AAFX TRADING

Daily Market Lookup

  • The dollar index vaulted to a 20-year high on Thursday, and notched a 24-year peak against the rate-sensitive Japanese yen, after U.S. data showed a resilient economy, giving the Federal Reserve more room to aggressively hike interest rates to quell inflation. The U.S. currency firmed after a government report showed that the number of Americans filing new claims for unemployment benefits declined further last week, consistent with strong demand for workers and tight labor market conditions. The report also showed fewer layoffs in August, despite hefty interest rate increases from the Fed to counter decades-high inflation, which have raised the risk of a recession. Data from the Institute for Supply Management (ISM) showed U.S. manufacturing grew steadily in August as employment and new orders rebounded, while a further easing in price pressures strengthened views that inflation has likely peaked. Expectations for a third straight 75-basis-point U.S. rate hike at the Sept. 20-21 Fed meeting are rising on the back of solid economic data, with Fed funds futures last pointing to around a 77.1% chance of such an increase. This helped push the yield on benchmark 10-year U.S. Treasuries to a more than two-month high of 3.297. The market's attention will now turn to the August U.S. nonfarm payrolls report, due on Friday, which will be one of the key data points guiding Fed members when they meet later this month. A strong reading could help the safe-haven dollar attract more demand. Manufacturing activity across the euro zone shrank for a second month in August, according to a survey, and while European energy costs have softened slightly this week, they remain at highly elevated levels.
  • The U.S. dollar drifted lower in early European trade Wednesday, retreating from the 20-year peak seen earlier in the week as a nascent rebound in the euro gathers pace. The latest U.S. employment data, the JOLTS report on job openings, pointed to continued strength in the labor market despite the string of large rate hikes by the Federal Reserve. This, combined with continued hawkish comments from a number of Fed officials, point to the U.S. central bank hiking by a probable 75 basis points in September. However, the dollar is struggling to make any further headway as European Central Bank members have joined the fight to combat inflation, also expressing strong determination to do so at the Jackson Hole symposium. The ECB must act decisively to contain inflation, Bundesbank chief Joachim Nagel said on Tuesday, while Belgian central bank Chief Pierre Wunsch said interest rates need to rise to a level that starts to restrict economic activity or above what is considered the "neutral" rate. The euro plays a big role in the overall direction of the greenback, making up almost 60% of the dollar index, and this hawkish testimony has helped the single currency climb over 1% from its Aug. 23 two-decade low. With this in mind, the Eurozone August CPI release will be in focus later Wednesday, with annual inflation expected to accelerate to 9.0% from 8.9% in July, well above the ECB’s 2% target. The Eurozone and the U.K. are both heading for recessions this year, Goldman Sachs said, in a recent note, but surging inflation will still force the region's two biggest central banks to raise interest rates sharply.
  • Oil prices climbed on Friday on bets that OPEC+ will discuss output cuts at a meeting on Sept. 5, though benchmarks were on track for a steep weekly decline as fears of China's COVID-19 curbs and weak global growth weighed on the market. The Organization of the Petroleum Exporting Countries and allies, together called OPEC+, are due to meet on Sept. 5 against a backdrop of sliding prices and falling demand, even as top producer Saudi Arabia says supply remains tight. ANZ commodities analyst Daniel Hynes said it might be a bridge too far for OPEC+ to agree to cut output but that top producer Saudi Arabia will likely highlight what it sees as a disconnect between current prices and tight supply fundamentals. OPEC+ this week slashed its demand outlook, now forecasting demand to lag supply by 400,000 barrels per day (bpd) in 2022, but it expects a market deficit of 300,000 bpd in its base case for 2023. Meanwhile, investors remain worried about the impact of the latest COVID-19 curbs in China. The city of Chengdu on Thursday ordered a lockdown that has hit manufacturers like Volvo. Data showed Chinese factory activity in August contracted for the first time in three months amid weakening demand, while power shortages and COVID-19 outbreaks disrupted production.
  • The bears in gold have been pushing and pushing and they’ve finally got what they wanted: The spot price of bullion tumbled beneath $1,700 for the first time in five weeks on Thursday, just ahead of the U.S. jobs report. Traders across markets have agonized for weeks on what the August non-farm payrolls could be. Three separate indicators on U.S. employment — Tuesday’s JOLTS, or the Job Openings and Labor Turnover Survey, Wednesday’s ADP private payrolls report for August and Thursday’s weekly jobless statistics — have told different stories. The Fed is keeping a close watch on all labor data to gauge how much tolerance the job market will have toward higher interest rates. U.S. inflation has been running at around four-decade highs since late last year, although the closely-watched Consumer Price Index slowed to an annualized rate of 8.5% in July from a peak of 9.1% in June. The Fed’s target for inflation is a mere 2% a year and it has vowed to raise interest rates as much as necessary to achieve that. Rate hikes are anathema to gold. U.S. jobs data has been inconsistent over the past week, confounding economists on what the future holds for the labor market. The Labor Department reported on Thursday that unemployment claims hit two-month lows last week, forging a clearer path for the Fed to continue with rate hikes to rein in inflation still near four-decade highs. The weekly jobless statistics came ahead of Friday’s more-important nonfarm payrolls report for August. Economists think some 300,000 payrolls were probably added last month — versus 528,000 last in July — holding the unemployment rate steady at 3.5% for a second straight month. A jobless rate of 4% or below is seen by the Fed as full employment. Unemployment among Americans reached a record high rate of 14.8% in April 2020, with the loss of some 20 million jobs after the COVID-19 breakout. Since then, hundreds of thousands of jobs have been added every month, with the trend not letting up in July despite a negative 0.6% growth in second quarter gross domestic product this year, after a minus 1.6% in the first quarter that together accounted for a recession.

 

 
Intraday RESISTANCE LEVELS
2nd September 2022 R1 R2 R3
GOLD-XAU 1,718-1,732 1,740-1,751 1,760-1,774
Silver-XAG 18.40-18.90 19.50-19.80 20.00-20.70
Crude Oil 89.40- 90.50-91.30 93.00-94.20
EURO/USD 0.9995-1.0030 1.0090-1.0150 1.0190-1.0280
GBP/USD 1.1600-1.1655 1.1760-1.1850 1.1930-1.2060
USD/JPY 140.00-140.70 141.40 142.00

Intraday SUPPORTS LEVELS
2nd September 2022 S1 S2 S3
GOLD-XAU 1,700-1,690 1,679 1,670-1,664
Silver-XAG 17.80-17.40 17.00 16.50-16.00
Crude Oil 88.00-87.20 86.50 86.00-85.10
EURO/USD 0.9950 0.9910 0.9850-0.9790
GBP/USD 1.1540 1.1480 1.1410-1.1350
USD/JPY 139.10-137.90 136.50 136.50

Intra-Day Strategy (2nd September 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 Thursday made its intraday high of US$1711.40/oz and low of $1688.77/oz. Gold is down by 0.785% at US$1697.54/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 1718-1774 keeping stop loss closing above 1774, targeting 1700-1690-1679 and 1671-1664. Buy in between 1700-1664 with risk below 1664, targeting 1718-1732-1740 and 1760-1774-1785.

 
Intraday Support Levels
S1     1,700-1,690
S2     1,679
S3     1,670-1,664
Intraday Resistance Levels
R1     1,718-1,732
R2     1,740-1,751
R3     1,760-1,774

Technical Indicators

Name   Value Action
14DRSI  

32.349

Buy
20-DMA   1745.60 Sell
50-DMA  

1766.39

Sell
100-DMA   1795.13 Sell
200-DMA   1814.87 Sell
STOCH(5,3)   4.546 Sell
MACD(12,26,9)   -12.794 Buy

Silver - XAG

AAFX TRADING

Silver on Thursday made its intraday high of US$17.99/oz and low of US17.55/oz settled down by 0.593% at US$17.80/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 17.70-16.00, targeting 18.40-18.90-19.50 and 20.45-20.70-21.45 with stop loss should be placed on the breakage below 16.90. Sell in between 18.40-20.75 with stop loss above 20.75; targeting 17.70-17.50-16.90 and 16.40-.

 
Intraday  Support Levels
S1     17.80-17.40
S2     17.00
S3     16.50-16.00

Intraday  Resistance Levels
R1     18.40-18.90
R2     19.50-19.80
R3     20.00-20.70

TECHNICAL INDICATORS
Name   Value Action
14DRSI   28.000 Buy
20-DMA   19.11 Buy
50-DMA   19.76 Sell
100-DMA   20.71 Sell
200-DMA   21.86 Sell
STOCH(5,3)   6.746 Sell
MACD(12,26,9)   -0.448 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Thursday made an intra‐day high of US$89.30/bbl, an intraday low of US$85.73/bbl, and settled down by 2.76% to close at US$86.08/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     88.00-87.20
S2     86.50
S3     86.00-85.10

Intraday Resistance Levels
R1     89.40-
R2     90.50-91.30
R3     93.00-94.20

TECHNICAL INDICATORS
Name   Value Action
14DRSI   42.418 Sell
20-DMA   91.75 Buy
50-DMA   95.30 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 Thursday made an intraday low of US$0.9910/EUR, a high of US$1.0055/EUR, and settled the day down by 1.063% to close at US$0.9944/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 0.9995-1.0430, 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     0.9950
S2     0.9910
S3     0.9850-0.9790

Intraday  Resistance Levels
R1     0.9995-1.0030
R2     1.0090-1.0150
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 Thursday made an intra‐day low of US$1.1497/GBP, a high of US$1.1629/GBP, and settled the day down 0.66% to close at US$1.1542/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 1.1600-1.1350 with a target of 1.1670-1.1760-1.1850 and 1.1890-1.1930-1.2060 with stop loss closing below 1.1480. Sell in between 1.1695-1.2010 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     1.1540
S2     1.1480
S3     1.1410-1.1350

Intraday Resistance Levels
R1     1.1600-1.1655
R2     1.1760-1.1850
R3     1.1930-1.2060

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

28.480

Buy
20-DMA   1.1850 Sell
50-DMA   1.2018 Sell
100-DMA   1.2266 Sell
200-DMA   1.2638 Sell
STOCH(5,3)   10.415 Sell
MACD(12,26,9)   -0.0049 Sell

USD/JPY

AAFX TRADING

USD/JPY on Thursday made an intra‐day low of JPY138.70/USD and made an intraday high of JPY140.22/USD and settled the day up by 0.895% at JPY140.19/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 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     139.10-137.90
S2     136.50
S3     136.50

INTRADAY RESISTANCE LEVELS
R1     140.00-140.70
R2     141.40
R3     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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