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Daily Market Lookup

  • The dollar edged higher in early European trade Wednesday, recovering a little from Tuesday’s two-year lows, helped by positive U.S. manufacturing activity and weak German retail sale. Economic data published on Tuesday showed U.S. manufacturing activity accelerated to a nearly two-year high in August amid a surge in new orders. This followed similarly upbeat Chinese and European manufacturing indicators. However, the overall tone remains one of dollar weakness. Weighing on the euro were German retail sales falling 0.9% on the month in July, dashing hopes that household spending in Europe's largest economy will prompt a recovery in the third quarter. This followed comments from Philip Lane, the European Central Bank’s chief economist, who linked movements in this pair to the bank’s monetary policy. This was the first sign of the ECB getting worried about the recent appreciation of the single currency, an important factor as the euro zone is heavily reliant on export markets for growth. The dollar bounced off two-year lows on Wednesday as U.S. data pointed to a firm manufacturing activity, while the euro retreated from its highest levels since 2018 on profit-taking. Economic data published on Tuesday showed U.S. manufacturing activity accelerated to a nearly two-year high in August amid a surge in new orders, with the reading from the Institute for Supply Management highest level since November 2018. The U.S. data followed similarly upbeat Chinese and European manufacturing indicators. Analysts said that an increase in pent-up demand has contributed to the rise in the greenback. The greenback has been declining since last week, down about 1%, after the Federal Reserve announced it would focus more on average inflation and higher employment. With the Fed's shift in policy having leeway to keep U.S. interest rates lower for longer, it has encouraged traders to sell the currency. That view was reinforced on Tuesday as Fed Governor Lael Brainard said the central bank would need to roll out more stimuli to help the economy overcome the coronavirus and fulfil the Fed's new pledge. Japan's Liberal Diplomatic Party formally decided to hold election of Sept. 14, sources told Reuters, but analysts say the market has already priced in the risk. Also supporting a rebound in the greenback, White House chief of staff Mark Meadows said Senate Republicans are likely to bring up a targeted COVID-19 relief bill next week.
  • The dollar was on an upward trend on Wednesday in Asia, after the U.S. saw better-than-expected manufacturing data the day before. The Institute for Supply Management (ISM) released its manufacturing data on Tuesday. Its PMI, at 56, was above than the expected 54.5 and better than the 54.2 in July. The rosy data came on the heels of China and Japan’s uptick in manufacturing, playing its part to restore confidence for economic recovery during the COVID-19 pandemic. Although the rosy data gave the dollar a boost, the greenback still remains at a one-year low on inflation expectations. The dollar has been on a downward trajectory from this year’s high at above 103 recorded in March. But some investors remain cautious about the data. Daiwa Securities chief FX strategist Mitsuo Imaizumi told Reuters that the ISM data also showed the labour market remained in contraction territory, warning that it is “unnecessary to see the data as entirely great.” There could be further rebound in the greenback as the U.S. is working to roll out more relief measures. Senate Republicans are reportedly bringing up a targeted COVID-19 relief bill next week, while U.S. Treasury Secretary Steven Mnuchin said the Trump administration is willing to work on a bipartisan relief package.
  • Crude oil futures extended gains on Wednesday after a bigger-than-expected draw in U.S. crude stockpiles and as solid U.S. and Chinese factory activity fuelled optimism of a recovery from the coronavirus pandemic, boosting investor risk appetite. U.S. crude inventories fell by 6.4 mn barrels in the week to Aug. 28 to 501.2 mn barrels, the API said, against analysts' expectations for a draw of 1.9 million barrels. Gasoline stocks also fell by 5.8 million barrels, more than analysts' estimates of a draw of 3.0 million barrels. Analysts had forecast a sixth weekly drawdown in U.S. crude inventories in a Reuters poll. U.S. manufacturing activity accelerated to a more than 1-1/2-year high in August amid a surge in new orders, lending support to Wall Street and oil markets. China's factory activity also expanded at the fastest clip in nearly a decade in August, bolstered by the first increase in new export orders this year as manufacturers ramped up production to meet rebounding demand, a private survey showed on Tuesday. U.S. Gulf of Mexico offshore oil output on Tuesday was down by 525,099 barrels per day, or 28.4% of the region's daily production, the U.S. Department of Interior reported, as energy companies restarted more activity in the aftermath of Hurricane Laura. Still, 71 of the U.S. Gulf of Mexico's 643 manned platforms remained evacuated, down from 117 production platforms on Monday, the regulator said. On the global supply side, oil output by the OPEC rose by about 1 min bpd in August, a Reuters survey found. From May 1, OPEC and its allies, known as OPEC+, made a record cut of 9.7 million bpd, or 10% of global output, after the novel coronavirus destroyed one-third of world demand. From Aug. 1, the cut tapered to 7.7 million bpd until December. The United Arab Emirates pumped 2.693 mn bpd in August, above its OPEC+ quota, after hot weather and people holidaying at home drove associated gas demand for power generation, two sources familiar with the matter told Reuters.

 

 
Intraday RESISTANCE LEVELS
2nd September 2020 R1 R2 R3
GOLD-XAU 1,971-1,989 2,010 2,023-2,030
Silver-XAG 28.10-29.00 29.80 30.50-31.00
Crude Oil 44.10 45.00-46.30 47.00
EURO/USD 1.2000-1.2050 1.2100 1.2170-1.2250
GBP/USD 1.3350-1.3420 1.3490 1.3520-1.3550
USD/JPY 106.90 107.30 108.10-108.90

Intraday SUPPORTS LEVELS
2nd September 2020 S1 S2 S3
GOLD-XAU 1,954 1,940 1,924-1,915
Silver-XAG 27.00 26.10 26.55-25.10
Crude Oil 43.15-42.00 41.00 40.60-39.50
EURO/USD 1.1955-1.1900 1.1850 1.1800-1.1730
GBP/USD 1.3290 1.3250 1.3190-1.3100
USD/JPY 106.10-105.50 104.90 104.30-103.90

Intra-Day Strategy (2nd September 2020)
GOLD-XAU Buy on Dips
Silver-XAG Buy on Dips
Crude Oil Neutral to Buy
EUR/USD Neutral to Buy
GBP/USD Neutral to Sell
USD/JPY Neutral to Sell

Gold – XAU

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Gold on Tuesday made its intraday high of US$1992.26/oz and low of US$1963.19/oz. Gold up 0.133% at US$1969.43/oz.

Technicals in Focus:

In daily charts, prices are above 50DMA (1882) and breakage below will call for 1805. MACD is above zero line and histograms are also increasing trend and it will bring upward stance in the upcoming sessions. RSI is in neutral region and more upside is expected before it gets stretched. Stochastic Oscillator is in overbought territory and giving positive crossover to bullish stance for intraday trade.

Trading Strategy: Buy on Dips

Based on the charts and explanations above; buy above 1954-1900 with risk below 1900, targeting 1971-1989-2010 and 2023-2030. Sell below 1971-2030 keeping stop loss closing above 2030, targeting 1954-1940 and 1924-1900-1889.

 
Intraday Support Levels
S1     1,954
S2     1,940
S3     1,924-1,915
Intraday Resistance Levels
R1     1,971-1,989
R2     2,010
R3     2,023-2,030

Technical Indicators

Name   Value Action
14DRSI  

58.043

Buy
20-DMA   1966.45 Buy
50-DMA  

1882.25

Buy
100-DMA   1805.63 Buy
200-DMA   1682.51 Buy
STOCH(5,3)   88.503 Buy
MACD(12,26,9)   15.45 Sell

Silver - XAG

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Silver on Tuesday made its intraday high of US$28.88/oz and low of US$27.54/oz settled down by 0.284% at US$28.03/oz.

Technicals in Focus:

On daily charts, silver is sustaining above 20DMA (21.60), breakage below will lead to 19.40. MACD is above zero line and histograms are increasing trend and it will bring bullish stance in the upcoming sessions. RSI is approaching overbought region, indicating buy signal for now. The Stochastic Oscillator is in neutral region and giving positive crossover to show upside move for the intraday trade.

Trading Strategy: Buy on Dips

Based on the charts and explanations above, buy above 28.10-24.50 targeting 29.00-29.80 and 30.50-31.00, stop breakage below 22.50. Sell below 29.00-30.00 with stop loss above 30.00; targeting 28.10-27.20-26.10 and 25.00-24.30.

 
Intraday  Support Levels
S1     27.00
S2     26.10
S3     26.55-25.10

Intraday  Resistance Levels
R1     28.10-29.00
R2     29.80
R3     30.50-31.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   60.514 Buy
20-DMA   24.90 Buy
50-DMA   20.81 Buy
100-DMA   18.30 Buy
200-DMA   17.66 Buy
STOCH(5,3)   49.268 Buy
MACD(12,26,9)   1.914 Buy

Oil - WTI

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Crude Oil on Tuesday made an intra‐day high of US43.53/bbl, intraday low of US$42.85/bbl and settled up by 0.214% to close at US$43.05/bbl.

Technicals in Focus:

On daily charts, oil is sustaining below its 50DMA i.e. 40.00 which is a resistance level and breakage above will call for 44.00. MACD is below zero line and histograms are in increasing mode will bring bullish stance in the upcoming sessions. The Stochastic Oscillator is in overbought region and giving positive crossover for confirmation of bullish stance; while the RSI is in neutral region and more downside can be expected to reach the oversold region, which is highly probable.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; buy above 43.15-38.50 with risk daily closing below 36.65 and targeting 44.10-45.00 and 46.30-47.00. Sell in between 44.10-47.30 with stop loss at 47.30; targeting 43.15-42.00-41.00 and 40.60-39.50-38.50.

 
Intraday Support Levels
S1     43.15-42.00
S2     41.00
S3     40.60-39.50

Intraday Resistance Levels
R1     44.10
R2     45.00-46.30
R3     47.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   63.099 Sell
20-DMA   42.14 Buy
50-DMA   41.02 Buy
100-DMA   34.96 Buy
200-DMA   42.11 Sell
STOCH(5,3)   78.130 Buy
MACD(12,26,9)   0.738 Sell

EUR/USD

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EUR/USD on Tuesday an intraday low of US$1.1900/EUR, high of US$1.2010/EUR and settled the day down by 0.206% to close at US$1.1911/EUR.

Technicals in Focus:

On daily charts, prices are sustaining below 100DMA (1.1031), which become immediate resistance level, break above will target 1.1090. MACD is below zero line but histograms are increasing mode which will bring bullish view. Stochastic is in oversold territory and giving negative crossovers to signal for bearish outlook for intraday. 14D RSI is currently in neutral region and giving no directions to consider right now.

Trading Strategy: Neutral to Buy

Buy above 1.1955-1.1740 with risk below 1.1740, targeting 1.2000-1.2050-1.2100 and 1.2170-1.2250. Sell below 1.2000-1.2250 targeting 1.1955-1.1900-1.1850 and 1.1800-1.1730-1.1650 with stop-loss at daily closing above 1.1950.

 
Intraday Support Levels
S1     1.1955-1.1900
S2     1.1850
S3     1.1800-1.1730

Intraday  Resistance Levels
R1     1.2000-1.2050
R2     1.2100
R3     1.2170-1.2250

TECHNICAL INDICATORS
Name   Value Action
14DRSI   57.032 Buy
20-DMA   1.1811 Buy
50-DMA   1.1531 Buy
100-DMA   1.1253 Buy
200-DMA   1.1145 Buy
STOCH(5,3)   28.758 Sell
MACD(12,26,9)   -0.0011 Buy

GBP/USD

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GBP/USD on Tuesday made an intra‐day low of US$1.3355/GBP, high of US$1.3481/GBP and settled the day up by 0.115% to close at US$1.3382/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 20DMA (1.3134) is become immediate support level. 14-D RSI is currently in neutral region and direction is difficult to predict on RSI bases. The Stochastic Oscillator is in oversold territory and giving negative crossover to confirm bearish stance. MACD is above zero line but histograms are increasing lead to upward movement.

Trading Strategy: Neutral to Sell

Based on the charts and explanations above; sell below 1.3420-1.3550 with targets at 1.3350-1.3290-1.3250 and 1.3190-1.3100-1.3050 stop-loss should be 1.3550. Buy above 1.3350-1.3050 with targets 1.3420-1.3490 and 1.3520-1.3550 with stop loss closing below 1.3000.

 
Intraday Support Levels
S1     1.3290
S2     1.3250
S3     1.3190-1.3100

Intraday Resistance Levels
R1     1.3350-1.3420
R2     1.3490
R3     1.3520-1.3550

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

70.904

Buy
20-DMA   1.3154 Buy
50-DMA   1.2857 Buy
100-DMA   1.2637 Sell
200-DMA   1.2729 Sell
STOCH(5,3)   95.940 Buy
MACD(12,26,9)   0.0124 Sell

USD/JPY

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USD/JPY on Tuesday made intra‐day low of JPY105.28/USD and made an intraday high of JPY106.09/USD and settled the day up by 0.454% at JPY105.90/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 200DMA (108.30), which is initial support on the daily chart. 14-D RSI is currently in overbought region and chances of downward are expected based on RSI. MACD is above zero line but histograms are in decreasing mode which might lead to downward movement. The Stochastic Oscillator is in neutral territory and signaling to sell as it has given negative crossover to confirm bearish stance.

Trading Strategy: Neutral to Sell

Sell below 106.50-111.00 with risk above 111.00 targeting 106.10-105.50-104.90 and 104.50-103.90-103.10. Long positions above 106.50-103.00 with targets of 106.90-107.50 and 107.90-108.40-109.40 with stop below 105.00.

 
Intraday Support Levels
S1     106.10-105.50
S2     104.90
S3     104.30-103.90

INTRADAY RESISTANCE LEVELS
R1     106.90
R2     107.30
R3     108.10-108.90

TECHNICAL INDICATORS
Name   Value Action
14DRSI   47.904 Buy
20-DMA   106.03 Sell
50-DMA   106.49 Sell
100-DMA   106.49 Sell
200-DMA   107.99 Sell
STOCH(9,6)   80.253 Sell
MACD(12,26,9)   -0.1448 Sell

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