Daily Markets

• The yen dropped on Wednesday after an influential Bank of Japan official played down the chances of a near-term rate hike, soothing investors' concerns that a further jump in the Japanese currency could again rock global markets. His remarks, which contrasted with Governor Kazuo Ueda's hawkish comments made last week when the BOJ unexpectedly raised interest rates, sent Japanese stocks higher, leaving them effectively flat for the week. The BOJ's hike last week, along with intervention from Tokyo in early July, led investors to bail out of once-popular carry trades in which traders borrow the yen at low rates to invest in assets that offer higher returns. The carry unwind combined with weak U.S. jobs data and fears about an artificial intelligence bubble to send global stocks tumbling this week, started by a 12% crash in Japanese equities on Monday The yen's decline was broad based, with the Mexican peso, New Zealand dollar and Australian dollar - all carry trade investment candidates - surging against the currency Traders ramped up their bets on Federal Reserve rate cuts on Monday following an unexpected jump in the unemployment rate on Friday, at one point pricing in more than 125 basis points of reductions this year. Those bets have gradually come down, and traders on Wednesday were expecting 100 bps of easing this year and a 62% chance of a 50 basis point cut in September, having priced it as a near certainty on Monday.
• 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 rose in Asian trade on Thursday as a sustained drop in U.S. inventories spurred some optimism over sustained demand in the world’s biggest fuel consumer. Bargain buying also aided oil prices, as they rebounded from multi-month lows in the prior session. But this rebound now appeared to be running out of steam, with further gains in crude stymied by dismal economic data from top oil importer China, especially on its crude imports. Brent oil futures rose 0.3% to $78.59 a barrel, while West Texas Intermediate crude futures rose 0.4% to $77.98 a barrel by 21:26 ET (01:26 GMT). Both contracts were nursing sharp losses in recent sessions amid concerns that a potential U.S. recession will batter oil demand. U.S. oil inventories shrank 3.7 million barrels in the week to August 2, dropping for a sixth straight month and also falling more than expectations for a draw of 1.6 million barrels. The reading sparked some hopes of tighter U.S. markets, especially as demand picked up over the past two months in the travel-heavy summer season. But builds in gasoline and distillate inventories indicated that fuel demand may now be cooling after a strong summer. Energy Information Administration data also showed U.S. oil production hit a record high of 13.4 million barrels per day last week. The EIA also forecast that global oil demand will grow at a slower pace than initially expected. China oil imports drop in July as growth concerns mount China imported around 10 million barrels of oil in July, down 12% from June and 3% lower than the same period last year, government data showed on Wednesday. The drop in imports came amid weaker fuel demand and lower refining margins. But the weak import data was also preceded by a string of soft economic readings from China, which added to concerns over slowing growth in the world’s biggest oil importer. Concerns over China, coupled with fears of a U.S. recession, were the biggest weight on oil prices in recent sessions. Concerns over demand saw traders attach little risk premium to oil prices despite the prospect of a bigger war in the Middle East, as tensions rose between Israel and Iran.

Gold – XAU

Gold on Wednesday made its intraday high of US$2406.92/oz and low of $2378.91/oz. Gold is down by 0.302% at S$2382.63/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 2400-2520 keeping stop loss closing above 2520, targeting 2400 and 2384-2370-2362. Buy in between 2380-2334 with risk below 2330 targeting 2400-2418-24322,4502470-2484 and 2490-2500.

Silver - XAG

Silver on Wednesday made its intraday high of US$27.24/oz and low of US$26.58/oz settle down by 1.05% at US$26.58/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 Wednesday 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 75.00-77.00 with stop loss at 77.00; targeting 73.10-72.50-71.90-71.00 and 70.55-69.90. Buy above 74.50-69.50 with risk daily closing below 69.00, targeting 75.10 and 76.50-77.40-78.00.

EUR/USD

EUR/USD on Wednesday made an intraday low of US$1.0904/EUR, a high of US$1.10935/EUR, and settled the day down by 0.0765% to close at US$1.0921/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 Wednesday made an intra‐day low of US$1.2679/GBP, a high of US$1.2735/GBP, and settled the day down by 0.0031% to close at US$1.2689/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 Wednesday made an intra‐day low of JPY144.12/USD an intraday high of 147.90/USD, and settled the day up by 1.689% at JPY146.64/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.