Daily Markets

• Most Asian currencies kept to a tight range on Monday with the yuan muted after more weak economic prints from China, while the dollar steadied before a widely expected interest rate cut by the Federal Reserve this week. Regional currencies logged some strength in recent weeks as traders dialled up bets on a September rate cut by the Fed, especially following several weak readings on the U.S. economy. But caution over the scale of the Fed’s easing, plus the central bank’s outlook on future cuts, limited overall gains in Asian markets. The Indian rupee was a laggard performer, hitting record lows last week amid heightened concerns over more U.S. trade tariffs against New Delhi, over its purchase of Russian oil. The USD/INR pair remained well above 88 rupees on Monday. The Chinese yuan’s USD/CNY pair fell slightly on Monday and remained close to a 10-month low hit last week Weak Chinese economic data continued to pile up. Industrial production and retail sales both grew less than expected in August, as did fixed asset investment China’s unemployment rate also unexpectedly grew to 5.3% in August, data showed on Monday. The prints followed weak inflation data from last week, which showed Chinese disinflation remaining squarely in play. The readings highlighted persistent weakness in the Chinese economy, especially as still-high U.S. trade tariffs eroded the country’s key exports. Weakness in local demand also came as support from Beijing’s sweeping consumer subsidies ran dry– a trend that is likely to draw out more government stimulus. But the yuan was sitting on stellar gains through August and September, with a series of strong midpoint fixings from Beijing contributing to this trend. China was seen propping up the yuan to make its exports appear more attractive, as the country grappled with U.S. trade tariffs. High-level trade talks between Washington and Beijing began on Sunday, as the two seek to hash out a more lasting trade truce. But semiconductors appeared to be a major point of contention, as Beijing over the weekend opened a probe into U.S. trade policy over chips. The dollar index and dollar index futures both steadied in Asian trade on Monday after logging mild gains last week. But the greenback remained under pressure from market conviction that the Fed will cut interest rates this week. Markets are pricing in a 96.4% chance the Fed will cut rates by 25 basis points during its September 16-17 meeting, and a 3.6% chance for a 50 bps cut, CME Fedwatch showed. Bets on a rate cut were boosted by data showing a sustained deterioration in the U.S. labor market, while inflation in August did not rise as sharply as markets were fearing. But markets still remained uncertain over just what the Fed had in store for its future easing plans.

Gold – XAU

Gold on Friday made its intraday high of US$3656.48/oz and low of $3630.35/oz. Gold is up by 0.252% at US$3643.00/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 3655-3700 keeping stop loss closing above 3700, targeting 3630-3619-3600 and 3590-3578-3564-3550. Buy in between 3630-3534 with risk below 3534 targeting 3651-3662-3675 and 3684-3690-3700.

Silver - XAG

Silver on Friday its intraday high of US$42.44/oz and low of US$41.37/oz settle up by 1.53% at US$42.16/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 41.70-33.10, targeting 38.90-39.50 and 39.90-40.50-41.10 with stop loss should be placed on the breakage below 33.00. Sell in between 42.20-44.00 with a stop loss above 44.00 targeting 41.40-40.70-40.10-39.50 and 38.20-37.80-37.20.

Oil - WTI

Crude Oil on Friday high of US$63.67/bbl, an intraday low of US$61.43/bbl, and settled up by 0.511% to close at US$62.30/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 63.00-72.00 with stop loss at 72.00; targeting 62.70-62.00 and 61.50-60.60-60.05. Buy above 62.50-58.00 with risk daily closing below 58.00, targeting 63.50-64.10 and 64.70-65.40-66.20-67.10.

EUR/USD

EUR/USD on Friday an intraday low of US$1.1700/EUR, a high of US$1.1747/EUR, and settled the day up by 0.0076% to close at US$1.1733/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 1.1755-1.1990, targeting 1.1640-1.1590-1.1545 and 1.1500-1.1470-1.1420 with stop-loss at daily closing above 1.1990. Buy above 1.1690-1.1110 with risk below 1.1100 targeting 1.1755-1.1790 and 1.1850-1.1890.

GBP/USD

GBP/USD on Friday low of US$1.3523/GBP, a high of US$1.3579/GBP, and settled the day down by 0.545% to close at US$1.3558/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 1.3410-1.3040 with a target of 1.3470-1.3550 and 1.3600-1.3625-1.3680-1.3720 with a stop loss closing below 1.3040. Sell in between 1.3550-1.3850 with targets at 1.3479-1.3410-1.3370-1.3310 and 1.3260-1.3200-1.3160 with a stop loss of 1.3850.

USD/JPY

USD/JPY on Friday an intra‐day low of JPY146.98/USD an intraday high of 148.16/USD, and settled the day down by 0.184% at JPY147.16/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 100DMA (152.35), 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 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 148.00-154.00 with risk above 154.00 targeting 147.40 and 146.60-146.10-145.20-144.70. Long positions above 147.60-144.00 with targets of 148.10-148.70-149.35 and 149.90-150.50-151.20-151.60 with stops below 144.00.