Daily Market Lookup

• The U.S. dollar climbed in early European trade Tuesday after a hefty rate hike by Australia’s central bank prompted further inflation concerns, causing U.S. bond yields to soar. The Reserve Bank of Australia raised its key rate by 50 basis points earlier Tuesday, a more hawkish move than the 25 basis point increase that most had expected, while also committing to doing "what is necessary" to cool inflation The fact the Australian policymakers felt the need to increase interest rates by a hefty half a percentage point has caused nerves to fray ahead of Friday’s U.S. consumer price figures, especially after the strong U.S. jobs data at the end of last week. The May CPI release will provide more clues on the Fed's rate-hiking path, ahead of next week's policy decision, and concerns are growing that upward price pressures will be around for longer, potentially forcing more aggressive action from the Fed. That said, the main focus is on Thursday's meeting by the European Central Bank, which is expected to prepare the ground for an interest rate hike at its July meeting. Even without the political turmoil, “the pound remains vulnerable in the short term given worsening growth prospects and a potential re-pricing of BoE rate expectations,” said ING. “A break below 1.2500 in cable could see the pair extend losses to the 1.2300-1.2350 area this week.”
• The dollar rallied for a second day, reaching a fresh two-decade high against the yen, as worries that inflation would prove sticky lifted Treasury yields while also hurting Asian equities, both to the U.S currency's benefit. By contrast, equivalent Japanese yields are pinned near zero by the Bank of Japan's yield-curve control policy, with central bank governor Haruhiko Kuroda on Monday reiterating an unwavering commitment to "powerful" monetary stimulus. Strong U.S. jobs data at the end of last week have fuelled bets that upward price pressures will be around for longer, potentially forcing more aggressive action from the U.S. Federal Reserve. Consumer price figures due Friday will provide more clues on the Fed's rate-hiking path, ahead of next week's policy decision, where a half-point increase is widely expected. The euro slipped 0.21% to $1.0674 ahead of the European Central Bank's rate-setting meeting on Thursday, with traders, who have already priced in several hikes and the end of bond-buying stimulus, wanting more clarity on what comes after. Prime Minister Boris Johnson survived a vote of confidence on Monday but was left weakened.
• Gold was up on Tuesday morning in Asia, but the moves were small. Expectations for more interest rate hikes in the U.S. and Europe grew. Last week’s jobs reports raised expectations of continued tightening by the U.S. Federal Reserve. Investors now await Friday’s U.S. consumer price index (CPI) for clues on the interest rate hike path. The European Central Bank will hand down its policy decision this Thursday and is expected to join global peers in moving to tamp down inflation. In Asia Pacific, The Reserve Bank of Australia will hand down its policy decision later in the day, which is widely expected to deliver back-to-back interest rate hikes for the first time in 12 years. India’s gold imports increased by 677% year-on-year ahead of a key festival and wedding season, according to Reuters citing a government source. With high inflation denting consumers’ confidence, Bank of Japan Governor Haruhiko Kuroda reiterated on Monday an unwavering commitment to “powerful” monetary stimulus.
• Oil prices edged higher on Tuesday on an expected demand recovery in China as the world's second-biggest economy relaxes tough COVID-19 curbs, and on doubts that a higher output target by OPEC+ producers would ease tight supply. Beijing and commercial hub Shanghai have been returning to normal in recent days after two months of painful lockdowns to stem outbreaks of the Omicron variant. Traffic bans were lifted and restaurants were opened for dine-in service on Monday in most parts of Beijing. Top oil exporter Saudi Arabia raised the July official selling price (OSP) for its flagship Arab light crude to Asia by $2.10 from June to a $6.50 premium over Oman/Dubai quotes, just off an all-time peak recorded in May when prices hit highs due to worries of disruptions in Russian supplies. Last week, the Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, decided to boost output for July and August by 648,000 barrels per day, or 50% more than previously planned. The increased target was spread across all OPEC+ members. However, many members have little room to ramp up output, including Russia, which faces Western sanctions. Elsewhere, U.S. crude inventories likely fell last week, while gasoline and distillate stockpiles were seen up, a preliminary Reuters poll showed on Monday.

Gold – XAU

Gold on Monday made its intraday high of US$1857.80/oz and low of US$1840.55/oz. Gold down 0.482% at US$1841.41/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 1859-1907 keeping stop loss closing above 1907, targeting 1851-1842-1827 and 1820-1801-1789. Buy in between 1831-1790 with risk below 1790, targeting 1840-1851-1870-1879 and 1890-1900-1907.

Silver - XAG

Silver on Monday made its intraday high of US$22.50/oz and low of US$21.88/oz settled up by 1.739% at US$22.07/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 21.60-19.60, targeting 22.05-22.50 and 23.05--23.95-24.55-25.10 with stop loss should be place on the breakage below 19.50. Sell in between 22.10-23.75 with stop loss above 23.75; targeting 21.50-21.05-20.60 and 20.00-19.60.

Oil - WTI

Crude Oil on Monday made an intra‐day high of US119.12/bbl, intraday low of US$115.97/bbl and settled down by 0.098% to close at US$117.78/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 118.20-122.10 with stop loss at 122.10; targeting 114.50-113.25-111.60 and 110.10-107.60-105.90. Buy above 117.10-109.90 with risk daily closing below 109.00 and targeting 105.80-117.10-118.20 and 119.00-120.10.

EUR/USD

EUR/USD on Monday made an intraday low of US$1.0695/EUR, high of US$1.0751/EUR and settled the day down by 0.097% to close at US$1.0695/EUR.

Technicals in Focus:

On daily charts, prices are sustaining above 50DMA (1.0736), which become immediate support, break below will target 1.0647. 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 1.0750-1.0970, targeting 1.0690-1.0630-1.0550 and 1.0490-1.0450-1.0390 with stop-loss at daily closing above 1.1100. Buy above 1.0690-1.0210 with risk below 1.0210, targeting 1.0741-1.0795 and 1.0920-1.0970-1.1005.

GBP/USD

GBP/USD on Monday made an intra‐day low of US$1.2475/GBP, high of US$1.2577/GBP and settled the day up by 0.332% to close at US$1.2529/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 1.2490-1.2010 with target 1.2575-1.2650-1.2745 and 1.2800-1.2975 with stop loss closing below 1.2010. Sell in between 1.2575-1.2975 with targets at 1.2490-1.2420 and 1.2310-1.2200-1.2150 with stop loss should be 1.2975.

USD/JPY

USD/JPY on Monday made intra‐day low of JPY130.42/USD and made an intraday high of JPY132.00/USD and settled the day up 0.733% at JPY131.85/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 130.60-133.50 with risk above 133.50 targeting 129.60-128.90-127.50 and 126.90-126.10-125.00. Long positions above 129.60-124.30 with targets of 130.60-131.20-132.00 and 132.90-133.50 with stop below 124.30.