Asian stocks nearly reached the highest level in 9 months on Monday due to easing worries on the Brexit vote’s impact. Further optimism was added by efforts from central banks’ to maintain global economic growth via different policy measures. MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.1 percent to hit levels just below its nine-month peak reached on Thursday. Japan’s Nikkei inched up 0.4 percent.
The speculation that the Federal Reserve (Fed) will raise interest rates by the end of this year has been revived by the strength of US economic data in recent weeks. Dollar interest rates futures, which had priced out any chance of a rate hike this in the days that followed the UK referendum, are now pricing in about a 40 percent chance of a 0.25 percentage point increase by the end of 2016. This expectation has been adding to the attractiveness of the greenback in the currency market.
On the sidelines of the G20 meeting, Bank of Japan Governor Haruhiko Kuroda stated that Japan would ease policy further if necessary to achieve its 2% inflation target. He also stated that there was no discussion on “helicopter money” – a radical policy of expanding fiscal stimulus, financed by printing money. The yen traded at 106.23 per dollar, recovering from the lowest level in six weeks at 107.49, showing limited response to his comments.
The euro weakened on news that an explosion killed at least one person and injured 10 others near the German city of Nuremberg on Sunday. This was the fourth violent incident in Germany in a week and came as the country was still on edge after the killing of nine people by an 18-year-old Iranian-German gunman in Munich on Friday.
Crude oil prices were down in early trading in Asia, hovering near the lowest level in 2 months, reached in the previous session, as the market worried over a global oil glut.
Overall, USDCHF has been in an uptrend with the support of the parabolics sar band below. ADX is staying at level 21, with the +DI (green line) moving far away from the –DI (red line), suggesting a strong bullish trend in the making. However, RSI is lingering at level 55 and pointing downwards, indicating that the price may fall slightly, to test the support level at 0.98517 before any attempts to bounce back.
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EURGBP has been tiptoeing smoothly around the price area of 0.83601. RSI is hovering at 49.53 and heading up. This is expected to help build a bullish formation for the pair. However, the pair is under downward pressure from the two moving averages and the parabolics sar above. It may continue to trade sideways around the Fibonacci 23.6% level for some time before pulling back.
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NZDUSD has been moving cautiously recently after the steep fall on 21st July . The pair is under downward pressure from the two EMAs, both in long-term and short-term, suggesting a continuous down-move for the pair. RSI is staying at level 34, and is expected to push the pair into oversold territory. The trend indicator is indicating a bearish trend too. The price is anticipated to hit the support level at 0.69475 soon.
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Gold has been moving sideways around the price area of 1316.76. RSI is at 40.51, and anticipated to fall further into the oversold territory. The –DI (red line) has refused to cross the +DI (green line), suggesting that bears are gaining momentum. The trend indicator has recommended a short position since July 12. This short position has accumulated 3382 points of profit so far, with further falls still expected. The support level of 1304.67 is anticipated to be tested soon.
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NASDAQ has gained continuously, with the support of the two moving averages below. The RSI is at 68.69, near the overbought territory, suggesting that a reversal may occur soon. The +DI (green line) is beginning to turn down, indicating that the uptrend is becoming weaker. The index’s up-move is expected to last for the rest of the day, after that a retreat could come about.
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Copper has retreated slightly from the price area of 2.2472, under downward pressure of the 50-day moving average. RSI is at level 45 and pointing down, suggesting that a bearish trend is about to be formed. The trend indicator is encouraging short positions. The price is expected to continue moving down, breaking the 10-day EMA and hitting the support level of 2.2020. After that, a bounce back could be expected.
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