Daily Markets

• The dollar recovered ground against most major peers on Tuesday and the Japanese yen steadied around seven-month highs against the U.S. currency, as some of the more striking moves of recent days reversed somewhat and a semblance of calm returned to markets. A reassessment was also taking place across equity markets, with Japan's benchmark Nikkei index gaining 10% on Tuesday after a 12% fall the day before, while shares in Europe also tried to recover. The yen's recent gains were driven by an uptick in volatility, causing investors to bail out of once-popular carry trades, reinforced by the Bank of Japan raising interest rates on Friday. So-called carry trades, which involve investors borrowing from economies with low interest rates such as Japan or Switzerland to fund investments in higher-yielding assets elsewhere, rely on lower volatility. Like the yen, the Swiss franc - another favored funding currency for carry trades - strengthened sharply since mid-July as those trades were unwound, with gains reinforced by safe haven flows on Monday. The carry trade unwind combined with softer-than-expected U.S. job data on Friday, and disappointing earnings from major tech firms triggered a global equity sell-off, further reinforcing the unwind. Sterling was down 0.64% at $1.2697, its lowest in five weeks, as the Bank of England's rate cut last week undermined one of the pillars of its strength earlier in the year. Also underpinning currency market moves are traders' attempts to price U.S. Federal Reserve policy in the coming meetings. U.S. central bank policymakers pushed back on Monday against the notion that weaker-than-expected July job data means the economy is in recessionary freefall, but also warned that the Fed will need to cut rates to avoid such an outcome.
• Gold prices rose slightly in Asian trade on Wednesday after falling sharply in the prior session as the dollar steadied from recent losses, with focus remaining on a potential U.S. recession and lower interest rates. Among industrial metals, copper prices pulled back after data showed China’s copper imports weakened in June, reflecting weak demand in the world’s biggest copper importer. Gold had initially benefited from safe haven demand as a hawkish Bank of Japan and concerns over a U.S. recession sparked steep losses in risk-driven assets, particularly stocks. But markets rebounded on Tuesday and Wednesday, pressuring safe haven assets. Gold prices retreated sharply on Tuesday after coming close to a new record high earlier in the week. A rebound in global stock markets was the biggest point of pressure on gold, as a mix of bargain buying and some hopes of a shallow U.S. recession brought traders back into markets. The prospect of deeper U.S. interest rate cuts, especially amid fears of a recession, also helped keep risk appetite in play. But any rate cuts are also bound to support gold prices, given that lower rates reduce the opportunity cost of investing in the yellow metal.
• Oil prices fell in Asian trade on Wednesday after a mixed reading on U.S. inventories, with persistent concerns over slowing economic growth and weak demand keeping prices under pressure. Focus also remained on any new developments in the Israel-Hamas war, with Hamas set to potentially retaliate against Israel over the killing of its leader last week. Fears of a broader conflict in the region offered some support to crude in recent sessions. Data from the American Petroleum Institute showed that U.S. oil inventories grew by 180,000 barrels in the week to August 2, less than expectations for a build of 850,000 barrels. But gasoline stockpiles rose by 3.3 million barrels while distillates grew 1.2 million barrels. The build in product inventories signaled that travel demand was cooling as the summer season came to an end. While increased travel during the summer season had spurred strong fuel demand, this trend was now likely to reverse. The API data usually heralds a similar reading from official inventory data, which is due later on Wednesday. Oil prices were nursing a slump to near seven-month lows this week amid growing concerns that a U.S. recession will dent oil demand in the coming months. A slew of weak labor data and purchasing managers index readings from the U.S. furthered this notion over the past week, sparking a rout in most commodity markets. Oil was already grappling with a weak outlook on demand, amid growing expectations for a market surplus by 2025. A recent meeting of the Organization of Petroleum Exporting Countries did little to buoy crude, as the cartel signaled no changes to production despite weakness in prices. But top producers Saudi Arabia and Russia did further downplay plans to increase production later this year. Oil was kept above seven-month lows by some elements of risk premium in the market, as traders feared that an all-out war in the Middle East could disrupt supplies. Israel largely maintained its offensive against Gaza, with potential retaliation from Iran, Hamas and Hezbollah in focus.

Gold – XAU

Gold on Tuesday made its intraday high of US$2418.23/oz and low of $2381.51/oz. Gold is down by 0.840% at S$2389.59/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 2420-2520 keeping stop loss closing above 2520, targeting 2400 and 2384-2370-2362. Buy in between 2400-2350 with risk below 2350 targeting 2418-2432-2,4502470-2484 and 2490-2500.

Silver - XAG

Silver on Tuesday made its intraday high of US$27.55/oz and low of US$26.58/oz settle down by 1.05% at US$26.94/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 27.00-25.90, 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 Tuesday made an intra‐day high of US$74.00/bbl, an intraday low of US$71.67/bbl, and settled down by 1.419% to close at US$72.42/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 73.00-77.00 with stop loss at 77.00; targeting 72.50-71.90-71.00 and 70.55-69.90. Buy above 72.50-69.50 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 Tuesday made an intraday low of US$1.0903/EUR, a high of US$1.10962/EUR, and settled the day up by 0.269% to close at US$1.0929/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 Monday made an intra‐day low of US$1.2671/GBP, a high of US$1.2802/GBP, and settled the day down by 0.623% to close at US$1.2690/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 1.2700-1.2500 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 1.2800-1.3100 with targets at 1.2720 and 1.2670-1.2610-1.2500 with a stop loss of 1.2950.

USD/JPY

USD/JPY on Tuesday made an intra‐day low of JPY143.61/USD an intraday high of 146.37/USD, and settled the day up by 0.104% at JPY144.26/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 147.00-150.00 with risk above 150.00 targeting 145.00-144.20-143.60 and 142.90-141.70-141.00. Long positions above 146.00-141.00 with targets of 146.00-146.45-146.90 and 147.50-148.40-149.00 with stops below 146.00.