Dow trades in record highs as GBP/USD swiftly recovers and US natural gas prices slip

Macro update

Japan's Nikkei declines as chip stocks come under pressure: Japan's benchmark index fell around 1% as AI-linked heavyweights, including Advantest and Tokyo Electron, tracked overnight losses on Wall Street, although the broader Topix gained 0.91% as investors rotated into previously underperforming shares.

South Korean equities lead regional losses: The KOSPI tumbled 4.8%, adding to Wednesday's 2% decline, with SK Hynix and Samsung each falling more than 7% despite a 68% increase in second-quarter demand for memory chips.

Oil prices extend their decline: Brent crude slipped 1.1% towards $70.00 a barrel, marking a third consecutive session of losses after Qatar reported progress in US-Iran negotiations over the future of the Strait of Hormuz.

Dollar steadies ahead of US jobs data: The dollar index edged 0.1% lower to 101.32 before the release of US non-farm payrolls, while the yen remained close to a 40-year low at ¥162.84 per dollar amid speculation Japanese authorities could intervene during the US holiday weekend.

Gold recovers after a weak second quarter: Spot gold gained 0.7% to $4,059 an ounce, clawing back some of the losses suffered during the previous quarter, when prices fell 14%.

Treasury yields edge higher before payrolls report: US two-year Treasury yields rose two basis points to 4.18%, while 10-year yields increased two basis points to 4.49%, as investors positioned for a potentially strong employment report that could strengthen the case for a near-term Federal Reserve rate hike.

Dow Jones trades in record highs

The Dow Jones Industrial Average made yet another record high at the start of the new quarter, this time at 52,748. If bettered, the 55,000 region may be reached next.

Potential support sits between the early June highs and 26 June low at 51,665-to-51,620.

While the 23 June low at 51,307 holds, the short-term uptrend is deemed to be intact.

Short-term outlook: bullish while above the 23 June low at 51,307

Medium-term outlook: bullish while above the 10 June 49,914 low 

Dow Jones daily candlestick chart

GBP/USD recovery is underway

GBP/USD's rally off its late June $1.3140 seven-month low is gaining momentum with the May-to-July downtrend line at $1.3358 being in focus. A break through it and rise above the late May $1.3368 low would push the 200-day simple moving average (SMA) at $1.3397 to the fore.

Immediate support sits in the $1.3306-to-$1.3303 region ahead of the 22 June high at $1.3273.

Short-term outlook: bullish while above the $1.3140 late June low

Medium-term outlook: neutral with a bullish undertone while trading within its $1.3140-to-$1.3658 March-to-June extremes

GBP/USD daily candlestick chart

US natural gas futures consolidate

Last week US natural gas futures topped out at 319.4, marginally above the 200-day simple moving average (SMA) at 315.4 which has acted as resistance these past few weeks.

The April-to-July uptrend line at 302.9 is about to be tested. Were it and the late June low at 300.0 to be fallen through, a slide towards the mid-June low at 286.2 may ensue.

A bounce off the uptrend line may lead to the 10-to-17 June highs at 310.4-to-311.7 being revisited. If the next higher 22-to-26 June highs at 316.0-to-319.4 were to be exceeded, the early June peak at 323.8 would be back in focus.

Short-term outlook: bearish while below the 26 June high at 319.4

Medium-term outlook: bullish while above the 15 June low at 286.2

US natural gas daily candlestick chart