AAFX TRADING

Daily Market Lookup

  • The dollar held most gains against basket of currencies on Thursday after hawkish comments from the U.S. Federal Reserve led markets to move forward the likely timing of a policy tightening. On Wednesday, Fed Vice Chair Richard Clarida said conditions for an interest rate hike could be met in late 2022, setting the stage for a move in early 2023. He and three other Fed members also signalled a move to taper bond buying later this year or early next depending on the labour market over the next few months. Predicting the jobs report with any confidence remains tricky as the spread of the Delta variant and labour bottlenecks roil the market. Thus, the median forecast for payrolls is 870,000 while the range of estimates stretches from 350,000 to 1.6 million. Mixed data on Wednesday added to the uncertainty as a surprisingly weak ADP report on private hiring clashed with the strongest reading yet for U.S. services. Clarida's comments led investors to price in slightly higher chances of a hike in late 2022/early 2023 and to a flattening of the Treasury yield curve as short-term yields rose. Such a move would likely precede any tightening by the European Central Bank, which is battling to get inflation near its target. In contrast, the Bank of England is nearer to tapering and could expand on timing at a policy meeting later on Thursday. That outlook helped the pound rally early in the year, although it has traded largely sideways over the last couple of months. It was last pinned near support at $1.3884, having repeatedly failed to clear resistance above $1.3980. All these central banks are laggards compared with the Reserve Bank of New Zealand (RBNZ), which seems likely to hike rates at its next policy meeting on Aug. 18, making it the first in the developed world to move since the pandemic hit. A super-strong jobs report on Wednesday added to the case for New Zealand tightening and sent the kiwi to a one-month peak of $0.7088 overnight, before steadying at $0.7041.
  • The dollar edged higher in early European trading Thursday, after hawkish comments from the Federal Reserve prompted traders to price in an earlier tightening of monetary policy. The dollar has been in a state of flux over the last couple of months, first rising after the June meeting of the Federal Reserve saw several members bring forward their timetable for interest rate hikes before slipping back after Chairman Jerome Powell stated last week that interest rate increases were still in the distance. The currency took another turn after Fed Vice Chair Richard Clarida, usually seen as something of a dove, said Wednesday that conditions for an interest rate hike could be met in late 2022, setting the stage for a move in early 2023. Alongside three of his colleagues, Clarida also hinted that asset tapering could begin later in 2021 or early 2022. Muddying the waters were mixed economic data Wednesday, with a surprisingly weak ADP report on private employment contrasting with the strongest ever reading for the U.S. ISM non-manufacturing PMI. Still, it’s the labor market that traders are focusing on, with Fed members making it clear that improvement is needed there before any moves. Thursday sees the release of the weekly initial jobless claims data, at 8:30 AM ET (1230 GMT), with analysts looking for a figure of 384,000, a gradual improvement from the previous week. However, it’s Friday’s nonfarm payrolls release which is attracting the most attention. The median forecast is for 870,000 jobs, but there is a broad range of estimates given the potential impact of the spread of the delta Covid-19 variant on the labor market. Elsewhere, GBP/USD rose 0.1% to 1.3893 ahead of the latest policy-setting meeting of the Bank of England later Thursday. The central bank could move a step closer to tightening monetary policy while raising its growth and inflation forecasts. Also giving the U.S. currency a boost was Fed Vice Chair Richard Clarida, who said on Wednesday that the conditions for an interest rate hike could be met in late 2022, with a move following in early 2023. Alongside three of his colleagues, Clarida also hinted that asset tapering could begin later in 2021 or early 2022. However, this is dependent on progress in the labor market’s recovery from COVID-19, which will be gauged in Friday’s U.S. jobs report, including non-farm payrolls. Making predictions on the jobs report difficult is the continuous spread of COVID-19 cases globally, the resultant labor bottlenecks, and Wednesday’s U.S. economic slowdown data. The ADP nonfarm employment change was at 330,000 in July, lower than expected. The services Purchasing Managers' Index (PMI) was 59.9, while the Institute of Supply Management (ISM) non-manufacturing employment was at 53.8 and the ISM non-manufacturing PMI was at 64.1.
  • Oil prices declined towards $70 a barrel on Thursday as more countries imposed fresh movement restrictions to counter a surge in COVID-19 cases, though Middle East tensions offered support. Japan is poised to expand emergency restrictions to more prefectures while China, the world's second-largest oil consumer, has imposed restrictions in some cities and cancelled flights, threatening fuel demand. In the United States, the world's biggest oil consumer, COVID-19 cases hit a six-month high with more than 100,000 infections reported on Wednesday, according to a Reuters tally. Also weighing on prices was a surprise 3.6 million barrel build in U.S. crude stockpiles last week in data from the U.S. Energy Information Administration (EIA). Tensions in the Middle East kept price declines in check, however. Israeli aircraft struck what the country's military said were rocket launch sites in south Lebanon early on Thursday in response to earlier projectile fire towards Israel. The exchange came after an attack on a tanker off the coast of Oman last Thursday, which Israel blamed on Iran. Two crew members, a Briton and a Romanian, were killed. Iran denied any involvement.

 

 
Intraday RESISTANCE LEVELS
5th August 2021 R1 R2 R3
GOLD-XAU 1,820-1,833 1,840 1,845-1,851
Silver-XAG 26.00-26.50 26.90 27.50-28.20
Crude Oil 68.00-68.80 69.50 70.40-71.00
EURO/USD 1.1850-1.1910 1.1990 1.2080-1.2120
GBP/USD 1.3955-1.4020 1.4050 1.4120-1.4150
USD/JPY 109.60-110.50 111.70 112.50-113.00

Intraday SUPPORTS LEVELS
5th August 2021 S1 S2 S3
GOLD-XAU 1,805-1,791 1,780 1,767-1,760
Silver-XAG 25.20-25.05 24.75 24.50-24.00
Crude Oil 67.40-67.02 66.50 65.40-64.95
EURO/USD 1.1840-1.1770 1.1690 1.1610-1.1550
GBP/USD 1.3890-1.3810 1.3750 1.3696-1.3615
USD/JPY 109.10 108.50 107.50-106.80

Intra-Day Strategy (5th August 2021)
GOLD-XAU Buy on Dips
Silver-XAG Buy on Dips
Crude Oil Neutral to Sell
EUR/USD Neutral to Sell
GBP/USD Neutral to Sell
USD/JPY Neutral to Sell

Gold – XAU

AAFX TRADING

Gold on Wednesday made its intraday high of US$1831.64/oz and low of US$1806.37/oz. Gold up 0.0712% at US$1811.63/oz.

Technicals in Focus:

In daily charts, prices are above 200DMA (1809) and breakage below will call for 1790. MACD is above zero line and histograms are also increasing trend and it will bring upward stance in the upcoming sessions. RSI is in overbought region and more upside is expected before it gets stretched. Stochastic Oscillator is in neutral territory and giving negative crossover to bearish stance for intraday trade.

Trading Strategy: Buy on Dips

Buy in between 1805-1767 with risk below 1767, targeting 1820-1833 and 1840-1854. Sell in between 1820-1860 keeping stop loss closing above 1860, targeting 1812-1800-1790 and 1780-1767.

 
Intraday Support Levels
S1     1,805-1,791
S2     1,780
S3     1,767-1,760
Intraday Resistance Levels
R1     1,820-1,833
R2     1,840
R3     1,845-1,851

Technical Indicators

Name   Value Action
14DRSI  

51.798

Buy
20-DMA   1809.64 Buy
50-DMA  

1812.27

Sell
100-DMA   1812.69 Sell
200-DMA   1808.04 Buy
STOCH(5,3)   43.503 Sell
MACD(12,26,9)   -23.653 Buy

Silver - XAG

AAFX TRADING

Silver on Wednesday made its intraday high of US$25.99/oz and low of US$25.31/oz settled up by 0.525% at US$25.36/oz.

Technicals in Focus:

On daily charts, silver is sustaining below 100DMA (26.62), breakage above will lead to 27.60. 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 positive crossover to show upside move for the intraday trade.

Trading Strategy: Buy on Dips

Buy in between 25.05-23.50, targeting 25.50-26.00-26.65 and 26.90-27.55-27.90 with stop loss should be place on the breakage below 23.50. Sell in between 25.50-28.50 with stop loss above 28.50; targeting 26.00-25.70 and 25.05-24.80-24.00.

 
Intraday  Support Levels
S1     25.20-25.05
S2     24.75
S3     24.50-24.00

Intraday  Resistance Levels
R1     26.00-26.50
R2     26.90
R3     27.50-28.20

TECHNICAL INDICATORS
Name   Value Action
14DRSI   46.411 Buy
20-DMA   24.58 Sell
50-DMA   25.55 Sell
100-DMA   26.00 Sell
200-DMA   26.12 Buy
STOCH(5,3)   74.556 Buy
MACD(12,26,9)   -0.380 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Wednesday made an intra‐day high of US$70.43/bbl, intraday low of US$67.64/bbl and settled down by 3.35% to close at US$67.74/bbl.

Technicals in Focus:

On daily charts, oil is sustaining above its 20DMA i.e. 68.50 which is a support level and breakage below will call for 65.40. MACD is above zero line and histograms are in increasing mode will bring bullish stance in the upcoming sessions. The Stochastic Oscillator is in neutral 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 Sell

Sell in between 68.00-70.40 with stop loss at 70.40; targeting 67.40-66.90-66.50 and 65.40-64.95. Buy above 66.80-64.90 with risk daily closing below 64.90 and targeting 68.00-68.80-69.50 and 70.40-71.00-71.90.

 
Intraday Support Levels
S1     67.40-67.02
S2     66.50
S3     65.40-64.95

Intraday Resistance Levels
R1     68.00-68.80
R2     69.50
R3     70.40-71.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   45.198 Sell
20-DMA   71.40 Buy
50-DMA   70.35 Buy
100-DMA   67.02 Buy
200-DMA   60.99 Buy
STOCH(5,3)   22.130 Sell
MACD(12,26,9)   0.085 Buy

EUR/USD

AAFX TRADING

EUR/USD on Wednesday an intraday low of US$1.1831/EUR, high of US$1.1898/EUR and settled the day down by 0.227% to close at US$1.1835/EUR.

Technicals in Focus:

On daily charts, prices are sustaining above 20DMA (1.2143), which become immediate Support level, break above will target 1.2090. MACD is above zero line and histograms are increasing mode which will bring bullish view. Stochastic is in oversold territory and still giving negative crossovers to signal for bearish outlook for intraday. 14D RSI is currently in overbought region and giving no directions to consider right now.

Trading Strategy: Neutral to Sell

Sell below 1.1840-1.2140 targeting 1.1850-1.1800-1.1750 with stop-loss at daily closing above 1.2140. Buy above 1.1800-1.1600 with risk below 1.1600, targeting 1.1840-1.1910-1.1990 and 1.2040-1.2100.

 
Intraday Support Levels
S1     1.1840-1.1770
S2     1.1690
S3     1.1610-1.1550

Intraday  Resistance Levels
R1     1.1850-1.1910
R2     1.1990
R3     1.2080-1.2120

TECHNICAL INDICATORS
Name   Value Action
14DRSI   45.682 Buy
20-DMA   1.1805 Sell
50-DMA   1.1903 Sell
100-DMA   1.1948 Sell
200-DMA   1.1911 Sell
STOCH(5,3)   33.758 Sell
MACD(12,26,9)   -0.0044 Buy

GBP/USD

AAFX TRADING

GBP/USD on Wednesday made an intra‐day low of US$1.3884/GBP, high of US$1.3956/GBP and settled the day down by 0.188% to close at US$1.3887/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 100DMA (1.3867) 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 overbought territory and giving positive crossover to confirm bullish 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 in between 1.3955-1.4120 with targets at 1.3890-1.3810-1.3750 and 1.3685-1.3600-1.3520 stop-loss should be 1.4120. Buy above 1.3890-1.3600 with targets 1.3955-1.4020 and 1.4050-1.4120 with stop loss closing below 1.3600.

 
Intraday Support Levels
S1     1.3890-1.3810
S2     1.3750
S3     1.3696-1.3615

Intraday Resistance Levels
R1     1.3955-1.4020
R2     1.4050
R3     1.4120-1.4150

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

53.930

Buy
20-DMA   1.3839 Buy
50-DMA   1.3886 Buy
100-DMA   1.3867 Buy
200-DMA   1.3696 Buy
STOCH(5,3)   83.940 Sell
MACD(12,26,9)   -0.0074 Sell

USD/JPY

AAFX TRADING

USD/JPY on Wednesday made intra‐day low of JPY108.71/USD and made an intraday high of JPY109.66/USD and settled the day up 0.413% at JPY109.47/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

Long positions above 109.10-106.50 with targets of 110.90-111.70-112.20 with stop below 106.00. Sell below 110.00-114.50 with risk above 114.50 targeting 109.00-108.50-108.0 and 107.50-106.80.

 
Intraday Support Levels
S1     109.10
S2     108.50
S3     107.50-106.80

INTRADAY RESISTANCE LEVELS
R1     109.60-110.50
R2     111.70
R3     112.50-113.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   49.407 Buy
20-DMA   108.83 Sell
50-DMA   109.07 Sell
100-DMA   106.99 Sell
200-DMA   106.00 Sell
STOCH(9,6)   51.253 Sell
MACD(12,26,9)   0.103 Sell

AAFX TRADING
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