Daily Market Lookup

• Asian shares flinched from testing their 2007 record peak on Wednesday, as investors booked profits in high-tech shares while oil prices hit three-year highs due to production cuts and a fall in inventories. Some investors said risk sentiment had been boosted by an apparent easing in tensions in the Korean peninsula after North and South Korea agreed to future talks in their first official dialogue in more than two years. Washington welcomed what it said was a first step to solving the North Korean nuclear weapons crisis, even though Pyongyang said those were aimed only at the United States and not up for discussion with Seoul. In the currency market, the yen maintained the gains it made the previous day after the Bank of Japan trimmed the amount of its buying in long-dated bonds. While the move was in line with the BOJ’s subtle reduction in its bond buying over the past year, the so-called ‘stealth tapering’, the reaction highlighted how sensitive markets are to a pullback in Japan’s massive stimulus. The dollar extended losses against the yen on Wednesday after the Bank of Japan’s move to trim Japanese government bond (JGB) purchases in the previous session triggered speculation that it could begin tapering its massive, ultra-easy monetary stimulus. While the move was a technical tweak in line with the central bank’s policies to date, it unleashed a wave of speculation that the BOJ could be poised to begin winding down its stimulus.
• The dollar’s move higher, however, was limited somewhat by yen strength after the Bank of Japan reduce its purchases of long-dated government bonds, raising expectations that the central bank could rein in its massive accommodative monetary policy measures this year. Consumer prices rose 0.3% in China on month and at a 1.8% on year, official data showed Wednesday, below the expected 0.4% and 1.9% gains seen respectively. Producer prices rose 4.9%, a tick above the 4.8% gain expected. Overnight, the dollar continued its revival from nearly four-month lows against a basket of major currencies shrugging off the recent flurry of mixed Fed commentary on monetary policy outlook. The U.S. Federal Reserve should leave interest rates at current low levels to support inflation and wage gains, Minneapolis Federal Reserve President Neel Kashkari said on Tuesday. Kaskari’s inflationary concerns paled in comparison to his Boston counterpart Eric Rosengren who said Monday, the Fed should focus an “inflation range” between 1.5% to 3% as inflation has struggled to meet the Fed’s 2% target. San Francisco Fed President John Williams, an FOMC voter, said recently three rates remained appropriate for 2018 amid expectations that President Donald Trump’s tax reform plans would give the economy a boost. Sterling, continued to weaken in the wake of Prime Minister Theresa May’s decision to reshuffle the Cabinet. Some said they expected the Cabinet reshuffle would strengthen May’s leadership but the opposite appears to have transpired amid a string of resignations.
• Oil prices hit their highest levels since 2014 on Wednesday due to ongoing production cuts led by OPEC as well as healthy demand, although analysts cautioned that markets may be overheating. In an effort to prop up prices, the OPEC together with Russia and a group of other producers last November extended an output cut deal that was due to expire in March this year to cover all of 2018. The cuts, which have mostly targeted Europe and North America, were aimed at reducing a global supply overhang that had dogged oil markets since 2014. The American Petroleum Institute said late on Tuesday that crude inventories fell by 11.2 mn barrels in the week to Jan. 5, to 416.6 million barrels. Official U.S. Energy Information Administration data is due at 1530 GMT on Wednesday. Amid the general bull-run, which has pushed up crude prices by more than 13 percent since early December, there are indicators of an overheated market. In the United States, crude oil production C-OUT-T-EIA is expected to break through 10 mn bpd this month, reaching levels only Russia and Saudi Arabia have achieved. In Asia, the world’s biggest oil consuming region, refiners are suffering from high prices and ample fuel supplies. Average Singapore refinery margins DUB-SIN-REF this week fell below $6 per barrel, their lowest seasonal value in five years, due to high fuel availability but also because the recent rise in feedstock crude prices dented profits. Asian oil prices are higher than in the rest of the world. Rising oil prices could fan inflation down the road, which could be detrimental to some countries that have been prone to high inflation. Still, China’s December producer prices grew at their slowest pace in 13 months as the government’s stepped-up war against winter smog dented factory demand for raw materials. The PPI in December rose 4.9 percent from a year earlier, compared with 5.8 percent in November, the NBS said on Wednesday.

Gold – XAU

Gold on Tuesday made its intraday high of US$1320.39/oz and low of US$1308.71/oz. Gold was up by 0.550% at US$1312.66/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 overbought territory and giving positive crossover to confirm bullish stance for intraday trade.

Trading Strategy: Neutral

Based on the charts and explanations above; sell below 1320-1340 keeping stop loss closing above 1340 and targeting 1309-1300-1294 and 1286-1280. Buy above 1309-1280 with risk below 1280, targeting 1320-1326 and 1334-1340.

Silver - XAG

Silver on Tuesday made its intraday high of US$17.11/oz and low of US$16.89/oz. Silver settled down by 0.819% at US$16.94/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 overbought region and giving negative crossover to show downside move for the intraday trade.

Trading Strategy: Neutral

Based on the charts and explanations above, buy above 16.70-14.60 targeting 17.10-17.50 and 18.00-18.30-18.60; stop breakage below 14.60. Sell below 17.10-18.00 with stop loss above 18.00; targeting 16.70-16.35-15.80-15.00.

Oil - WTI

Crude Oil on Tuesday made an intra‐day high of US$63.45/bbl, intraday low of US$61.78/bbl and settled up by 2.47% to close at US$63.44/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 approaching oversold 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 63.50-65.30 with stop loss at 65.30; targeting and 63.00-62.50 and 61.90-61.00-60.50. Buy above 63.00-60.50 with risk daily closing below 60.50 and targeting 63.65-64.50 and 64.90-65.30.

EUR/USD

EUR/USD on Tuesday made an intraday low of US$1.1.1974/EUR, high of US$1.1914/EUR and settled the day down by 0.242% to close at US$1.1936/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 1.1950-1.2150 targeting 1.1900-1.1850 and 1.1790-1.1720 with stop-loss at daily closing above 1.2300. Buy above 1.1900-1.1720 with risk below 1.1700 targeting 1.2090-1.2150 and 1.2230-1.2300.

GBP/USD

GBP/USD on Tuesday made an intra‐day low of US$1.3504/GBP, high of US$1.3581/GBP and settled the day down by 0.199% to close at US$1.3539/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 50DMA (1.3263) 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 oversold 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 1.3550-1.3750 with targets at 1.3500-1.3450-1.3400 and 1.3350-1.3300. Buy above 1.3500-1.3320 with stop loss closing below 1.3300 targeting 1.3550-1.3590 and 1.3650-1.3750.

USD/JPY

USD/JPY on Tuesday made intra‐day low of JPY112.35/USD and made an intraday high of JPY113.17/USD and settled the day down by 0.397% at JPY112.63/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 200DMA (111.61), 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 112.50-115.50 with risk above 115.50 targeting 112.50-112.00 and 111.60-111.00. Long positions above 112.50-111.00 with targets of 113.20-114.00 and 114.75-115.50 with stop below 110.00.