Daily Market Lookup

• The dollar steadied on Friday and was headed for a positive week as worsening tensions in the Middle East buoyed expectations for higher inflation and interest rates in the coming months. Focus was squarely on upcoming U.S. payrolls data for more cues on the world’s biggest economy, amid increasing headwinds from the war on Iran. Broader currency markets were largely muted in anticipation of the reading, while uncertainty over Iran also weighed after negotiations over a peace deal appeared to have collapsed this week. Iran-backed, Lebanon-based militant group Hezbollah rejected a ceasefire with Israel, pointing to more difficulties for the U.S. in negotiating a peace deal with Iran. Tehran has called for a Lebanon ceasefire before any major peace deal with the U.S. can be reached. The euro and the pound were both flat in morning trade. The dollar index and dollar index futures moved little on Friday, but were set for weekly gains as heightened Middle East tensions drove flows into the greenback. Growing concerns over a prolonged conflict drove up bets on more energy-fueled inflation in the coming months– a scenario that is likely to elicit a hawkish stance from the Federal Reserve. This notion boosted the dollar and pressured most other currencies. Focus is now on upcoming nonfarm payrolls for May, due later on Friday, for more cues on the economy and interest rates. Inflation and the labor market are the Fed’s two biggest considerations for adjusting interest rates. Payroll growth is expected to have slowed in May from the prior month. The print has surprised to the upside for four of the past six months.
• Gold prices fell in Asian trade on Friday, as waning hopes for a U.S.-Iran peace deal drove up expectations of higher inflation and interest rates, spurring flows into the dollar. Market focus was squarely on upcoming U.S. payrolls data for more cues on the world’s largest economy and the path of interest rates this year. Spot prices were set to lose about 2.2% this week- their worst drop since early May. Gold was pressured by signs of worsening geopolitical tensions in the Middle East, as the U.S. and Iran traded a fresh round of attacks amid reports that Tehran had stepped away from negotiations. Hopes for a peace deal were further quashed by Iran-backed Lebanese group Hezbollah rejecting a ceasefire with Israel, as hostilities in Southern Lebanon continued. Tehran had outlined a Lebanon ceasefire as a necessity for any broader peace deal. This week’s developments pointed to little progress in a peace deal, heralding a prolonged U.S.-Iran conflict that is likely to underpin oil prices and inflation. Rising inflation is likely to elicit more hawkish moves from global central banks, especially the Federal Reserve. This notion has weighed heavily on gold since the onset of the U.S.-Israel war on Iran in late-February, given that high rates diminish the appeal of non-yielding assets. U.S. nonfarm payrolls data for May is due later on Friday, and is widely expected to offer more cues on the labor market and interest rates. The print is expected to show a further cooling in U.S. jobs growth, amid persistent headwinds from the Iran war and cooling economic growth. The labor market and inflation are the Federal Reserve’s two main considerations for adjusting interest rates. Friday’s print comes amid growing conviction that the central bank will keep rates steady for longer in the face of inflationary pressures from the Iran war. A strong payrolls reading could give the central bank more headroom to leave rates unchanged, or even hike rates later in the year. Nonfarm payrolls have surprised to the upside for four of the past six months.
• Oil prices rose in Asian trade on Friday after Iran-backed group Hezbollah rejected a ceasefire between Lebanon and Israel, undermining U.S. efforts to broker peace in the Middle East. Crude was headed for weekly gains after a flare-up in military tensions in the region, with the U.S. and Iran trading airstrikes, while bitter fighting between Israel and Hezbollah forces in Lebanon continued. The Iran-backed, Lebanon-based Hezbollah militia rejected a proposed ceasefire with Israel on Thursday and said it will not withdraw troops from the country, while also denouncing Lebanon-Israel negotiations. Israel kept up its air strikes in southern Lebanon, drawing retaliatory attacks from Hezbollah. Israeli officials signaled that forces would not be withdrawing from southern Lebanon or halting operations in the country, after a brief pause earlier this week. The development further undermined hopes for a U.S.-Iran peace deal, given that Tehran has repeatedly signaled that a Lebanon ceasefire is paramount for any lasting peace agreement. Reports earlier this week showed Iran had halted indirect negotiations with the U.S., after Tehran accused Washington of violating their ceasefire with recent attacks. The U.S. struck several targets in Iran this week, drawing retaliatory attacks by the Revolutionary Guard against American targets in Kuwait and Beirut. The strikes came even as U.S. officials asserted that a peace deal with Iran was close and that talks were ongoing. But there has been little evidence of diplomatic progress with Iran, despite claims to the contrary from Washington since at least late-March. Brent and WTI futures were set to add between 3% and 6% this week, as oil flows through the Strait of Hormuz– remained muted. While U.S. intervention did help spur an increase in ship crossings of the channel, oil flows still remained well below pre-war levels. The trend pointed to little immediate improvement in global oil supplies, especially given that roughly a fifth of the world’s oil consumption passed through Hormuz prior to the war. A lack of any clear deescalation in the war pointed to continued disruptions in oil supplies, keeping prices largely underpinned.

Gold – XAU

Gold on Wednesday interaday high of US$4496.70/oz and low of $4426.21/oz. God is down by 1.246% at US$4434.16/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 4464-4665 keeping stop loss closing above 4665, targeting 4428-4400-4380 and 4364-4348-4340-4315-4300. Buy in between 4482-4200 with risk below 4200 targeting 4500-4565-4590 and 4610-4655-4680.

Silver - XAG

Silver on Thursday its intraday high of US75.06/oz and low of US$72.58/oz settle down by 1.49% at US$73.86/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, 72.60-69.00 targeting 76.70-77.20-78.00 and 79.10-79.90-80.40-81.00 with stop loss should be placed on the breakage below 82.00. Sell in between 73.00-82.15 with a stop loss above 83.00 targeting 72.6-72.00-71.40 and 70.85-70.4-69.90-69.00.

Oil - WTI

Crude Oil on Thursday high of US$93.86/bbl, an intraday low of US$90.02/bbl, and settled down by 1.492% to close at US$90.96/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 upsides can be expected to reach the overbought region, which is highly probable.

Trading Strategy: Neutral to Sell

Sell in between 92.00-103.47 with stop loss at 104.00 targeting 90.95-89.90-89.00 and 87.55-86.90-86.00-85.10. Buy above 91.00-84.00 with risk daily closing below 84.00, targeting 93.30-93.80 and 95.30-96.00-96.60-97.30-98.00.

EUR/USD

EUR/USD on Thursday made an intraday low of US$1.1593/EUR, a high of US$1.1644/EUR, and settled up by 0.110% to close at US$1.1609/EUR.

Technicals in Focus:

On daily charts, prices are sustaining above 100DMA (1.1661), which becomes immediate support, a break below will target 1.1695. 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 1.1690-1.1990, targeting 1.1600 and 1.1565-1.1500-1.1450-1.1410 with stop-loss at daily closing above 1.1990. Buy above 1.1630-1.1450 with risk below 1.1450 targeting 1.1690-1.750-1.1790 and 1.1810-1.1840-1.1920-1.1960.

GBP/USD

GBP/USD on Thursday made a intraday low of US$1.3410/GBP, a high of US$1.3461/GBP, and settled the day up by 0.0581% to close at US$1.3422/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 between 1.3440-1.3150 with a target of 1.3436-1.3500-1.3570 and 1.3600-1.3640-1.3690-1.3725 with a stop loss closing below 1.3150. Sell in between 1.3440-1.3820 with targets at 1.3490-1.3440-1.3395-1.3325-1.3275 and 1.3250-1.3190-1.3150 with a stop loss of 1.3900.

USD/JPY

USD/JPY on Thursday made an intra‐day low of JPY159.59/USD an intraday high of 160.06/USD, and settled the day up by 0.0068% at JPY160.01/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 159.40-163.10 with risk above 163.10 targeting 158.70-158.10-157.00 and 156.60-153.00-152.65-152.10. Long positions above 158.70-152.00 with targets of 159.40-160.00 and 160.90-161.60-162.20-162.60 with stops below 148.00.