker Nancy Pelosi had made remarks that raised hopes of the measures’ passage before the Nov. 3 presidential election, whetting investor appetite for riskier assets and a retreat from the greenback. However, the optimism faded as continuous opposition from Senate Republicans reduces the chances of the measures being passed before the election. Pelosi herself said, before continuing discussions with Treasury Secretary Steven Mnuchin, that she remained optimistic about reaching a deal despite the Republican opposition but admitted that the measures might not pass before Americans head to the polls. Investors now await the final presidential debate between Trump and Democrat candidate Joe Biden later in the day. Federal Reserve Governor Lael Brainard separately warned that the biggest risk to her outlook for economic recovery was that the federal government’s fiscal support would be withdrawn too soon. The pound steadied against the dollar on Thursday, after rising to a six-week high during the previous session as U.K. chief Brexit negotiator David Frost announced the resumption of talks with the European Union. The talks will take place later in the day.
• Gold was down on Thursday morning in Asia, reversing gains from the previous session over a strengthening dollar. Meanwhile, investors kept their focus on the å U.S. Congress’ progress towards passing the latest stimulus measures before the Nov. 3 presidential election. Although President Donald Trump and House of Representatives Speaker Nancy Pelosi made earlier remarks that raised hopes for the measures to be passed before the election, investors continue to doubt Congress’ ability to overcome Senate Republicans’ opposition to the package’s price tag. Pelosi herself admitted that the measures might not pass before Nov. 3, even as she continues discussions with Treasury Secretary Steven Mnuchin later in the day and remains optimistic about reaching a deal. Meanwhile, Trump and Democratic candidate Joe Biden will meet for the final presidential debate n Nashville, Tennessee, later in the day. In Asia, tensions between the U.S. and China mounted after Secretary of State Michael Pompeo designated six more Chinese publications as “foreign missions”, or media outlets controlled by Beijing, at a Wednesday briefing.
• Oil was down on Thursday morning in Asia, continuing losses from the previous session. The U.S. Energy Information Administration (EIA) reported a smaller-than-expected draw in U.S. crude oil supplies, adding to worries of an oversupply as fuel demand continues to weaken. EIA data released on Wednesday showed a 1.001 million-barrel draw for the week to Oct. 16, smaller that the predicted 1.021 million-barrel draw and much smaller than the previous week’s 3.818 million-barrel draw. Wednesday’s data also showed that a 1.895 million-barrel build in gasoline inventories, against the 1.829 million-barrel draw predicted and the previous week’s 1.626 million-barrel draw. The American Petroleum Institute reported a surprise 584,000-barrel build in the week to Oct. 16 on Tuesday. Investors remain concerned about weak fuel demand as the number of COVID-19 cases in Europe and some U.S. states continues to climb. Fears were also exacerbated by China’s decision to restrict outbound travel to curb the spread of the virus. Diminishing hopes that the U.S. Congress would be able to pass the latest stimulus measures before the Nov. 3 election also contributed to a worsening outlook. However, NAB’s Shaw warned that even if Congress approved the measures in time, any uplift would likely be temporary.

Gold – XAU

Gold on Wednesday made its intraday high of US$1931.40/oz and low of US$1906.60/oz. Gold up 0.908% at US$1923.92/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 Wednesday made its intraday high of US$25.27/oz and low of US$24.63/oz settled up by 1.60% at US$24.03/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 24.50-25.10 and 26.00-26.50, stop breakage below 21.50. Sell below 24.50-28.00 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 US41.60/bbl, intraday low of US$39.80/bbl and settled down by 3.04% to close at US$39.94/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 40.00-37.50 with risk daily closing below 37.50 and targeting 40.50-41.20-42.00 and 42.50 43.10. 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 Wednesday an intraday low of US$1.1820/EUR, high of US$1.1880/EUR and settled the day up by 0.310% to close at US$1.1857/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 1.1800-1.1460 with risk below 1.1460, targeting 1.1860 and 1.1900-1.1955-1.2010. Sell below 1.1860-1.2000 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$1.2933/GBP, high of US$1.3176/GBP and settled the day up by 1.535% to close at US$1.3142/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 1.3190-1.3490 with targets at 1.3100-1.3020-1.2940 and 1.2820-1.2735-1.2650 stop-loss should be 1.3270. Buy above 1.3100-1.2600 with targets 1.3190 1.3250-1.3400 and 1.3450-1.3490 with stop loss closing below 1.2650.

USD/JPY

USD/JPY on Wednesday made intra‐day low of JPY104.33/USD and made an intraday high of JPY105.22/USD and settled the day up by 0.844% at JPY104.58/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 104.90-104.50-103.90 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.