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  • The U.S. Treasury could label several countries currency manipulators before President Donald Trump leaves office, analysts say, as the coronavirus pandemic skews trade flows and widens U.S. deficits with trading partners. Currency experts say Vietnam, Thailand, Taiwan and Switzerland all risk being found in violation of the three U.S. criteria for currency manipulation in the Treasury Department's long-delayed report on the foreign exchange practices of major trading partners. They expect the report within days. While President-elect Joe Biden is expected to be less confrontational with U.S. allies on matters of trade, a new White House could find it politically difficult to immediately walk back designations of currency manipulation by the current administration. To be labeled a manipulator, countries must at least have a $20 billion-plus bilateral trade surplus with the United States, foreign currency intervention exceeding 2% of GDP and a global current account surplus exceeding 2% of GDP. Brad Setser, a former U.S. Treasury economist and senior fellow at the Council on Foreign Relations, has replicated data used by Treasury to analyze these criteria, constructing a quarterly tracker that shows Vietnam, Switzerland and Thailand exceeded the department's thresholds during the first and second quarters of 2020. Taiwan met all three thresholds in the second quarter, but barely missed on the foreign exchange intervention in the first quarter in the data compiled by Setser, who now serves on Biden's transition team for trade issues. However, Treasury's actual data may differ and it has some discretion in applying the label, and mitigating circumstances such as the coronavirus pandemic may factor into its decisions. Trade surpluses for Asian economies exporting personal protective equipment and other supplies needed to fight the pandemic have jumped, while capital has surged into safe haven currencies such as the Swiss franc, driving them higher. The Swiss National Bank has spent 90 billion francs ($101 billion) to tame the franc's rise in the first half of 2020, putting it squarely in the Treasury's focus. The Treasury has often treated Switzerland differently because it views Switzerland's intervention as not trade-driven, but that could change this time, said Mark Sobel, another former Treasury and International Monetary Fund official. Vietnam's currency practices have been in the Trump administration's crosshairs for months, as the U.S. Trade Representative's office investigates the undervaluation of the dong. Business groups are concerned the administration could make moves, such as punitive tariffs, on these soon. The Treasury already declared Vietnam's currency undervalued by 4.7% in 2019 in a Commerce Department anti-subsidy case, which led to punitive duties on Vietnamese light vehicle tire imports. Taiwan, like Vietnam, has seen its trade surplus with the United States grow as companies moved supply chains from China to these countries in response to U.S. tariffs on Chinese goods. Taiwan spent $3.9 billion buy U.S. dollars in the first half of 2020, to tame a 5% rise in the Taiwan dollar against the greenback, exceeding its 2019 purchases. China, declared a manipulator in August 2019 at the height of U.S.-China trade tensions, has been a fixture on Treasury's monitoring list for years due to its massive trade surplus with the United States. Treasury removed the label in January as the two countries signed a "Phase 1" trade deal and China's foreign exchange interventions and global current account surplus remain below the thresholds. In the U.S., hopes are also rising for another deal, a $748 billion bipartisan proposal for COVID-19 relief. Before tackling the proposal, Congress began a second meeting on Tuesday to finalize a $1.4 trillion spending bill for the fiscal year beginning on Oct. 1. The spending bill must be passed by Friday, ahead of the measures to avert a government shutdown. The Federal Reserve will also conclude its two-day policy meeting later in the day. The central bank is widely expected to keep the key overnight interest rate pinned near zero and signal it will stay there for years to come, a decision that some investors say will further boost investor risk sentiment. The Fed is also expected to provide new guidance on how long it will keep up its massive bond-buying program.
  • Oil prices dropped on Wednesday on a surprise gain in crude oil inventories in the United States and as investors continued to worry about demand for fuel being squeezed amid tighter lockdowns in Europe to counter the coronavirus pandemic. Crude inventories swelled by 2 million barrels in the week to Dec. 11 to about 495 million barrels, according to industry group API. Analysts had expected a draw of 1.9 million barrels, according to a Reuters poll. Official government data was scheduled for Wednesday. The rollout of vaccines this month to combat the coronavirus pandemic will not quickly reverse the destruction wrought on global oil demand, International Energy Agency (IEA) warned on Tuesday. The IEA revised down its estimates for oil demand this year by 50,000 barrels per day (bpd) and for next year by 170,000 bpd, citing scarce jet fuel use as fewer people travel by air Still, progress on vaccine rollouts continued on Tuesday after Moderna (NASDAQ:MRNA) Inc's COVID-19 vaccine appeared set for U.S. regulatory authorisation this week. The U.S. also expanded on Tuesday its rollout of the newly approved COVID-19 vaccine developed by Pfizer Inc (NYSE:PFE) and German partner BioNTech SE (NASDAQ:BNTX) to hundreds of additional distribution centres on Tuesday, inoculating thousands more healthcare workers in a mass immunisation expected to reach the general public in the coming months. U.S. congressional leaders also reported substantial progress on Tuesday after two meetings of top Democrats and Republicans to end a months-long standoff on coronavirus relief and finalise a funding bill to avert a government shutdown.

 

 
Intraday RESISTANCE LEVELS
16th December 2020 R1 R2 R3
GOLD-XAU 1,860 1,868 1,880-1,890
Silver-XAG 24.95 25.65 26.50-27.00
Crude Oil 48.00 49.20-50.00 50.40
EURO/USD 1.2190-1.2240 1.2275 1.2350
GBP/USD 1.3480 1.3515-1.3540 1 3610
USD/JPY 103.80-104.50 105.00 105.40-105.90v

Intraday SUPPORTS LEVELS
16th December 2020 S1 S2 S3
GOLD-XAU 1,849-1.830 1,821 1,808-1,800
Silver-XAG 24.50-23.90 23.20 22.60-22.00
Crude Oil 47.50-46.50 45.10 44.60¬-43.90
EURO/USD 1.2150-1.2090 1.2050 1.1990-1.1950
GBP/USD 1.3400-1.3340 1.3300 1.3250-1.3200
USD/JPY 103.15-102.50 102.05 101.60-101.20

Intra-Day Strategy (16th December 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 Tuesday made its intraday high of US$1855.30/oz and low of US$1825.40/oz. Gold up 1.402% at US$1852.72/oz.

Technicals in Focus:

In daily charts, prices are below 50DMA (1899) and breakage above will call for 1916. 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 1849-1796 with risk below 1796, targeting 1868-1880 and 1890-1900. Sell below 1868-1900 keeping stop loss closing above 1900, targeting 1850-1829-1821 and 1811-1796-1790.

 
Intraday Support Levels
S1     1,849-1.830
S2     1,821
S3     1,808-1,800
Intraday Resistance Levels
R1     1,860
R2     1,868
R3     1,880-1,890

Technical Indicators

Name   Value Action
14DRSI  

51.041

Buy
20-DMA   1833.19 Sell
50-DMA  

1871.78

Sell
100-DMA   1906.27 Sell
200-DMA   1811.19 Buy
STOCH(5,3)   53.503 Buy
MACD(12,26,9)   -6.276 Sell

Silver - XAG

AAFX TRADING

Silver on Tuesday made its intraday high of US$24.54/oz and low of US$23.75/oz settled up by 2.85% at US$24.48/oz.

Technicals in Focus:

On daily charts, silver is sustaining below 50DMA (24.30), breakage above will lead to 25.00. MACD is below zero line and histograms are decreasing trend and it will bring bearish stance in the upcoming sessions. RSI is approaching neutral region, indicating buy signal for now. The Stochastic Oscillator is in oversold region and giving negative crossover to show downside move for the intraday trade.

Trading Strategy: Buy on Dips

Based on the charts and explanations above, Sell below 24.95-26.80 with stop loss above 26.80; targeting 24.50-23.90-23.20 and 22.00-21.60-21.20. Buy silver in between 24.50-21.60, targeting 24.95-25.65 and 26.05-26.40-26.80 with stop loss should be place on the breakage below 21.50.

 
Intraday  Support Levels
S1     24.50-23.90
S2     23.20
S3     22.60-22.00

Intraday  Resistance Levels
R1     24.95
R2     25.65
R3     26.50-27.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   58.473 Buy
20-DMA   20.93 Sell
50-DMA   24.15 Sell
100-DMA   25.07 Sell
200-DMA   20.93 Buy
STOCH(5,3)   65.268 Sell
MACD(12,26,9)   0.061 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Monday made an intra‐day high of US47.85/bbl, intraday low of US$46.68/bbl and settled up by 1.25% to close at US$47.69/bbl.

Technicals in Focus:

On daily charts, oil is sustaining above its 100DMA i.e. 40.58 which is a support level and breakage below will call for 40.10. MACD is above 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 upside can be expected to reach the overbought region, which is highly probable.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; buy above 47.50-42.00 with risk daily closing below 42.00 and targeting 48.00-48.60 and 49.30-50.00. Sell in between 47.50-50.30 with stop loss at 50.30; targeting 44.60-44.00-43.60 and 43.00-42.50-41.50.

 
Intraday Support Levels
S1     47.50-46.50
S2     45.10
S3     44.60¬-43.90

Intraday Resistance Levels
R1     48.00
R2     49.20-50.00
R3     50.40

TECHNICAL INDICATORS
Name   Value Action
14DRSI   66.216 Sell
20-DMA   43.20 Buy
50-DMA   40.88 Buy
100-DMA   40.98 Buy
200-DMA   36.44 Buy
STOCH(5,3)   70.130 Buy
MACD(12,26,9)   1.547 Buy

EUR/USD

AAFX TRADING

EUR/USD on Tuesday an intraday low of US$1.2121/EUR, high of US$1.2168/EUR and settled the day up by 0.0568% to close at US$1.2149/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 1.2150-1.1840 with risk below 1.1800, targeting 1.2190-1.2240 and 1.2275-1.2350. Sell below 1.2190-1.2275 targeting 1.2150-1.2090- 1.2050 and 1.1990-1.1960-1.1905-1.1860 with stop-loss at daily closing above 1.2275.

 
Intraday Support Levels
S1     1.2150-1.2090
S2     1.2050
S3     1.1990-1.1950

Intraday  Resistance Levels
R1     1.2190-1.2240
R2     1.2275
R3     1.2350

TECHNICAL INDICATORS
Name   Value Action
14DRSI   74.812 Buy
20-DMA   1.1898 Buy
50-DMA   1.1794 Buy
100-DMA   1.1494 Buy
200-DMA   1.1426 Buy
STOCH(5,3)   97.758 Buy
MACD(12,26,9)   0.0011 Buy

GBP/USD

AAFX TRADING

GBP/USD on Tuesday made an intra‐day low of US$1.3279/GBP, high of US$1.3468/GBP and settled the day up by 1.202% to close at US$1.3452/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 1.3340-1.3600 with targets at 1.3290-1.3200 and 1.3150-1.3100 stop-loss should be 1.3550. Buy above 1.3290-1.2880 with targets 1.3340-1.3400-1.3480 and 1.3520-1.3600 with stop loss closing below 1.2800.

 
Intraday Support Levels
S1     1.3400-1.3340
S2     1.3300
S3     1.3250-1.3200

Intraday Resistance Levels
R1     1.3480
R2     1.3515-1.3540
R3     1 3610

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

53.783

Buy
20-DMA   1.3317 Sell
50-DMA   1.3133 Buy
100-DMA   1.3080 Buy
200-DMA   1.2746 Buy
STOCH(5,3)   68.940 Buy
MACD(12,26,9)   0.009 Sell

USD/JPY

AAFX TRADING

USD/JPY on Tuesday made intra‐day low of JPY103.40/USD and made an intraday high of JPY103.71/USD and settled the day down by 0.361% at JPY103.44/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 103.80-108.00 with risk above 108.00 targeting 103.15-102.50-102.05 and 101.60-101.20. Long positions above 103.10-101.00 with targets of 103.80-104.50-105.00 and 105.40-105.90- with stop below 105.00.

 
Intraday Support Levels
S1     103.15-102.50
S2     102.05
S3     101.60-101.20

INTRADAY RESISTANCE LEVELS
R1     103.80-104.50
R2     105.00
R3     105.40-105.90v

TECHNICAL INDICATORS
Name   Value Action
14DRSI   57.307 Buy
20-DMA   104.40 Sell
50-DMA   105.36 Sell
100-DMA   105.36 Sell
200-DMA   106.45 Sell
STOCH(9,6)   57.253 Sell
MACD(12,26,9)   -0.199 Sell

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