Daily Market Lookup

• Asian shares eked out modest gains on Thursday, clawing back sharp losses from earlier this week, however, rising U.S. bond yields and interest rates could dampen investors’ optimism toward the global economic outlook. The U.S. Federal Reserve flagged interest policy tightening later this year and upgraded inflation outlook, at its policy meeting that ended on Wednesday, its first in 2018 and last to be chaired by Janet Yellen, who will be replaced by governor Jerome Powell on Feb 3. It kept interest rates on hold as expected. Investors have been expecting strong profit growth in U.S. firms due to a sound global growth, with U.S. President Donald Trump’s tax cuts seen giving an additional boost to Corporate America’s bottom line. Economic data released overnight underscored the strength of the global economy. ADP payrolls data in the United States showed job increases of 234,000 in January, 49,000 more than economists’ forecast. Caixin/Markit Manufacturing Purchasing Managers’ Index, a private business survey, came at 51.5, matching December’s reading, which was the highest in four months, showing growth in China’s manufacturing sector remained elevated in January. For a growing number of investors, the biggest worry now is that the economy may accelerate too fast, lifting inflation and prompting central banks to tighten their monetary policy faster. Investors’ inflation expectations have also risen to 3 1/2-year high of 2.12 percent based on the so-called breakeven inflation (BEI) rate calculated by the gap between conventional bonds and inflation-protected bonds. U.S. interest rate futures are now almost fully pricing in three rate hikes this year, compared to twice at the start of year, with some now talking about the possibility of four rate hikes. The euro traded at $1.2420, consolidating after having hit a 3-year high of $1.2538 hit on Jan. 25, as investors bet the European Central Bank will be laying the groundwork for ending its asset purchase and raising interest rates.
• The dollar held steady against a basket of major currencies on Thursday after the Federal Reserve signaled its confidence about inflation and growth in the world's biggest economy, reinforcing views it will raise rates several more times this year. Traders are now awaiting a host of indicators including non-farm payrolls to see if they offer more than a brief respite to the ailing dollar. The Fed kept interest rates unchanged on Wednesday but said inflation is likely to quicken this year, bolstering expectations borrowing costs will continue to climb under incoming central bank chief Jerome Powell. Upcoming U.S. data include Thursday's manufacturing ISM index and U.S. non-farm payrolls and average hourly earnings due on Friday. It had lost 3.1 percent against the yen in January, weighed by a bevy of factors including concerns about U.S. trade protectionism and lingering speculation the Bank of Japan was gearing up to begin an exit from its easy monetary policy. Some traders are trying to put bullish bets on the Canadian dollar against the yen, after data on Wednesday showed strong growth in Canada's economy in November, he added. The U.S. Federal Reserve kept interest rates unchanged on Wednesday but said inflation likely would rise this year, bolstering expectations borrowing costs will continue to climb under incoming central bank chief Jerome Powell. It also said its rate-setting committee had unanimously selected Powell to succeed Yellen, effective Feb. 3. Powell, a Fed governor who has worked closely with Yellen, was nominated by President Donald Trump and confirmed by the U.S. Senate. Powell is expected to hew closely to the policies embraced by Yellen, who spearheaded the gradual move away from the near-zero interest rates adopted to nurse the economy back to health and spur job growth after the 2007-2009 recession. Fed policymakers have been encouraged in recent months as the economy picked up speed and the unemployment rate fell to a 17-year low of 4.1 percent. The Fed, which raised rates three times last year and in December forecast three more hikes for this year, said on Wednesday it expected “further gradual” rate increases will be warranted. The target range for the federal funds rate currently is 1.25 percent to 1.50% U.S. oil prices extended modest gains on Thursday as OPEC’s strong compliance with a supply reduction pact offset news that U.S. production topped 10 million barrels per day for the first time in nearly half a century. U.S. crude oil production in November surpassed 10 million barrels per day for the first time since 1970, and neared the all-time output record, the Energy Information Administration said on Wednesday. Oil output by the OPEC also rose in January from an eight-month low as higher output from Nigeria and Saudi Arabia offset a further decline in Venezuela and strong compliance with a supply reduction pact, a Reuters survey found. Oil prices are unlikely to advance much above $70 a barrel in 2018, with the market caught between the opposing forces of OPEC-led production cuts and surging U.S. output, a Reuters poll showed on Wednesday. Oil prices initially slipped on Wednesday after U.S EIA data showed that U.S. crude inventories rose by 6.8 million barrels last week, after 10 straight weeks of declines. But prices rebounded on the back of a surprise 2 million-barrel drawdown in gasoline stocks, helping push up gasoline futures Distillate stockpiles, which include diesel and heating oil, fell by 1.9 mn barrels, versus expectations for a 1.5 mn-barrel drop, the EIA data also showed. Kuwait Petroleum Corp expects to spend over $500 billion as it boosts its crude oil production capacity to 4.75 mn bpd in 2040, the national oil firm said on Wednesday.

Gold – XAU

Gold on Wednesday made its intraday high of US$1347.47/oz and low of US$1332.56/oz. Gold was up by 0.520% at US$1344.94/oz.

Technicals in Focus:

In daily charts, prices are below 20DMA (1329) 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 negative crossover to confirm bearish stance for intraday trade.

Trading Strategy: Sell on Strength

Based on the charts and explanations above; sell below 1355-1375 keeping stop loss closing above 1375 and targeting 1342-1336 and 1326-1318. Buy above 1358-1326 with risk below 1326, targeting 1355-1366-1375 and 1382-1390.

Silver - XAG

Silver on Wednesday made its intraday high of US$17.37/oz and low of US$17.08/oz. Silver settled up by 1.22% at US$17.32/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 neutral 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 17.00-15.80 targeting 17.75-18.20 and 18.60-18.95; stop breakage below 15.80. Sell below 17.70-18.60 with stop loss above 18.60; targeting 17.45-17.00-16.70 and 16.35-15.80.

Oil - WTI

Crude Oil on Wednesday made an intra‐day high of US$64.92/bbl, intraday low of US$63.65/bbl and settled down by 2.39% to close at US$64.76/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 neutral region and giving positive crossover for confirmation of bullish 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 64.90-68.00 with stop loss at 68.00; targeting and 64.00-63.50 and 62.80-61.90. Buy above 64.00-61.90 with risk daily closing below 61.90 and targeting 65.30-66.00-66.90 and 68.00-68.80.

EUR/USD

EUR/USD on Wednesday made an intraday low of US$1.2386/EUR, high of US$1.2474/EUR and settled the day up by 0.096% to close at US$1.2412/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 neutral 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 1.2500-1.2725 targeting 1.2400-1.2360-1.2290 and 1.2200-1.2160 with stop-loss at daily closing above 1.2725. Buy above 1.2400-1.2160 with risk below 1.2140 targeting 1.2500-1.2590 and 1.2650-1.2725.

GBP/USD

GBP/USD on Wednesday made an intra‐day low of US$1.4120/GBP, high of US$1.4232/GBP and settled the day up by 0.318% to close at US$1.4187/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 50DMA (1.3431) 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 overbought 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 1.4200-1.4400 with targets at 1.4100-1.4050-1.4000 and 1.3860-1.3800. Buy above 1.4100-1.3800 with stop loss closing below 1.3800 targeting 1.4200-1.4260 and 1.4300-1.4390.

USD/JPY

USD/JPY on Wednesday made intra‐day low of JPY108.58/USD and made an intraday high of JPY109.43/USD and settled the day up by 0.386% at JPY109.18/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 200DMA (111.69), 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 109.20-111.60 with risk above 111.60 targeting 108.45-107.90 and 107.30-106.50. Long positions above 108.45-106.50 with targets of 109.20-110.10-110.50 and 111.00-111.60 with stop below 107.30.