Daily Markets

• The yen edged higher on Monday, reversing early declines, with sentiment still fragile following the Japanese currency's best weekly rally since late April after a U.S. tech-led stock rout ignited demand for safe haven assets Traders are now looking ahead to policy decisions by the Bank of Japan and the Federal Reserve, both on Wednesday, for further direction. Rising speculation for a BOJ interest rate hike this week has helped buoy the yen, with the Fed also widely expected to set the stage for a September rate cut. Investor were also wary of further geopolitical volatility, with Israel weighing a response to a deadly rocket strike in the Israeli-occupied Golan Heights which Israel and the United States blamed on Lebanese armed group Hezbollah. It had started the day by gaining as much as 0.36%, as the global equity market rebound from Friday extended into Monday in Asia, with Japan's Nikkei stock average up more than 2%. Currency traders also need to contend with not just the BOJ and Fed on Wednesday, but the Bank of England a day later. Speculation has grown that the BOJ will raise interest rates on Wednesday at the same time as significantly reducing its monthly bond purchases. It had promised to outline its quantitative tightening (QT) plans at this meeting during its previous gathering last month. Elsewhere, the Fed is widely expected to leave rates unchanged this week, but cut them by a quarter point at the following meeting in September.
• Gold prices rose in Asian trade on Monday, recovering more ground from a rout through most of July as focus turned to an upcoming Federal Reserve meeting where the central bank is expected to provide more cues on interest rate cuts. The yellow metal was also aided by weakness in the dollar, which retreated after key inflation data on Friday pointed to some easing in U.S. inflation- a scenario that gives the Fed more confidence to reduce borrowing rates. Gains in the yellow metal were driven chiefly by increased speculation over interest rate cuts, following some encouraging signs from PCE price index data last week, which is the Fed’s preferred inflation gauge. The reading put this week’s Fed meeting squarely in focus. While the central bank is expected to keep rates unchanged, any signals on its plans to cut rates will be closely watched. Traders are almost entirely pricing in a 25 basis point cut in September, according to CME Fedwatch. The prospect of lower rates bodes well for gold, given that it reduces the opportunity cost of investing in the yellow metal. High rates had battered gold prices over the past two years, although increased safe haven demand still helped the yellow metal hit record highs.
• Oil prices rose on Monday, paring last week's loss, on fears of a widening conflict in the Middle East following a rocket strike in the Israeli-occupied Golan Heights, which Israel and the United States blamed on Lebanese armed group Hezbollah. Last week, Brent lost 1.8% while WTI fell 3.7% on sagging Chinese demand and hopes of a Gaza ceasefire agreement. On Sunday, Israel's security cabinet authorised Prime Minister Benjamin Netanyahu's government to decide on the "manner and timing" of a response to the Saturday's rocket strike in the Golan Heights that killed 12 teenagers and children. Iran-backed Hezbollah denied responsibility for the attack, the deadliest in Israel or Israeli-annexed territory since Palestinian militant group Hamas' Oct. 7 assault sparked the war in Gaza. That conflict has spread to several fronts and risks spilling into a wider regional conflict. Israel has vowed retaliation against Hezbollah in Lebanon, and Israeli jets hit targets in southern Lebanon on Sunday. Over the past few weeks, hopes of a ceasefire in Gaza have been gaining momentum. But Israel wants changes in a plan for a Gaza truce and the release of hostages by Hamas, complicating a deal to halt nine months of combat that have devastated the enclave, according to a Western official, a Palestinian and two Egyptian sources. On the demand side, data released earlier this month showing that China's total fuel oil imports dropped 11% in the first half of 2024 have raised concern about the wider demand outlook in the Asian giant, the world's biggest crude importer. She added that the U.S. Federal Reserve's rate decision and China's manufacturing PMI are the next key events for markets as they try to gauge the oil market trajectory. Meanwhile, U.S. energy firms last week added oil and natural gas rigs for a second week in a row, boosting the monthly count by the most since November 2022, energy services firm Baker Hughes said in its closely followed report on Friday. Markets are also keeping a watch on oil producer Venezuela, after the country's electoral authority said President Nicolas Maduro has won a third term with 51% of the vote despite multiple exit polls pointing to an opposition win. The U.S. has said it would "calibrate" its sanctions policy towards Venezuela depending on how the high-stakes election unfolds in the OPEC nation.

Gold – XAU

Gold on made its intraday high of US$2401.07/oz and low of $2396.48/oz. Gold is up by 0.348% at S$2364.32/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 Friday made its intraday high of US$28.05/oz and low of US$27.56/oz settle up by 0.533% at US$27.92/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 Friday made an intra‐day high of US$78.17/bbl, an intraday low of US$75.79/bbl, and settled down by 0.238% to close at US$76.04/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 78.00-85.29 with stop loss at 85.30; targeting 79.90 and 79.20-78.10-77.00. Buy above 77.00-73.50 with risk daily closing below 73.00, targeting 77.40-78.00-79.20 and 80.40-82.00-83.00.

EUR/USD

EUR/USD on Friday made an intraday low of US$1.0841/EUR, a high of US$1.0867/EUR, and settled the day up by 0.101% to close at US$1.0855/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 Friday made an intra‐day low of US$1.2849/GBP, a high of US$1.2877/GBP, and settled the day up by 0.129% to close at US$1.2866/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 Friday made an intra‐day low of JPY153.04/USD an intraday high of 154.73/USD, and settled the day down by 0.064% at JPY153.77/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 154.000-162.00 with risk above 162.00 targeting 152.50-151.60-151.0 and 150.50-150.00. Long positions above 153.10-151.00 with targets of 153.20-154.00-155.30 and 156.00-156.50-157.00 with stops below 151.00.