Daily Market Lookup

• Asian shares erased earlier modest gains on Friday but were still on track for a weekly rise, as sentiment was hurt by Wall Street’s weakness on concerns about the progress of U.S. tax reform. Big Japanese manufacturers’ business confidence improved for a fifth straight quarter in the three months to December to hit an 11-year high, the BoJ’s quarterly tankan survey showed. On Thursday, U.S. retail sales increased more than expected in November and the number of Americans filing for unemployment benefits dropped to near a 44-1/2-year low last week. That pointed to sustained strength in the economy that could pave the way for further Federal Reserve interest rate hikes next year. The Fed hiked interest rates on Wednesday but left its rate outlook for the coming years unchanged even as policymakers projected a short-term jump in U.S. economic growth from the Trump administration’s proposed tax cuts. Republicans in the U.S. Congress reached a deal this week on a final version of their debt-financed legislation to cut taxes for businesses and wealthy Americans, with House and Senate votes expected early next week. But the bill has yet to get needed support of some key Senators, and investors worry about downward pressure on stocks if the bill were to fail. On Thursday, the European Central Bank raised growth and inflation forecasts for the euro area, but stuck with its pledge to provide stimulus for as long as needed. The Bank of England also left interest rates unchanged on Thursday, as expected.
• The dollar was on the defensive on Friday after wrangling over a bill to change the U.S. tax code dented confidence, while the euro sagged after the European Central Bank signalled it would maintain stimulus for as long as needed. The U.S. currency had climbed to a one-month high of 113.750 yen on Tuesday. But it made U-turn midweek after the Federal Reserve tightened monetary policy as expected but also expressed concern about low inflation. The dollar lost further ground after two U.S. Republican senators on Thursday were reported to have sought changes to the proposed legislation to overhaul the U.S. tax code. The tax bill needs a simple majority to pass in the Senate, in which Republicans hold just 52 of the 100 seats and no Democrats are expected to support it. Democrat Doug Jones won the contest for a U.S. senate seat on Tuesday in Alabama, a Republican stronghold, and trimmed their already narrow Senate majority. Negotiators from both the Senate and House of Representatives have been scrambling to reconcile their own versions of the tax bill in recent days. Once a compromise is reached, it will be sent to U.S. President Donald Trump to be signed into law. The common currency flagged after the European Central Bank on Thursday raised growth and inflation forecasts for the euro area, but stuck with its pledge to provide stimulus for as long as needed.
• Gold price rose slightly in Asia on Friday as investors digested a triple load of central bank view from the Fed, ECB and Bank of England that pointed to continued easy liquidity. Overnight, gold prices traded close to session highs on Thursday, shrugging off a rebound in the dollar as the European Central Bank said it would continue its ultra-accommodative monetary policy measures. The European Central Bank left its benchmark rate unchanged on Thursday, reiterating its commitment to running an asset-purchase stimulus programme until at least next September. "Domestic price pressures remain muted overall and have yet to show convincing signs of a sustained upward trend,” European Central bank president Mario Draghi said in a press conference on Thursday, adding that an “ample degree” of stimulus is still needed. Gold prices reversed a two-day slide on Wednesday against the backdrop of a widely expected Federal Reserve rate hike, and an unchanged outlook on the path of monetary policy tightening with three rate hikes expected in 2018. In a sign of confidence, the Federal Reserve revised upward its projection for economic growth in 2017 to 2.5%, while forecasting growth for 2018 at 2.5%. Also supporting sentiment on gold prices were reports of renewed brexit uncertainty after UK Prime Minister Theresa May's government was defeated on Wednesday, when lawmakers forced through changes to its Brexit plan that ministers said could threaten Britain's departure from the European Union.
• Oil markets were stable on Friday as the Forties pipeline outage in the North Sea and ongoing OPEC-led production cuts supported prices, while rising output from the United States kept crude from rising further. Traders said markets were well supported overall by efforts led by OPEC and Russia to withhold supply to prop up prices. The ongoing outage of the Forties pipeline, which carries North Sea oil to Britain, was also buoying crude prices, traders said. While the pipeline outage physically mostly affects the North Sea region, it is of global relevance as the crude it supplies is part of the supply that underpins the Brent price benchmark. Goldman Sachs said that market conditions allowed the major oil companies, which it referred as Big Oil, to enter “a positive earnings-revision cycle” and that “this should allow Big Oil to re-employ capital at double-digit returns” Undermining OPEC’s efforts to tighten the market is U.S. oil production, which has soared by 16 percent since mid-2016 to 9.78 million barrels per day (bpd), close to levels of top producers Russia and Saudi Arabia. Rising U.S. supply, driven largely by shale drilling, will likely move oil markets into a supply surplus in the first half of 2018, the IEA said on Thursday.

Gold – XAU

Gold on Thursday made its intraday high of US$1258.98/oz and low of US$1258.98/oz. Gold was down by 0.218% at US$1252.55/oz.

Technicals in Focus:

In daily charts, prices are below 200DMA (1267) and breakage above will call for 1280-1290. MACD is below zero line and histograms are decreasing trend and it will bring upward stance in the upcoming sessions. RSI is in oversold region and more downside is expected before it gets stretched. Stochastic Oscillator is in oversold territory and giving negative crossover to confirm bearish stance for intraday trade.

Trading Strategy: Neutral

Based on the charts and explanations above; sell below 1254-1280 keeping stop loss closing above 1280 and targeting 1246-1239 and 1230-1224. Buy above 1246-1224 with risk below 1224, targeting 1254-1266-1274 and 1284-1290-1300.

Silver - XAG

Silver on Thursday made its intraday high of US$16.11/oz and low of US$15.82/oz. Silver settled down by 0.936% at US$15.87/oz.

Technicals in Focus:

On daily charts, silver is sustaining above 200DMA (17.16), breakage below will lead to 16.70-16.35. MACD is above zero line and histograms are increasing trend and it will bring bullish stance in the upcoming sessions. RSI is in oversold region, indicating buy signal for now. The Stochastic Oscillator is in oversold region and giving positive crossover to show upside move for the intraday trade.

Trading Strategy: Neutral

On daily charts, silver is sustaining above 200DMA (17.16), breakage below will lead to 16.70-16.35. MACD is above zero line and histograms are increasing trend and it will bring bullish stance in the upcoming sessions. RSI is in oversold region, indicating buy signal for now. The Stochastic Oscillator is in oversold region and giving positive crossover to show upside move for the intraday trade.

Oil - WTI

Crude Oil on Wednesday made an intra‐day high of US$57.21/bbl, intraday low of US$56.08/bbl and settled up by 0.88% to close at US$57.17/bbl.

Technicals in Focus:

On daily charts, oil is sustaining below its 200DMA i.e. 49.60 which is a major resistance and breakage above will call for 50.30-51.00. MACD is above zero line and histograms are in increasing mode will bring bearish stance in the upcoming sessions. The Stochastic Oscillator is in overbought region and giving negative crossover for confirmation of bearish stance; while the RSI is in oversold region and more downside can be expected.

Trading Strategy: Neutral

Based on the charts and explanations above; sell below 57.45-61.00 with stop loss at 61.00; targeting and 57.00-56.00-55.40 and 54.70-54.00. Buy above 57.00-54.50 with risk daily closing below 54.50 and targeting 57.45-58.50-59.00 and 59.60-61.00.

EUR/USD

EUR/USD on Thursday made an intraday low of US$1.1770/EUR, high of US$1.1861/EUR and settled the day down by 0.405% to close at US$1.1777/EUR.

Technicals in Focus:

On daily charts, prices are sustaining below 100DMA (1.1700), which become immediate resistance level, break above will target 1.1750-1.1800. 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 approaching oversold region and giving wards directions to consider buy.

Trading Strategy: Neutral to Sell

Based on the charts and explanations above; sell below 1.1790-1.12090 targeting 1.1750-1.1700 and 1.1660-1.1590 with stop-loss at daily closing above 1.2090. Buy above 1.1850-1.1700 with risk below 1.1700 targeting 1.1790-1.1900-1.1990 and 1.2050-1.2090.

GBP/USD

GBP/USD on Thursday made an intra‐day low of US$1.3367/GBP, high of US$1.3464/GBP and settled the day down by 0.081% to close at US$1.3429/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 50DMA (1.3241) is become major support level. 14-D RSI is currently in neutral region and direction is difficult to predict on RSI bases. The Stochastic Oscillator is in neutral territory and giving negative crossover to confirm bearish stance. MACD is below zero line and histograms are decreasing lead to downward movement.

Trading Strategy: Neutral to Sell

Based on the charts and explanations above; short positions below 1.3500-1.3660 with targets at 1.3425-1.3360 and 1.3300-1.3260- 1.3200. Buy above 1.3425-1.3200 with stop loss closing below 1.3200 targeting 1.3425-1.3500 and 1.3570-1.3650.

USD/JPY

USD/JPY on Thursday made intra‐day low of JPY112.05/USD and made an intraday high of JPY112.87/USD and settled the day down by 0.133% at JPY112.37/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 200DMA (111.62), which is major support on the daily chart. 14-D RSI is currently in neutral region and direction is difficult to predict on RSI bases MACD is above zero line but histograms are in decreasing mode which might lead to downward movement. The Stochastic Oscillator is approaching overbought territory and signaling to sell as it has given negative crossover to confirm bearish stance.

Trading Strategy: Neutral to Sell

Sell below 112.50-115.00 with risk above 115.00 targeting 112.00-111.60 and 111.00-110.20. Long positions above 112.00-110.00 with targets of 112.50-113.00 and 114.00-114.75-115.50 with stop below 110.00.