AAFX TRADING

Daily Market Lookup

  • The dollar's race to two-decade highs is leaving a trail of destruction in its wake, exacerbating inflation in other countries and tightening financial conditions just as the world economy confronts the prospect of a slowdown in growth. This year's 8% gain against a basket of currencies is driven partly by bets that the U.S. Federal Reserve will raise interest rates faster and further than other developed countries, and partly by its status as a safe haven in times of turbulence. It is also supported by Japan's reluctance to ditch its super-easy policies, and fears of recession in Europe. Currency weakness normally benefits export-reliant Europe and Japan, but the equation may not hold when inflation is high and rising. Euro zone inflation hit a record 7.5% this month, although so far European Central Bank policymakers blame it mainly on energy prices. Bank of Japan boss Haruhiko Kuroda still views yen weakness as a positive for Japan, but lawmakers fret that the yen, at 20-year lows, will inflict damage via costlier food and fuel. Half of Japanese firms expect higher costs to hurt earnings, a survey found. A rising U.S. dollar tends to tighten financial conditions, which reflect the availability of funding.. Emerging markets tend to have especially high levels of dollar debt. EM conditions have tightened 190 basis points this month, led by Russia, Goldman's FCI shows. The U.S. FCI is at its tightest since July 2020. Almost all past emerging market crises were linked to dollar strength. A 10.5% jump in 1993 followed by a 4.6% rise in 1994 for instance were blamed for triggering the "Tequila crisis" in Mexico, which was followed by meltdowns in emerging markets in Asia, as well as Brazil and Russia. Dollar strength means higher revenues in local currencies for commodity-exporting developing countries. But the flip side is higher debt servicing costs. Median foreign-currency government debt in emerging markets stood at a third of GDP by end-2021, Fitch estimates, compared to 18% in 2013. Several developing countries are already seeking IMF/World Bank assistance, and further dollar strength could add to those numbers. The rule of thumb is that a firmer greenback makes dollar-denominated commodities costlier for consumers who use other currencies, eventually subduing demand and prices. This year, however, tight supplies of major commodities have prevented that equation from kicking in as the Ukraine-Russia war has hit exports of oil, grain, metals and fertiliser, keeping prices elevated. The Fed might welcome a rising greenback that calms imported inflation -- Societe Generale (OTC:SCGLY) estimates a 10% dollar appreciation causes U.S. consumer inflation to decline by 0.5 percentage points over a year. If dollar gains continue, the Fed won't need to tighten monetary policy as aggressively as anticipated; notably, the dollar surge of the past week has also seen money market bets on Fed rate hikes stabilise.
  • Gold prices fell on Monday as elevated U.S. Treasury yields pressured demand for zero-yield bullion, ahead of a widely expected big interest rate hike by the Federal Reserve to contain rising inflationary pressures. The market is concerned that the Fed could be quite hawkish, pricing in a 50 basis point hike, and it could be 75 basis points in July, said Stephen Innes, managing partner at SPI Asset Management. The U.S. central bank's Federal Open Market Committee is scheduled to begin its two-day meeting on interest rates on May 3 and announce its decision the next day. Fed policymakers look set to deliver a series of aggressive rate hikes at least until the summer to deal with rapid inflation and surging labour costs, even as two reports released on Friday showed tentative signs that both may be cresting. The Fed is still behind, and has constantly tried to keep up with these expectations, so there's a good chance they are looking at current inflation metrics, and "are going to continue to beat the hawkish drum," Innes said. Higher short-term U.S. interest rates and bond yields tend to increase the opportunity cost of holding bullion, which yields nothing. Bullion is also seen as a safe store of value during times of economic and political crises. Around 100 civilians evacuated from the ruined Azovstal steelworks in Mariupol were due to arrive in a Ukrainian-held city on Monday, Ukrainian President Volodymyr Zelenskiy said, after U.S. Speaker Nancy
  • Oil prices fell on Monday in holiday-sapped trade in Asia as concerns about weak economic growth in China, the world's top oil importer, outweighed fears of potential supply stress from a looming European Union ban on Russian crude. Prices fell after China released data on Saturday showing that factory activity in the world's second-largest economy contracted for a second month to its lowest since February 2020 because of COVID lockdowns. On the supply side, Libya's National Oil Corp (NOC) said on Sunday it would temporarily resume operations at the Zueitina oil terminal to reduce stockpiles in storage tanks to avert an "imminent environmental disaster" at the port. NOC in late April declared force majeure on some shipments at Zueitina as political protesters forced a number of oil facilities to suspend operations. Limiting the down side for oil prices is a possible dent in supply with the European Union leaning towards banning imports of Russian oil by the end of the year, two EU diplomats said after talks between the European Commission and EU member states on the weekend. Around half of Russia's 4.7 million barrels per day (bpd) of crude exports go to the EU, supplying about one-fourth of the EU's oil imports in 2020. While Western countries have curbed buying Russian oil as sanctions have hit shipping and insurance for the country's exports, the impact on global supply has been cushioned as India has been picking up heavily discounted Russian cargoes. Reuters reported on Friday that Indian refiners are negotiating a six-month oil deal with Russia to import millions of barrels per month.

 

 
Intraday RESISTANCE LEVELS
2nd May 2022 R1 R2 R3
GOLD-XAU 1,890-1,900 1,923-1,938 1.950-1,958
Silver-XAG 22.85-23.05 23.20 23.60-23.95
Crude Oil 103.90-104.50 106.40 107.20-109.40
EURO/USD 1.0610-1.0690 1.0765 1.0820-1.0900
GBP/USD 1.2605-1.2690 1.2750-1.2790 1.2840-1.2900
USD/JPY 130.60-131.20 132.00 132.90-133.50

Intraday SUPPORTS LEVELS
2nd May 2022 S1 S2 S3
GOLD-XAU 1,874-1,868 1,857 1,848-1,834
Silver-XAG 22.50-22.05 21.70 21.40-21.05
Crude Oil 102.95-102.10 101.00-99.25 98.50-97.00
EURO/USD 1.0550-1.0490 1.0450 1.0390
GBP/USD 1.2545-1.2490 1.2420 1.2360-1.2300
USD/JPY 130.00-129.60 129.00-127.50 127.00-126.40

Intra-Day Strategy (2nd May 2022)
GOLD-XAU Sell on Strength
Silver-XAG Buy on Dips
Crude Oil Neutral to Sell
EUR/USD Neutral to Sell
GBP/USD Neutral to Buy
USD/JPY Neutral to Sell

Gold – XAU

AAFX TRADING

Gold on Friday made its intraday high of US$1919.77/oz and low of US$1892.47/oz. Gold up 1.02% at US$1897.14/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: Sell on Strength

Sell below 1890-1970 keeping stop loss closing above 1970, targeting 1874-1868 and 1857-1849-1834. Buy in between 1874-1834 with risk below 1834, targeting 1890-1908-1923 and 1938-1958-1970.

 
Intraday Support Levels
S1     1,874-1,868
S2     1,857
S3     1,848-1,834
Intraday Resistance Levels
R1     1,890-1,900
R2     1,923-1,938
R3     1.950-1,958

Technical Indicators

Name   Value Action
14DRSI  

42.603

Buy
20-DMA   1944.89 Buy
50-DMA  

1925.10

Buy
100-DMA   1890.99 Buy
200-DMA   1856.28 Buy
STOCH(5,3)   10.014 Sell
MACD(12,26,9)   3.180 Buy

Silver - XAG

AAFX TRADING

Silver on Friday made its intraday high of US$23.55/oz and low of US$22.67/oz settled down by 1.585% at US$22.77/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 22.40-21.00, targeting 22.85-23.20--23.95 and 24.55-25.10-25.70 with stop loss should be place on the breakage below 21.00. Sell in between 22.90-24.90 with stop loss above 24.90; targeting 22.50-22.05-21.70 and 21.40-21.05.

 
Intraday  Support Levels
S1     22.50-22.05
S2     21.70
S3     21.40-21.05

Intraday  Resistance Levels
R1     22.85-23.05
R2     23.20
R3     23.60-23.95

TECHNICAL INDICATORS
Name   Value Action
14DRSI   27.633 Buy
20-DMA   24.14 Sell
50-DMA   24.38 Sell
100-DMA   24.21 Sell
200-DMA   24.17 Sell
STOCH(5,3)   12.135 Sell
MACD(12,26,9)   0.082 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Friday made an intra‐day high of US107.04/bbl, intraday low of US$103.01/bbl and settled down by 0.806% to close at US$103.35/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 0will 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 103.95-109.40 with stop loss at 109.40; targeting 102.95-102.10-101.00 and 99.25-98.50-97.00. Buy above 103.10-97.00 with risk daily closing below 97.00 and targeting 103.90-104.50-106.40 and 107.20-109.40.

 
Intraday Support Levels
S1     102.95-102.10
S2     101.00-99.25
S3     98.50-97.00

Intraday Resistance Levels
R1     103.90-104.50
R2     106.40
R3     107.20-109.40

TECHNICAL INDICATORS
Name   Value Action
14DRSI   52.634 Sell
20-DMA   102.29 Buy
50-DMA   100.05 Buy
100-DMA   94.30 Buy
200-DMA   85.54 Buy
STOCH(5,3)   76.206 Buy
MACD(12,26,9)   0.352 Buy

EUR/USD

AAFX TRADING

EUR/USD on Friday made an intraday low of US$1.0489/EUR, high of US$1.0592/EUR and settled the day up by 0.036% to close at US$1.0543/EUR.

Technicals in Focus:

On daily charts, prices are sustaining above 50DMA (1.1191), which become immediate support, break below will target 1.1270. MACD is above zero line and histograms are increasing mode which will bring bullish view. Stochastic is in overbought territory and giving positive crossovers to signal for bullish outlook for intraday. 14D RSI is currently in neutral region and giving no directions to consider right now.

Trading Strategy: Neutral to Sell

Sell below 1.0610-1.1145, targeting 1.0765-1.0720-1.0640 and 1.0600-1.0550 with stop-loss at daily closing above 1.1200. Buy above 1.0550-1.0450 with risk below 1.0450, targeting 1.0765-1.0820-1.0870 and 1.0900-1.0950-1.1105.

 
Intraday Support Levels
S1     1.0550-1.0490
S2     1.0450
S3     1.0390

Intraday  Resistance Levels
R1     1.0610-1.0690
R2     1.0765
R3     1.0820-1.0900

TECHNICAL INDICATORS
Name   Value Action
14DRSI   32.509 Buy
20-DMA   1.0869 Sell
50-DMA   1.0995 Sell
100-DMA   1.1143 Sell
200-DMA   1.1338 Sell
STOCH(5,3)   21.688 Sell
MACD(12,26,9)   -0.007 Buy

GBP/USD

AAFX TRADING

GBP/USD on Friday made an intra‐day low of US$1.2437/GBP, high of US$1.2613/GBP and settled the day up by % to close at US$1.2572/GBP.

Technicals in Focus:

On daily charts, prices are sustaining below 20DMA (1.2834) is become immediate resistance level. 14-D RSI is currently in oversold 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 Buy

Based on the charts and explanations above; buy in between 1.2545-1.2300 with target 1.2605-1.2690-1.2750 and 1.2790-1.2840-1.2900 with stop loss closing below 1.2500. Sell in between 1.2605-1.2900 with targets at 1.2545-1.2490-1.2420 and 1.2360-1.2300 with stop loss should be 1.3300.

 
Intraday Support Levels
S1     1.2545-1.2490
S2     1.2420
S3     1.2360-1.2300

Intraday Resistance Levels
R1     1.2605-1.2690
R2     1.2750-1.2790
R3     1.2840-1.2900

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

29.403

Buy
20-DMA   1.2834 Sell
50-DMA   1.3043 Sell
100-DMA   1.3214 Sell
200-DMA   1.3435 Sell
STOCH(5,3)   29.970 Sell
MACD(12,26,9)   -0.002 Sell

USD/JPY

AAFX TRADING

USD/JPY on Friday made intra‐day low of JPY129.30/USD and made an intraday high of JPY130.94/USD and settled the day down 0.778% at JPY129.71/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 130.60-132.50 with risk above 132.50 targeting 130.00-129.60-129.00 and 128.10-127.00-126.40. Long positions above 130.00-126.40 with targets of 130.60-131.20-132.00 and 132.90-133.50 with stop below 126.40.

 
Intraday Support Levels
S1     130.00-129.60
S2     129.00-127.50
S3     127.00-126.40

INTRADAY RESISTANCE LEVELS
R1     130.60-131.20
R2     132.00
R3     132.90-133.50

TECHNICAL INDICATORS
Name   Value Action
14DRSI   70.839 Buy
20-DMA   126.96 Sell
50-DMA   123.14 Buy
100-DMA   119.76 Buy
200-DMA   116.35 Buy
STOCH(9,6)   75.683 Buy
MACD(12,26,9)   0.0102 Sell

AAFX TRADING
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