Daily Markets

• Most Asian currencies kept to a tight range on Tuesday amid caution before a string of economic signals this week, with the yen steadying amid uncertainty over a potential interest rate hike by the Bank of Japan. The dollar recovered some ground as anticipation of a Federal Reserve meeting sparked some flows into the greenback, especially as traders speculated over whether the central bank will signal any rate cuts. Broader Asian currencies remained on the backfoot, as concerns over slowing Chinese economic growth and uncertainty over the U.S. presidential race also weighed on risk sentiment. The Japanese yen steadied on Tuesday after strengthening sharply against the dollar over the past two weeks. The USDJPY pair hovered around 154 yen in morning trade. Focus was squarely on a BOJ meeting, with analysts split over a potential hold or a 10-15 basis point hike by the central bank. But apart from interest rates, the BOJ is widely expected to offer hawkish signals by signaling an end to its quantitative easing policy. The central bank had said during its June meeting that it would outline plans to phase out its asset purchase programs in July. The dollar index and dollar index futures steadied on Tuesday after seeing some strength this week, with focus squarely on a Fed rate decision on Wednesday. The central bank is widely expected to keep rates unchanged. But any signals on when it plans to begin cutting rates will be closely watched. Soft inflation readings and dovish-leaning comments from Fed officials saw markets ramp up bets that the Fed will cut rates by 25 basis points in September. But markets are also pricing in a small possibility of a similar cut on Wednesday. Still, rate cuts bode poorly for the dollar, which was nursing a sharp tumble through most of July on this notion. Broader Asian currencies moved in a flat-to-low range. The Chinese yuan’s USDCNY pair moved little, remaining close to eight-month highs amid persistent concerns over slowing economic growth in the country. Purchasing managers index data for July is due on Wednesday, and is expected to provide more cues on business activity in the country.
• Gold prices rose slightly on Tuesday, steadying after a sharp drop in the prior session as anticipation of a Federal Reserve meeting and more cues on interest rates kept traders biased towards the dollar. Among industrial metals, copper prices sank further amid persistent concerns over slowing Chinese demand. The prospect of increased production from a joint deal between BHP and Lundin Mining (OTC:LUNMF) to take over Filo Corp and expand its South American copper projects also weighed on the red metal. The yellow metal steadied from sharp swings in recent sessions, having briefly hit record highs earlier in the month on some safe haven demand. But gold was dragged off these record highs as market focus turned squarely towards U.S. interest rates. While lower rates do benefit precious metal prices, any signs to the contrary present additional risk to the sector. This caution kept traders biased towards the dollar, with the Fed set to kick off a two-day meeting later on Tuesday. The central bank is widely expected to keep rates unchanged at the conclusion of the meeting on Wednesday. But any signals on when it plans to begin trimming rates will be closely watched.
• Oil prices fell to a near two-month low in Asian trade on Tuesday as a lack of immediate escalation in tensions between Israel and Hezbollah saw traders price out a risk premium from prices. Caution before a meeting of the Organization of Petroleum Exporting Countries also weighed on sentiment, although recent weakness in crude is likely to see the cartel downplay any plans for scaling back production cuts. Anticipation of a slew of key central bank meetings this week kept prices on the backfoot, while persistent concerns over slowing demand, especially in top importer China, continued to chip away at sentiment. Traders were seen pricing out a risk premium from crude after media reports said Israeli officials were not seeking all-out war with Lebanon in their retaliation for a rocket strike that killed 12 in Israel-occupied Golan Heights. Israel is preparing a retaliation for the attack, which was blamed on Lebanese armed group Hezbollah. Officials said they were preparing for a few days of fighting following the strike, although Prime Minister Benjamin Netanyahu flagged a “harsh” response to the attack. While the prospect of an all-out war in the Middle East does present some supply risks for crude, there has been so far little disruptions in oil production in the region, even with the Israel-Hamas war reaching its ninth month. But a ceasefire between the two still appeared distant. The Joint Ministerial Monitoring Committee of the OPEC is set to meet on August 1, although reports suggested that the meeting will be routine and yield few changes to production. But analysts argued that recent weakness in crude prices could push major producers Russia and Saudi Arabia to further downplay plans to increase production later this year, as they had forecast earlier in 2024. Oil prices were also pressured by strength in the dollar, as the greenback rebounded on Monday in anticipation of a Federal Reserve meeting this week. The Fed is widely expected to keep rates steady. But any signals on plans for interest rate cuts will be closely watched- caution over which kept markets subdued.

Gold – XAU

Gold on Monday made its intraday high of US$2403.01/oz and low of $2369.58/oz. Gold is down by 0.189% at S$2383.19/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 2390-2520 keeping stop loss closing above 2520, targeting 2384-2370 and 2362-2350. Buy in between 2384-2300 with risk below 2300 targeting 2400-2418-2,440 and 2,450-2470-2484.

Silver - XAG

Silver on Monday made its intraday high of US$28.17oz and low of US$27.28/oz settle down by 0.154% at US$27.83/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 27.60-25.90, targeting 28.00-28.50-29.70 and 30.50-31.10- 31.90 with stop loss should be placed on the breakage below 25.00. Sell in between 28.00-31.00 with a stop loss above 31.50 targeting 27.60 and 27.10-26.50-26.00.

Oil - WTI

Crude Oil on Monday made an intra‐day high of US$77.21/bbl, an intraday low of US$74.94/bbl, and settled down by 1.792% to close at US$75.51/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 76.00-85.29 with stop loss at 85.30; targeting 74.50-73.90-73.10 and 72.50-71.90. Buy above 75.00-73.50 with risk daily closing below 73.00, targeting 76.50-77.40-78.00 and 79.20-80.40-82.00.

EUR/USD

EUR/USD on Monday made an intraday low of US$1.0802/EUR, a high of US$1.0869/EUR, and settled the day down by 0.304% to close at US$1.0820/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 1.0900-1.1100, targeting 1.0700-1.0640-with stop-loss at daily closing above 1.1100. Buy above 1.0810-1.0450 with risk below 1.0400 targeting 1.0845-1.0890 and 1.1020-1.1105-1.1145.

GBP/USD

GBP/USD on Monday made an intra‐day low of US$1.2806/GBP, a high of US$1.2887/GBP, and settled the day up by 0.0482% to close at US$1.2860/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 50DMA (1.2674) is becoming a support 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 1.2830-1.2500 with a target of 1.2990-1.3040 and 1.3100-1.3150 with a stop loss closing below 1.2050. Sell in between 1.2920-1.3100 with targets at 1.2870-1.2800-1.2720 and 1.2670-1.2610-1.2500 with a stop loss of 1.2950.

USD/JPY

USD/JPY on Monday made an intra‐day low of JPY153.00/USD an intraday high of 154.34/USD, and settled the day up by 0.227% at JPY153.98/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 100DMA (155.35), 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 154.90-162.00 with risk above 162.00 targeting 152.50-151.60-151.0 and 150.50-150.00. Long positions above 154.00-151.00 with targets of 154.90-155.30 and 156.00-156.50-157.00 with stops below 151.00.