AAFX TRADING

Daily Market Lookup

  • The dollar edged higher on Tuesday, but was below the 20-year high it hit a day earlier, while the euro broke back above parity, as markets priced in super-sized interest rate hikes by the U.S. Federal Reserve and the European Central Bank (ECB). The greenback has been supported by aggressive rate hikes by the Fed in an effort to reel in decades-high inflation, and economic data released on Tuesday gave the central bank no reason to hold back. One report showed that U.S. job openings unexpectedly rose in July, while the previous month was revised sharply higher, suggesting a strong economy, despite two straight quarterly declines in gross domestic product. Other data showed a bigger-than-expected rebound in U.S. consumer confidence in August after three straight monthly declines, which is potentially a positive signal for consumer spending. Traders increased their bets on the chance of a third-straight 75-basis-point rate hike by the Fed in September to 74.5% from around 66.5% about an hour before Tuesday's U.S. economic data was released. Some traders had bet the Fed would pivot to a more accommodative stance early in 2023, but those expectations were dashed on Friday when Chairman Jerome Powell said at the Jackson Hole conference in Wyoming that the central bank would raise rates and keep them high for some time. All eyes will be on U.S. nonfarm payrolls data for August on Friday, as any cooling in labor demand would ease pressure on the Fed to stick with outsized rate hikes. German inflation rose to its highest level in almost 50 years in August, beating a high set only three months earlier, data showed, strengthening the case for the ECB to go for a larger basis-point interest rate increase next month. The single currency has risen over the past few sessions by aggressive pricing of expected ECB rate hikes, as well as a softening of natural gas prices, said John Hardy head of FX strategy at Saxo Bank. The U.S. dollar edged lower in early European trade Tuesday, falling back from a 20-year peak, as attention turns towards Europe, with Wednesday’s Eurozone inflation data likely to point to an aggressive ECB interest rate hike next month. The dollar soared higher at the end of last week after Federal Reserve chief Jerome Powell firmly committed to raising interest rates to tame inflation, even at the cost of a decline in economic growth. This means upcoming economic data, and Friday’s monthly nonfarm payrolls in particular will be studied carefully as investors try to figure out whether the central bank can pull off an economic slowdown without triggering a recession. Ahead of this, the Eurozone is set to release August CPI figures on Wednesday, with annual inflation expected to accelerate to 9.0% from 8.9% in July, well above the ECB’s 2% target. The data will likely add to pressure on the ECB to hike rates aggressively at its upcoming September meeting even amid the mounting risk of a recession. European Central Bank board member Isabel Schnabel acknowledged this over the weekend, saying central banks risk losing public trust and must now act forcefully to combat inflation, even if that drags their economies into a recession. USD/CNY rose 0.1% to 6.9149, with the pair near a two-year high after China’s finance minister indicated the country’s authorities would step up measures to boost demand and stabilize employment and prices in the second half of the year, potentially resulting in a looser monetary policy.
  • Gold prices fell on Wednesday and were set for a fifth straight month of losses amid fears of aggressive policy tightening by the Federal Reserve, while copper rose as Chinese manufacturing activity improved slightly in August. Bullion prices tumbled on Tuesday after data showed a bigger-than-expected rise in U.S. job openings. The dollar index surged after the reading, given that strength in the labor market gives the Fed more space to raise rates aggressively. The data also comes ahead of U.S. nonfarm payrolls, due on Friday. A strong reading is likely to sway the Fed towards more aggressive policy tightening. Traders are now penciling in a nearly 70% chance that the Fed will hike rates by 75 basis points in September. Gold has been on an extended downturn this year as a series of sharp interest rate hikes by the Fed drove up the dollar and U.S. Treasury yields. The yellow metal was hit especially hard last week after Fed Chair Jerome Powell warned that the central bank has no intention of slowing its tightening cycle. Among industrial metals, copper prices recovered slightly on Wednesday after data showed Chinese manufacturing activity shrank at a slightly lesser-than-expected pace in August. A reading below 50 indicates contraction. While overall business activity in China expanded in August, it did so at a slower pace than July.
  • Oil prices recovered slightly on Wednesday as data pointed to firm fuel demand in the United States, providing respite after a 5% drop a day earlier on fear of demand suffering from increased China COVID-19 curbs and central bank interest rate hikes. The price swings since the Ukraine conflict began six months ago have rattled hedge funds and speculators and thinned trading, which in turn has made the market whipsaw even more, as seen on Tuesday. Supporting market sentiment on Wednesday, data from the American Petroleum Institute (API) showed gasoline inventories fell by about 3.4 million barrels, while distillate stocks, which include diesel and jet fuel, fell by about 1.7 million barrels for the week ended Aug. 2 The drawdown in gasoline stockpiles was nearly triple the 1.2 million barrel drop that eight analysts polled by Reuters had expected on average. For distillate inventories they had expected a drop of about 1 million barrels. However API data showed crude stocks rose by about 593,000 barrels, against analysts' estimates of a drop of around 1.5 million barrels. A slightly weaker U.S. dollar also shored up the market, with oil consequently being cheaper for buyers holding other currencies. Price gains were capped by worries that some of China's biggest cities - from Shenzhen to Dalian - are imposing lockdowns and business closures to curb COVID-19 at a time when the world's second-biggest economy is already experiencing weak growth On the supply side, oil exports from Iraq were unaffected by the worst violence seen in Baghdad for years, three sources told Reuters on Tuesday. Clashes eased on Tuesday after powerful cleric Moqtada al-Sadr ordered his followers to end their protests. The main factor supporting prices at the moment is talk from members of the Organization of the Petroleum Exporting Countries (OPEC) and allies, together called OPEC+, that they might cut output to stabilise the market. OPEC+ is next due to meet on Sept. 5.

 

 
Intraday RESISTANCE LEVELS
31st August 2022 R1 R2 R3
GOLD-XAU 1,732-1,740 1,751 1,760-1,774
Silver-XAG 18.90-19.50 19.80-20.00 20.70-21.00
Crude Oil 93.00-94.20 95.00-96.30 97.00-98.30
EURO/USD 1.0030-1.0090 1.0150 1.0190-1.0280
GBP/USD 1.1760-1.1850 1.1930 1.2060-1.2010
USD/JPY 139.10-140.00 140.70 141.40-142.00

Intraday SUPPORTS LEVELS
31st August 2022 S1 S2 S3
GOLD-XAU 1,718-1,706 1,700 1,690-1,679
Silver-XAG 18.40-17.80 17.40 17.00-16.50
Crude Oil 91.30-90.50 89.40 88.00-87.20
EURO/USD 0.9995-0.9950 0.9910 0.9850-0.9790
GBP/USD 1.1655-1.1600 1.1540-1.1480 1.1540-1.1480
USD/JPY 137.90-136.50 137.90-136.50 135.20-134.10

Intra-Day Strategy (31st 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 Monday made its intraday high of US$1740.45/oz and low of US$1721.12/oz. Gold is up by 0.748% at US$1724.19/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 the 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 1732-1800 keeping stop loss closing above 1800, targeting 1718-1707 and 1700-1690-1671. Buy in between 1718-1679 with risk below 1679, targeting 1732-1740-1760 and 1774-1785-1798.

 
Intraday Support Levels
S1     1,718-1,706
S2     1,700
S3     1,690-1,679
Intraday Resistance Levels
R1     1,732-1,740
R2     1,751
R3     1,760-1,774

Technical Indicators

Name   Value Action
14DRSI  

37.095

Buy
20-DMA   1755.77 Sell
50-DMA  

1772.60

Sell
100-DMA   1799.90 Sell
200-DMA   1817.81 Sell
STOCH(5,3)   34.008 Sell
MACD(12,26,9)   -7.270 Buy

Silver - XAG

AAFX TRADING

Silver on Tuesday made its intraday high of US$18.83/oz and low of US18.34/oz settled down by 2.02% at US$18.42/oz.

Technicals in Focus:

On daily charts, silver is sustaining below 100DMA (26.62), breakage above will lead to 27.60. MACD is below the zero line and histograms are decreasing trend and it will bring a bearish stance in the upcoming sessions. RSI is approaching the neutral region, indicating a buy signal for now. The Stochastic Oscillator is in the oversold region and gives a positive crossover to show an upside move for the intraday trade.

Trading Strategy: Buy on Dips

Buy in between 18.90-16.90, targeting 20.45-20.70-21.45 and 21.60-22.50 with stop loss should be placed 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     18.40-17.80
S2     17.40
S3     17.00-16.50

Intraday  Resistance Levels
R1     18.90-19.50
R2     19.80-20.00
R3     20.70-21.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   59.961 Buy
20-DMA   19.54 Buy
50-DMA   20.33 Sell
100-DMA   21.30 Sell
200-DMA   22.33 Sell
STOCH(5,3)   74.746 Sell
MACD(12,26,9)   0.1095 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Tuesday made an intra‐day high of US$97.23/bbl, an intraday low of US$90.29/bbl, and settled down by 4.670% to close at US$92.04/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 the zero line and histograms are in increasing mode will bring a bullish stance in the upcoming sessions. The Stochastic Oscillator is in the neutral region, giving a positive crossover for confirmation of a bullish stance; while the RSI is in the 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 92.40-96.50 with stop loss at 100.05; targeting 91.30-90.50-89.40 and 88.00-87.20. Buy above 93.00-86.10 with risk daily closing below 86.10; targeting 93.00-94.20-95.00 and 96.30-97.00-98.30.

 
Intraday Support Levels
S1     91.30-90.50
S2     89.40
S3     88.00-87.20

Intraday Resistance Levels
R1     93.00-94.20
R2     95.00-96.30
R3     97.00-98.30

TECHNICAL INDICATORS
Name   Value Action
14DRSI   54.441 Sell
20-DMA   92.24 Buy
50-DMA   96.22 Buy
100-DMA   98.24 Buy
200-DMA   94.25 Buy
STOCH(5,3)   96.932 Sell
MACD(12,26,9)   -1.163 Buy

EUR/USD

AAFX TRADING

EUR/USD on Tuesday made an intraday low of US$0.9981/EUR, a high of US$1.0054/EUR, and settled the day up by 0.196% to close at US$1.0013/EUR.

Technicals in Focus:

On daily charts, prices are sustaining above 50DMA (1.0736), which become immediate support, a break below will target 1.0647. MACD is above the zero line and histograms are increasing mode which will bring a bullish view. Stochastic is in overbought territory and giving positive crossovers to the bullish outlook for intraday. 14D RSI is currently in a neutral region and giving no directions to consider right now.

Trading Strategy: Neutral to Sell

Sell below 1.0030-1.0430, targeting 0.9950-0.9900-0.9860-0.9790 and 0.9700-0.9640 with stop-loss at daily closing above 1.0430. Buy above 0.9950-0.9640 with risk below 0.9640, targeting 1.0030-1.0090 and 1.0150-1.0190-1.0290.

 
Intraday Support Levels
S1     0.9995-0.9950
S2     0.9910
S3     0.9850-0.9790

Intraday  Resistance Levels
R1     1.0030-1.0090
R2     1.0150
R3     1.0190-1.0280

TECHNICAL INDICATORS
Name   Value Action
14DRSI   39.220 Buy
20-DMA   1.0192 Buy
50-DMA   1.0289 Sell
100-DMA   1.0478 Sell
200-DMA   1.0785 Sell
STOCH(5,3)   11.104 Buy
MACD(12,26,9)   -0.0034 Buy

GBP/USD

AAFX TRADING

GBP/USD on Tuesday made an intra‐day low of US$1.1620/GBP, a high of US$1.1760/GBP, and settled the day down 0.195% to close at US$1.1654/GBP.

Technicals in Focus:

On daily charts, prices are sustaining below 20DMA (1.2834) is becoming a resistance level. 14-D RSI is currently in an oversold region and direction is difficult to predict on RSI bases. The Stochastic Oscillator is in overbought territory and gives a positive crossover to confirm bullish a stance. MACD is above zero line but histograms are increasing leading movement.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; buy in between 1.1695-1.1350 with a target of 1.1760-1.1850 and 1.1890-1.1930-1.2060 with stop loss closing below 1.1480. Sell in between 1.1760-1.2010 with targets at 1.1695-1.1600-1.1540 and 1.1480-1.1410-1.1350 with stop loss should be 1.2630.

 
Intraday Support Levels
S1     1.1655-1.1600
S2     1.1540-1.1480
S3     1.1540-1.1480

Intraday Resistance Levels
R1     1.1760-1.1850
R2     1.1930
R3     1.2060-1.2010

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

33.005

Buy
20-DMA   1.1908 Sell
50-DMA   1.2054 Sell
100-DMA   1.2294 Sell
200-DMA   1.2659 Sell
STOCH(5,3)   20.734 Sell
MACD(12,26,9)   -0.0049 Sell

USD/JPY

AAFX TRADING

USD/JPY on Tuesday made an intra‐day low of JPY138.04/USD and made an intraday high of JPY139.07/USD and settled the day up by 0.0583% at JPY138.78/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 the overbought region and chances of downward are expected based on RSI. MACD is above the 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 a bearish stance.

Trading Strategy: Neutral to Sell

Sell below 139.40-142.00 with risk above 142.00 targeting 136.00-135.20-134.10 and 133.00-132.50-131.90. Long positions above 136.60-132.50 with targets of 137.90-138.50 and 139.40-140.00 with stops below 128.50.

 
Intraday Support Levels
S1     137.90-136.50
S2     137.90-136.50
S3     135.20-134.10

INTRADAY RESISTANCE LEVELS
R1     139.10-140.00
R2     140.70
R3     141.40-142.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   57.99 Buy
20-DMA   134.75 Sell
50-DMA   134.16 Sell
100-DMA   131.21 Sell
200-DMA   125.87 Buy
STOCH(9,6)   94.298 Buy
MACD(12,26,9)   -0.0765 Sell

AAFX TRADING
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