Daily Markets

• Most Asian currencies rose on Thursday after some softer U.S. consumer inflation readings pulled the dollar to a one-month low and saw traders increase bets on a September interest rate cut. But gains in some regional units were held back by a mix of soft economic data and trade tensions, especially in Japan, China and Australia. The dollar index and dollar index futures fell 0.2% each in Asian trade, extending steep overnight losses after month-on-month consumer price index inflation and core CPI read cooler than expected for April. The readings, which were also followed by softer-than-expected retail sales data, ramped up hopes that inflation will cool further in the coming months, giving the Fed more confidence to begin cutting interest rates. This saw traders increase their expectations for a 25 basis point cut in September, the probability of which rose to nearly 54% from last week’s 49%, according to the CME Fedwatch tool. Still, the CPI reading remained well above the Fed’s 2% annual target, while a string of Fed officials also warned over the past week that the central bank will need more convincing that inflation was going down. The yen’s recovery stalled as gross domestic product data showed the Japanese economy shrank much more than expected in the first quarter, as consumer spending stalled. This raised doubts over just how much headroom the Bank of Japan has to keep raising interest rates. The Chinese yuan’s USDCNY pair fell only slightly, as sentiment towards China was battered by Washington imposing stricter trade tariffs on China’s key industries, such as electric vehicles, medicines and solar technology. Beijing threatened retaliation over the move. The Australian dollar’s AUDUSD pair moved little as an unexpected increase in unemployment ramped up expectations of a cooling labor market, which in turn gives the Reserve Bank less impetus to raise interest rates further. Concerns over China also weighed on the Aussie, which has high trade exposure to the country.

Gold – XAU

Gold on Wednesday made its intraday high of US$2390.13/oz and low of $2334.76/oz. Gold is up by 1.18% at US$2385.69/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 2394-2440 keeping stop loss closing above 2440, targeting 2382-2370-2351 and 2,340-2329-2310. Buy in between 2370-2300 with risk below 2300 targeting 2,394-2,400-2,410 and 2419-2431-2440.

Silver - XAG

Silver on Tuesday made its intraday high of US$28.72/oz and low of US$28.08/oz settle up by 0.044% at US$28.58/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 28.90-23.90, targeting 29.60 and 30.00-30.40-31.00 with stop loss should be placed on the breakage below 23.00. Sell in between 29.90-32.50 with a stop loss above 32.50 targeting 28.90-28.10-27.50-26.40 and 25.90-25.45-24.60.

Oil - WTI

Crude Oil on Wednesday made an intra‐day high of US$78.42/bbl, an intraday low of US$76.35/bbl, and settled up by 0.430% to close at US$78.37 /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 78.90-89.65 with stop loss at 90.00; targeting 79.00-78.10-77.80 and 77.00-76.40. Buy above 78.00-75.00 with risk daily closing below 75.00, targeting 79.00-79.90-80.50 and 81.10-82.00-82.90.

EUR/USD

EUR/USD on Wednesday made an intraday low of US$1.0812/EUR, a high of US$1.0885/EUR, and settled the day up by 0.108% to close at US$1.0883/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 1.0845-1.1100, targeting 1.0700-1.0640-with stop-loss at daily closing above 1.1100. Buy above 1.0750-1.0450 with risk below 1.0400 targeting 1.0805-1.0845-1.0890 and 1.1020-1.1105-1.1145.

GBP/USD

GBP/USD on Wednesday made an intra‐day low of US$1.2577/GBP, a high of US$1.2685/GBP, and settled the day up by 0.746% to close at US$1.2684/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 1.2650-1.2050 with a target of 1.2690-1.2730-1.2760 and 1.2830-1.2890 with a stop loss closing below 1.2050. Sell in between 1.2700-1.2900 with targets at 1.2670-1.2610-1.2500 and 1.2450-1.2360-1.2300 with a stop loss of 1.2950.

USD/JPY

USD/JPY on Wednesday made an intra‐day low of JPY154.64/USD an intraday high of 156.55/USD, and settled the day down by 0.97% at JPY154.86/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 145.90-159.00 with risk above 159.00 targeting 153.10-152.60-151.00 and 150.60-149.90-149.30. Long positions above 153.90-149.50 with targets of 154.30-154.90 and 156.10-156.90-157.50 with stops below 149.50.