AAFX TRADING

Daily Market Lookup

  • The dollar sank to a fresh six-week low to the yen on Monday as markets continued to wager that the Federal Reserve has less tightening to do with the U.S. economy at risk of recession. Data at the end of last week tossed the greenback in both directions, with it rising initially after the personal consumption expenditures (PCE) price index showed the fastest inflation since 2005, only to sink after the final University of Michigan report - closely watched by Fed policymakers - showed slipping consumer inflation expectations. The big economic focus for this week will be the monthly U.S. jobs report on Friday. Traders currently price about 31% probability that the Fed will keep its current 75 basis-point pace of rate hikes at its next meeting on Sept. 21, with 69% odds for a smaller half point increase. Data from top trading partner China showed factory activity expanded at a slower pace in July.
  • The dollar dropped to a three-week low in choppy trading on Friday, as investor concerns about recession outweighed inflation worries, for now, amid a mixed batch of economic data. There was also a lot of month-end position-squaring, analysts said. Earlier, U.S. economic numbers showed that inflation continued its red-hot rise in June, keeping the Federal Reserve on track to raise interest rates as aggressively as it deems necessary. The personal consumption expenditures (PCE) price index jumped 1.0% last month, the largest increase since September 2005 and followed a 0.6% gain in May. In the 12 months through June, the PCE price index advanced 6.8%, the biggest gain since January 1982. Excluding the volatile food and energy components, the PCE price index shot up 0.6% after climbing 0.3% in May. The dollar initially rose on the inflation numbers, but gains fizzled amid the final University of Michigan report showing consumers' inflation expectations slipped in July. Federal Reserve Chairman Jerome Powell had mentioned the Michigan survey last month as key behind the pivot to the more aggressive rate posture. The greenback was also partly weighed down by data showing the Chicago manufacturing index falling to a 23-month low of 52.1 from a prior low of 56.0, according to Action Economics. Another key indicator, the U.S. employment cost index (ECI), also increased. The ECI, the broadest measure of labor costs, rose 1.3% last quarter after accelerating 1.4% in the January-March period, the Labor Department said on Friday. The index is widely viewed as one of the better gauges of labor market slack and a predictor of core inflation. Action Economics, in its blog after the U.S. data, said the ECI was one of the metrics that alarmed the Fed and caused its pivot to a 75 basis points hike. Post-data on Friday, rates futures markets have priced in a 72% chance of a 50 basis points hike at the Fed's September policy meeting, with a 28% probability of a 75-bps rate increase. . The rates markets also predict that the fed funds rate will peak in February 2023. Pre-U.S. data, futures were betting that top in the fed funds rate would hit this December. The yen was the primary short bet of the widening interest rate differential trade between the United States and its global peers, with net shorts on the currency, despite a recent pullback, above historical averages at $5.4 billion.
  • Oil prices dropped on Monday, as weak manufacturing data from China and Japan for July weighed on the outlook for demand, while investors braced for this week's meeting of officials from OPEC and other top producers on supply adjustments. Fresh COVID-19 lockdowns snuffed out a brief recovery seen in June for factory activity in China, the world's largest crude oil importer. The Caixin/Markit manufacturing purchasing managers' index (PMI) eased to 50.4 in July from 51.7 in the previous month, well below analysts' expectations, data showed on Monday. Japanese manufacturing activity expanded at its weakest rate in 10 months in July, data showed on Monday. Brent and WTI ended July with their second straight monthly losses for the first time since 2020, as soaring inflation and higher interest rates raise fears of a recession that would erode fuel demand. ANZ analysts said fuel sales to drivers in Britain were waning, while gasoline demand remained below its five-year average for this time of the year. The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, will meet on Wednesday to decide on September output. Two of eight OPEC+ sources in a Reuters survey said a modest increase for September would be discussed at the Aug. 3 meeting, while the rest said output would likely be held steady. The meeting comes after U.S. President Joe Biden visited Saudi Arabia last month. The start of August sees OPEC+ having fully unwound record output cuts in place since the COVID-19 pandemic took hold in 2020. The group's new secretary general, Haitham al-Ghais, reiterated on Sunday that Russia's membership in OPEC+ is vital for the success of the agreement, Kuwait's Alrai newspaper reported. Meanwhile, U.S. oil production continued to climb as the rig count rose by 11 in July, increasing for a record 23rd month in a row, data from Baker Hughes showed. Chinese factory activity shrank in July amid a fresh round of COVID-related lockdowns, official data showed on Sunday. The purchasing manager’s index (PMI) fell to 49.0 in July from 50.2 in the previous month. A reading below 50 indicates a contraction. A prolonged Chinese economic downturn is likely to weigh on global oil demand, given that the country is among the largest importers of crude oil. A brewing debt crisis in the country’s beleaguered real estate sector could also point to more economic weakness. Focus now turns to the Organization of Petroleum Exporting Countries and allies (OPEC+), which is set to meet on Wednesday, August 3, to discuss future supply. Reports suggest the group is likely to either hold production at current levels, or slightly raise output. The organization is, by August, expected to have fully phased out record supply cuts introduced during the COVID-19 pandemic in 2020. The OPEC+ decision this week will be closely watched by traders, given that U.S. President Joe Biden has called on the group to increase output to stabilize the market.

 

 
Intraday RESISTANCE LEVELS
1st August 2022 R1 R2 R3
GOLD-XAU 1,774-1,785 1,798 1,809-1,818
Silver-XAG 20.35-20.70 21.45 21.57-22.50
Crude Oil 96.90-98.00 98.90-99.90 100.70-101.85
EURO/USD 1.0290-1.0335 1.0390 1.0430-1.0470
GBP/USD 1.2245-1.2300 1.2405 1.2479-1.2550
USD/JPY 133.10-134.10 135.25 136.30-137.40

Intraday SUPPORTS LEVELS
1st August 2022 S1 S2 S3
GOLD-XAU 1,760-1,746 1,741 1,732-1,707
Silver-XAG 19.80-19.50 18.90 18.60-17.80
Crude Oil 96.00-94.90 94.00 92.35-91.30
EURO/USD 1.0190 1.0150 .0010-0.9950
GBP/USD 1.2170-1.2100 1.2010-1.1930 1.1870-1.1810
USD/JPY 132.50-131.90 131.50 130.90-130.20

Intra-Day Strategy (1st August 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$1767.88/oz and low of US$1752.03/oz. Gold up 0.584% at US$1766.03/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.

 
Intraday Support Levels
S1     1,760-1,746
S2     1,741
S3     1,732-1,707
Intraday Resistance Levels
R1     1,774-1,785
R2     1,798
R3     1,809-1,818

Technical Indicators

Name   Value Action
14DRSI  

33.708

Buy
20-DMA   1746.30 Sell
50-DMA  

1794.58

Sell
100-DMA   1826.12 Sell
200-DMA   1834.0 Sell
STOCH(5,3)   7.367 Sell
MACD(12,26,9)   -27.400 Buy

Silver - XAG

AAFX TRADING

Silver on Friday made its intraday high of US$20.36/oz and low of US$19.84/oz settled up by 1.760% at US$20.34/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.

 
Intraday  Support Levels
S1     19.80-19.50
S2     18.90
S3     18.60-17.80

Intraday  Resistance Levels
R1     20.35-20.70
R2     21.45
R3     21.57-22.50

TECHNICAL INDICATORS
Name   Value Action
14DRSI   57.738 Buy
20-DMA   19.37 Sell
50-DMA   20.35 Sell
100-DMA   21.46 Sell
200-DMA   22.48 Sell
STOCH(5,3)   97.797 Buy
MACD(12,26,9)   -0.331 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Thursday made an intra‐day high of US$100.91/bbl, intraday low of US$95.56/bbl and settled down by 0.840% to close at US$97.27/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.

 
Intraday Support Levels
S1     96.00-94.90
S2     94.00
S3     92.35-91.30

Intraday Resistance Levels
R1     96.90-98.00
R2     98.90-99.90
R3     100.70-101.85

TECHNICAL INDICATORS
Name   Value Action
14DRSI   45.197 Sell
20-DMA   98.88 Buy
50-DMA   102.69 Buy
100-DMA   101.85 Buy
200-DMA   94.99 Buy
STOCH(5,3)   67.76 Sell
MACD(12,26,9)   -3.175 Buy

EUR/USD

AAFX TRADING

EUR/USD on Friday made an intraday low of US$1.0145/EUR, high of US$1.0254/EUR and settled the day down by 0.270% to close at US$1.0224/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.

 
Intraday Support Levels
S1     1.0190
S2     1.0150
S3     .0010-0.9950

Intraday  Resistance Levels
R1     1.0290-1.0335
R2     1.0390
R3     1.0430-1.0470

TECHNICAL INDICATORS
Name   Value Action
14DRSI   46.993 Buy
20-DMA   1.0253 Sell
50-DMA   1.0428 Sell
100-DMA   1.0636 Sell
200-DMA   1.0930 Sell
STOCH(5,3)   87.589 Buy
MACD(12,26,9)   -0.0090 Buy

GBP/USD

AAFX TRADING

GBP/USD on Friday made an intra‐day low of US$1.2062/GBP, high of US$1.2245/GBP and settled the day up 0.013% 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.

 
Intraday Support Levels
S1     1.2170-1.2100
S2     1.2010-1.1930
S3     1.1870-1.1810

Intraday Resistance Levels
R1     1.2245-1.2300
R2     1.2405
R3     1.2479-1.2550

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

58.303

Buy
20-DMA   1.2071 Sell
50-DMA   1.2203 Sell
100-DMA   1.2468 Sell
200-DMA   1.2821 Sell
STOCH(5,3)   83.940 Buy
MACD(12,26,9)   -0.0006 Sell

USD/JPY

AAFX TRADING

USD/JPY on Friday made intra‐day low of JPY132.49/USD and made an intraday high of JPY134.67/USD and settled the day down by 0.770% at JPY133.21/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.

 
Intraday Support Levels
S1     132.50-131.90
S2     131.50
S3     130.90-130.20

INTRADAY RESISTANCE LEVELS
R1     133.10-134.10
R2     135.25
R3     136.30-137.40

TECHNICAL INDICATORS
Name   Value Action
14DRSI   63.771 Buy
20-DMA   136.42 Buy
50-DMA   133.46 Buy
100-DMA   129.18 Buy
200-DMA   123.59 Buy
STOCH(9,6)   60.033 Buy
MACD(12,26,9)   1.389 Sell

AAFX TRADING
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