Daily Markets

• Most Asian currencies kept to a tight range on Wednesday, while the dollar came close to a six-month high as anticipation of a Federal Reserve meeting kept traders largely biased towards the greenback. This saw the Japanese yen weaken even after suspected government intervention sparked a sharp rebound in the currency earlier this week. A slew of regional holidays in Asia, for Labor Day, also kept most regional currencies treading water. The dollar index and dollar index futures rose 0.2% in Asian trade, extending overnight gains as markets awaited the conclusion of a two-day Fed meeting later on Wednesday. The Fed is widely expected to keep rates on hold. But Fed Chair Jerome Powell is likely to offer a hawkish outlook on rates, especially following a slew of hotter-than-expected inflation readings. A higher-than-expected reading on the first quarter employment cost index added to concerns over sticky inflation, and was a key driver of the dollar’s gains on Tuesday. The Fed is now expected to begin cutting interest rates only by September, if at all, this year. Powell is also expected to provide more cues on the path of rates. The USDJPY pair, which gauges the amount of yen required to buy one dollar, rose slightly on Wednesday after clocking sharp gains in overnight trade. The pair hovered close to 158, having seen limited weakness after suspected intervention by the Japanese government earlier this week. The USDJPY pair had fallen as far as 155 on Monday, before bouncing back on Tuesday as markets remained unconvinced over the Bank of Japan’s outlook for higher inflation. The biggest point of pressure on the yen continued to be the prospect of higher-for-longer U.S. rates and a stronger dollar. Other Asian currencies were muted, amid a mix of labor day holidays and caution before the Fed. The Australian dollar’s AUDUSD pair fell slightly, as dollar pressure outweighed growing speculation over more potential interest rate hikes by the Reserve Bank of Australia.

Gold – XAU

Gold on Tuesday made its intraday high of US$2336.14/oz and low of $2284.89/oz. Gold is up by 2.104% at US$2286.05/oz.

Technicals in Focus:

On the daily charts, gold trades higher than 20DMA (2197). If it drops below this level, it could lead to 2,100. The MACD is currently above the zero line and the histograms are showing an increasing trend, indicating that there may be upward movement in the coming sessions. The RSI is currently at 83.04, which is in the overbought region, suggesting there may be selling pressure in the next 2 to 3 sessions. The Stochastic Oscillator is also in the overbought territory but has given a positive crossover, indicating a bullish stance for intraday trades, but rebound in expected in all the overbought indicators.

Trading Strategy: Sell on Strength

Sell below 2300-2380 keeping stop loss closing above 2400, targeting 2300-2280-2267. Buy in between 2280-2254 with risk below 2250 targeting 2300-2310-2325 and 2340-2351-2360.

Silver - XAG

Silver on Tuesday made its intraday high of US$27.12/oz and low of US$26.22/oz settle down by 3.13% at US$26.27/oz.

Technicals in Focus:

On daily charts, silver is sustaining above 20MA (25.05), breakage above will lead to 23.73. MACD is below the zero line and histograms are increasing trend, bringing a bullish stance in the upcoming sessions. RSI is in the oversold region, indicating a sell signal for now. The Stochastic Oscillator is in the overbought region and gives a positive crossover to show an upside move for the intraday trade.

Trading Strategy: Buy on Dips

Buy in between 26.20-23.90, targeting 27.50-27.90-28.90 and 29.40-30.00-30.40-31.00 with stop loss should be placed on the breakage below 23.00. Sell in between 27.00-30.50 with a stop loss above 30.50 targeting 26.40-25.90 and 25.45-24.90 and 24.60-23.90-23.20.

Oil - WTI

Crude Oil on Tuesday made an intra‐day high of US$83.00/bbl, an intraday low of US$80.67/bbl, and settled down by 2.22% to close at US81.18/bbl.

Technicals in Focus:

On daily charts, oil is sustaining above its 100DMA i.e. 75.37, a support level, and breakage above will call for 77.48. 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 overbought region, giving a negative crossover to confirm a bearish stance; while the RSI is in the neutral region, more upside can be expected to reach the overbought region, which is highly probable.

Trading Strategy: Neutral to Sell

Sell in between 81.50-89.65 with stop loss at 90.00; targeting 82.00-81.10-79.90. Buy above 80.00-75.00 with risk daily closing below 75.00, targeting 83.45-83.90-84.70 and 86.70-87.50-88.40.

EUR/USD

EUR/USD on Tuesday made an intraday low of US$1.0664/EUR, a high of US$1.0734/EUR, and settled the day up by 0.49% to close at US$1.0665/EUR.

Technicals in Focus:

On daily charts, prices are sustaining above 100DMA (1.0800), which becomes immediate support, a break below will target 1.0717. MACD is above the zero line and histograms are increasing mode, bringing a bullish view. Stochastic is in oversold territory, giving negative 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 1.0690-1.1100, targeting 1.0775 and 1.0770-1.0640 with stop-loss at daily closing above 1.1100. Buy above 1.0650-1.0450 with risk below 1.0400 targeting 1.0845-1.0890 and 1.1020-1.1105-1.1145.

GBP/USD

GBP/USD on Tuesday made an intra‐day low of US$1.2488/GBP, a high of US$1.2562/GBP, and settled the day down by 0.561% to close at US$1.2490/GBP.

Technicals in Focus:

On daily charts, prices are sustaining below 50DMA (1.2674) is becoming a resistance level. 14-D RSI is currently in a neutral region and direction is difficult to predict on an RSI basis. The Stochastic Oscillator is in oversold territory and gives a positive crossover to confirm a bullish stance. MACD is above the zero line but histograms are increasing leading to movement.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; buy in between 1.2430-1.2050 with a target of 1.2500-1.2540 and 1.2600-1.2690-1.2730 with a stop loss closing below 1.2050. Sell in between 1.2540-1.2700 with targets at 1.2360-1.2300-1.2240 and 1.2190-1.2100 with a stop loss of 1.2950.

USD/JPY

USD/JPY on Tusday made an intra‐day low of JPY154.52/USD an intraday high of 160.17/USD, and settled the day down by 0.946% at JPY156.30/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 100DMA (137.57), major 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 overbought territory and signaling to sell as it has given a negative crossover to confirm a bearish stance.

Trading Strategy: Neutral to Sell

Sell below 157.00-159.00 with risk above 159.00 targeting 153.10-152.60-151.00 and 150.60-149.90-149.30. Long positions above 156.00-149.90 with targets of 156.10-156.90-175.50 and 158.00-159.00 with stops below 149.90.