Daily Markets

• Most Asian currencies moved in a tight range on Monday, taking little advantage of a softer dollar amid growing concerns over a slowdown in U.S. economic growth The Japanese yen was an outlier, strengthening sharply on safe haven demand and as the prospect of more interest rate hikes by the Bank of Japan underpinned the currency. Other units such as the Chinese yuan also appreciated sharply, although this was mostly driven by a substantially stronger-than-expected midpoint fix from the central bank. Sentiment towards regional markets was battered by a persistent sell-off in risk-driven assets, as a string of weak economic readings from the U.S. drove up concerns over slowing growth and largely offset optimism over lower interest rates. The yen extended recent gains against the dollar after the Bank of Japan last week hiked interest rates and said it planned to raise rates further this year amid some pick-up in inflation and spending. The minutes of the BOJ’s June meeting, released earlier on Monday, also presented an unexpectedly hawkish stance for the BOJ. This was coupled with purchasing managers index data that showed a sharp rebound in Japanese service sector activity, which also indicated some resilience in the economy. The greenback saw little safe haven demand as worsening economic conditions in the U.S. saw traders begin pricing in the potential for an ever greater raft of interest rate cuts by the Federal Reserve. Traders are now pricing in a 74% chance the Fed will cut rates by 50 basis points in September, compared to prior bets on a 25 bps cut, CME Fedwatch showed. The central bank is expected to bring rates down by a total 100 basis points this year, amid concerns over slowing economic growth. Such a scenario bodes poorly for the dollar, and portends some strength in Asian currencies. But weak risk appetite saw most Asian units soften on Monday. The Australian dollar’s AUDUSD pair fell 0.2% before a Reserve Bank meeting on Tuesday, where the central bank is widely expected to keep rates unchanged following recent data that showed inflation was cooling slightly. The Chinese yuan’s USDCNY pair fell 0.3% to a six-month low, with a bulk of the strength coming from a stronger-than-expected midpoint fix by the PBOC. The central bank was also seen intervening in currency markets in July, as a string of weak readings on China’s economy battered the yuan. But private PMI data on Monday showed some resilience in the country’s services sector.
• Gold prices rose in Asian trade on Friday and were in sight of a record high as a rout in global markets, amid concerns over an economic slowdown, fueled safe haven buying into the yellow metal Bullion was sitting on strong price gains this week as bets on U.S. interest rate cuts weighed on the dollar and dented Treasury yields. Heightened tensions in the Middle East, after the killing of a Hamas leader, also spurred some safe haven demand for the yellow metal. Spot prices were set to add over 3% this week- their best week since March. The yellow metal benefited from safe haven demand as weak purchasing managers index and employment data from the U.S. ramped up concerns over a slowdown in the world’s largest economy. The data triggered steep declines on Wall Street, which spilled over into Asian trade and sparked a broad risk-off move. This fueled safe haven bids for gold. The weak data also came after the Federal Reserve flagged the potential for an interest rate cut in September, which saw markets almost entirely price in a 25 basis point in the month. Focus was now on upcoming nonfarm payrolls data, for more cues on the U.S. economy. A cooling labor market furthers the prospect of interest rate cuts by the Fed.
• Oil prices hovered at eight-month lows on Monday as fears of a recession in the United States, the world's top oil consumer, offset concerns that escalating tensions in the Middle East may affect supplies from the largest producing region. Prices were supported by persistent fighting in Gaza with an Israeli airstrike hitting two schools and killing at least 30 people on Sunday, Palestinian officials said, the day after a round of talks in Cairo ended without result. Israel and the United States are bracing for a serious escalation in the region after Iran and its allies Hamas and Hezbollah pledged to retaliate against Israel for the killings of Hamas' leader Ismail Haniyeh and Fuad Shukr, a top military commander from Lebanese armed group Hezbollah last week. Despite worries about escalating tensions in the Middle East, Brent and WTI tumbled more than 3% to settle at their lowest since January on Friday in a volatile week. Last week, both contracts marked their fourth straight week of losses, their biggest losing streaks since November. Oil prices were dragged down by U.S. recession fears and after OPEC+, an alliance between the Organization of the Petroleum Exporting Countries and other producers such as Russia, stuck to its plan to phase out voluntary production cuts from October. he market had been expecting OPEC+ to delay the phase out of voluntary production cuts beyond the third quarter, ANZ analysts said. A Reuters survey showed on Friday that OPEC oil output rose in July despite production cuts by the group. In the U.S., the number of operating oil rigs were steady at 482 last week, Baker Hughes said in a weekly report. Weak economic data across the globe weighed on oil prices, on concerns that a sluggish global economic recovery would dampen fuel consumption. Data released last week showed that the U.S. economy added fewer jobs than expected last month while factories across the U.S., China and Europe grappled with tepid demand. Slumping diesel consumption in China, the world's biggest contributor to oil demand growth, is weighing on global oil prices.

Gold – XAU

Gold on Friday made its intraday high of US$2477.55/oz and low of $2410.66/oz. Gold is down by 1.32% at S$2442.67/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 2450-2520 keeping stop loss closing above 2520, targeting 2431-2418-2400 and 2384-2370-2362. Buy in between 2431-2350 with risk below 2350 targeting 2,450-2470-2484 and 2490-2500.

Silver - XAG

Silver on Monday made its intraday high of US$29.20/oz and low of US$27.92/oz settle up by 0.154% at US$28.55/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 28.60-25.90, 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 28.90-31.00 with a stop loss above 31.50 targeting 28.50-28.00-27.60 and 27.10-26.50-26.00.

Oil - WTI

Crude Oil on Friday made an intra‐day high of US$76.70/bbl, an intraday low of US$72.45/bbl, and settled down by 3.518% to close at US$73.57/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 73.10-77.00 with stop loss at 77.00; targeting 72.50-71.90-71.00 and 70.55-69.90. Buy above 72.00-69.50 with risk daily closing below 69.00, targeting 73.10-73.90-74.50 and 76.50-77.40-78.00.

EUR/USD

EUR/USD on Friday made an intraday low of US$1.0781/EUR, a high of US$1.0834/EUR, and settled the day down by 0.313% to close at US$1.0911/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 1.0960-1.1100, targeting 1.0700-1.0640-with stop-loss at daily closing above 1.1100. Buy above 1.0900-1.0450 with risk below 1.0400 targeting 1.0845-1.0890 and 1.1020-1.1105-1.1145.

GBP/USD

GBP/USD on Friday made an intra‐day low of US$1.2706/GBP, a high of US$1.2839/GBP, and settled the day up by 0.548% to close at US$1.2805/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 1.2760-1.2500 with a target of 1.2830-1.2890-1.2990-1.3040 and 1.3100-1.3150 with a stop loss closing below 1.2050. Sell in between 1.2830-1.3100 with targets at 1.2720 and 1.2670-1.2610-1.2500 with a stop loss of 1.2950.

USD/JPY

USD/JPY on Friday made an intra‐day low of JPY148.50/USD an intraday high of 150.88/USD, and settled the day down by % at JPY149.34/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 149.50-154.00 with risk above 154.00 targeting 149.50-149.0-148.40 and 147.50-146.90-146.45. Long positions above 149.500-146.00 with targets of 150.40-151.00-151.60 and 152.50-153.20-154.00 with stops below 146.00.