Daily Markets

• Most Asian currencies steadied on Wednesday with the Japanese yen weakening slightly after a strong rally earlier this week, while persistent bets on U.S. interest rate cuts saw the dollar wallow at seven-month lows. Strength in the yen pointed to a sustained unwinding in the carry trade- a trend that bodes poorly for risk-driven markets in Asia. But regional currencies benefited from weakness in the dollar, with traders remaining largely bearish towards the greenback as expectations of a September interest rate cut grew. The Japanese yen weakened slightly after a strong rally this week, with the USDJPY pair rising 0.2%. But the pair fell sharply earlier this week and hovered around the 145 yen level, remaining well below highs of 160 yen hit earlier this year. USDJPY had fallen as far as 141 earlier in August as the yen carry trade was largely unwound by hawkish signals from the Bank of Japan. Rising Japanese rates are expected to underpin the yen and further undermine the yen carry trade in the coming months. Analysts at Jefferies said USDJPY was likely to settle around 145 yen, but could fall as low as 120 yen if the carry trade unwound further. Data earlier on Wednesday showed Japan’s exports grew less than expected in July, while imports picked up sharply. The dollar index and dollar index futures moved little in Asian trade, after sinking to their lowest levels since early-January on Tuesday. The dollar was pressured by growing bets that the Federal Reserve will cut interest rates in September. Markets were split over a 25 basis point or 50 bps cut next month, CME Fedwatch showed. An address by Fed Chair Jerome Powell, at the Jackson Hole Symposium on Friday, is set to offer more cues on the central bank’s plans to cut rates, although Powell is not expected to provide any explicit cues on a cut. Broader Asian currencies drifted lower, as markets weighed the prospect of an unwinding carry trade against the outlook for lower U.S. interest rates.

Gold – XAU

Gold on Tuesday made its intraday high of US$2531.69/oz and low of $2497.21/oz. Gold is down by 0.398% at S$2513.72/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 2512-2560 keeping stop loss closing above 2560, targeting 2,490-2,484-2,470 and 2459-2431-2418. Buy in between 2490-2430 with risk below 2430 targeting 2512-2,520-2531 and 2545-2560.

Silver - XAG

Silver on Tuesday made its intraday high of US$29.94/oz and low of US$29.18/oz settle down by 0.0407% at US$29.41/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 29.40-25.90, targeting 29.70 and 30.50-31.10- 31.90 with stop loss should be placed on the breakage below 25.00. Sell in between 29.70-31.00 with a stop loss above 31.50 targeting 28.90-28.00-27.60 and 27.10-26.50-26.00.

Oil - WTI

Crude Oil on Tuesday made an intra‐day high of US$74.23/bbl, an intraday low of US$74.23/bbl, and settled down by 0.931% to close at US$72.98/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 73.50-80.00 with stop loss at 80.00; targeting 73.00-72.50-71.90-71.00. Buy above 73.00-71.00 with risk daily closing below 71.00, targeting 73.10-73.90-74.50 and 76.00-78.10-78.75-79.80.

EUR/USD

EUR/USD on Tuesday made an intraday low of US$1.1071/EUR, a high of US$1.1129/EUR, and settled the day up by 0.410% to close at US$1.1128/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 1.1130-1.1400, targeting 1.1100-1.1020-1.0960 and 1.0850- 1.0785with stop-loss at daily closing above 1.1100. Buy above 1.1100-1.0785 with risk below 1.0400 targeting 1.1130-1.1190-1.1250 and 1.1290-1.1340-1.1400.

GBP/USD

GBP/USD on Tuesday made an intra‐day low of US$1.2973/GBP, a high of US$1.3051/GBP, and settled the day up by 0.352% to close at US$1.3032/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 1.2950-1.2600 with a target of 1.2990-1.3040 and 1.3100-1.3150 with a stop loss closing below 1.2600. Sell in between 1.2990-1.3100 with targets at 1.2950-1.2890-1.2790-1.2720 and 1.2670-1.2610-1.2500 with a stop loss of 1.3100.

USD/JPY

USD/JPY on Tuesday made an intra‐day low of JPY145.18/USD an intraday high of 147.34/USD, and settled the day down by 0.862% at JPY145.22/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 147.90-150.00 with risk above 150.00 targeting 148.00-147.20-145.00 and 144.20-143.60-142.90. Long positions above 147.00-141.00 with targets of 148.90-149.50 and 150.10-151.00 with stops below 146.00.