Daily Market Lookup

• The dollar was down on Friday morning in Asia as investors bet on slower hikes from the U.S. Federal Reserve. He warned, like many analysts have this week, that the market's "conclusion that the Fed has lost some of its hawkishness (is) debatable". U.S. Gross Domestic Product (GDP) released on Thursday fell at a 0.9% annual rate in the second quarter, according to the Commerce Department's advance estimate. The first quarter saw a contraction of 1.6%. Two consecutive contractionary quarters are widely viewed by economists as signaling a technical recession. However, in the U.S., the National Bureau of Economic Research is the arbiter of recessions, which it defines as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators”. The Fed, on Wednesday, raised interest rates by 75 basis points to 2.25-2.5% as markets expected. Fed Chair Jerome Powell said he did not think the United States was in a recession, based on the strength of the jobs market. Now markets have priced in the possibility that the Fed will slow the pace of interest rate hikes to half a point at the next meeting in September. Elsewhere, U.S. President Joe Biden and Chinese President Xi Jinping plan to have an in-person meeting, which would be the first face-to-face one between the men since Biden became president. It won’t be long until the dollar shakes off its post-Federal Reserve slumber as calls on a dovish Fed pivot are too early and weakening in the global economy will continue to sour sentiment on risk assets. The economy declined by 0.9% in the second quarter, the Commerce Department said in its first estimate on Thursday, confounding estimates for a 0.5% increase. The weaker economy data reignited the ‘bad news is good news’ reaction in risk assets amid expectations that a wobble in the economy will force the Fed to rethink its approach to front-load rate hikes. Treasury yields added to losses from a day earlier, pressuring the greenback to slide deeper in the red. The Fed hiked rates by 0.75% on Wednesday but also teed up expectations for a slower pace of tightening after the September meeting to assess the impact of rate hikes on inflation and the economy. Bets on the Fed pivoting to a less hawkish stance, ING adds, may prove too early and “markets should retain most dollar longs until the Fed is giving clearer signals that it is pivoting to a less hawkish stance.” Morgan Stanley appears to agree and points to a Fed that will likely remain “hyper-focused on fighting inflation, despite signs of weaker growth.”
• Gold was up on Friday morning in Asia as expectations of aggressive interest rate hikes from the U.S. Federal Reserve receded. The dollar which normally moves inversely to gold, edged down on Thursday morning. The dollar has spent most of July hovering around 20-year highs. U.S. Gross Domestic Product (GDP) released on Thursday fell at a 0.9% annual rate in the second quarter, which lifted bullion’s safe-haven allure. The U.S. Federal Reserve on Wednesday raised interest rates by 75 basis points to 2.25-2.5% as markets expected. Fed Chair Jerome Powell sounded less hawkish in his press conference, saying the final rate hike decision at the September meeting will be determined by the incoming economic data Elsewhere, US President Joe Biden and Chinese President Xi Jinping plan to have an in-person meeting, which would be the first face-to-face one between the men since Biden became president.
• Oil was up on Friday morning in Asia. Investors now focus on the Organization of the Petroleum Exporting Countries and allies (OPEC+)’s meeting next week, where the bloc will decide the oil output. Brent is set to climb nearly 5% for the week in its second straight weekly gain, while WTI is on track for a nearly 3% rise for the week, recouping the previous week’s losses The dollar is softening, which usually leads to a rise in oil as a weaker dollar makes crude cheaper for buyers holding other currencies. Now investors have shifted their focus to the Organization of the Petroleum Exporting Countries and allies (OPEC+) meeting on August 3 as the bloc is about to end its 2020 output reduction pact. According to Reuters, OPEC+ sources said the group will consider keeping oil output unchanged for September, but two OPEC+ sources also said a modest increase would be discussed. A senior U.S. administration official said on Thursday said extra supply would help stabilize the market and the government was optimistic about the meeting. However, analysts were less optimistic as many of the OPEC+ producers have difficulties boosting supply due to a lack of investment in oil fields. A key driver will be the next meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together called OPEC+, on Aug. 3. Producers have now unwound the record 9.7 million barrels per day (bpd) supply cut they agreed in April 2020, when the COVID-19 pandemic slammed demand. OPEC+ sources said the group will consider keeping oil output unchanged for September, but two OPEC+ sources also told Reuters a modest increase would be discussed. A decision not to raise output would disappoint the United States after U.S. President Joe Biden visited Saudi Arabia this month hoping to strike a deal on oil production. A senior U.S. administration official said on Thursday the government was optimistic about the OPEC+ meeting, and said extra supply would help stabilise the market. Analysts, however, said it would be difficult for OPEC+ to boost supply much given that many producers are struggling to meet their production quotas due to a lack of investment in oil fields.

Gold – XAU

Gold on Thursday made its intraday high of US$1756.95/oz and low of US$1733.74/oz. Gold up 1.25% at US$1755.80/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 a2lso 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 1774-1818 keeping stop loss closing above 1818, targeting 1760-1746-1741 and 1732-1707-1700. Buy in between 1760-1707 with risk below 1707, targeting 1774-1785-1798 and 1809-1818.

Silver - XAG

Silver on Thursday made its intraday high of US$20.01/oz and low of US$19.05/oz settled up by 4.99% at US$20.00/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 18.90-16.90, targeting 19.50-19.80 and 20.45-20.70-21.20 with stop loss should be place on the breakage below 16.90. Sell in between 19.50-23.75 with stop loss above 23.75; targeting 18.90-18.40-17.90 and 17.50-16.90-16.40.

Oil - WTI

Crude Oil on Thursday made an intra‐day high of US99.00/bbl, intraday low of US$95.29/bbl and settled up by 2.58% to close at US$96.54/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 98.00-104.70 with stop loss at 104.70; targeting 96.90-96.00-94.30 and 93.20-92.30-91.30. Buy above 96.90-90.30 with risk daily closing below 90.30 and targeting 98.00-98.90-99.90 and 100.70-101.85.

EUR/USD

EUR/USD on Thursday made an intraday low of US$1.0113/EUR, high of US$1.0234/EUR and settled the day down by 0.090% to close at US$1.0196/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 1.0290-1.0430, targeting 1.0190-1.0010 and 0.9950-0.9860 with stop-loss at daily closing above 1.0430. Buy above 1.0190-0.9800 with risk below 0.9800, targeting 1.0290-1.0335-1.0390 and 1.0430-1.0470.

GBP/USD

GBP/USD on Thursday made an intra‐day low of US$1.2102/GBP, high of US$1.2191/GBP and settled the day up 0.198% to close at US$1.2176/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 1.1210-1.1700 with target 1.2200-1.2245-1.2310 and 1.2405-1.2479 with stop loss closing below 1.1700. Sell in between 1.12050-1.2230 with targets at 1.1850-1.1800 and 1.1760-1.1700 with stop loss should be 1.2630.

USD/JPY

USD/JPY on Thursday made intra‐day low of JPY134.19/USD and made an intraday high of JPY136.57/USD and settled the day down by 0.983% at JPY134.19/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 133.10-137.50 with risk above 137.50 targeting 132.50-131.90-131.50 and 130.90-130.20. Long positions above 132.50-130.20 with targets of 133.10-134.10-135.25 and 136.30-137.40-137.90 with stop below 130.20.