Daily Market Lookup

• Asian equity markets surged on Thursday on signs of easing Sino-U.S. trade tensions and expectations that China will step up efforts soon to support its cooling economy. Markets are slowly growing less pessimistic about the chances of a Sino-U.S. trade deal after a slew of news this week pointed to easing tensions between the two powers. Reuters reported on Wednesday that Chinese state-owned companies have bought more than 1.5 million tonnes of U.S. soybeans in the first major U.S. soybean purchases in more than six months. The purchases are the most concrete evidence yet that China is making good on pledges made when Presidents Donald Trump and Xi Jinping met on Dec. 1 and agreed to a 90-day detente to negotiate a trade deal. But markets have been stung by false signals in the past and Yoshinori Shigemi, a global market strategist at JPMorgan (NYSE:JPM) Asset Management, cautioned against reading too much into trade headlines. China also appears to be toning down its high-tech industrial development push, dubbed "Made in China 2025," which has long irked the United States, according to new guidance to local governments. But it remains to be seen if Beijing will meet Washington's demands for stronger protection for U.S. intellectual property. But China's economic woes are deeper rooted than just trade, and global investors are also banking that Beijing will roll out more support measures in coming months to reduce the risk of a sharper slowdown. Zhang Gang, an analyst at China Central Securities, said investor expectations of further policy support were rising ahead of a key policy meeting. The Central Economic Work Conference (CEWC) is typically held in mid-December. Major economic growth targets and policy goals are discussed but typically not publicly announced until the National People's Congress in March. Some analysts expect China's economic growth could slow to around 6 percent next year, the slowest pace since 1990, from around 6.5 percent in 2018. But analysts expect gains in the pound will be fleeting, as May appeared no closer to getting her EU divorce agreement through parliament, raising the risk of a chaotic exit in March. The euro was also higher, up 0.04 percent at $1.1375 after Italy's government offered to lower its deficit target next year to 2.04 percent of gross domestic product, below the 2.4 percent level that the European Commission had rejected as too high. The European Central Bank is all but certain to formally end its lavish bond purchase scheme on Thursday but will take an increasingly dim view on growth, raising the odds that its next step in removing stimulus will be delayed. The two-year yield, sensitive to expectations of higher Fed fund rates, was at 2.7723 percent compared with a U.S. close of 2.77 percent.
• The pound held onto most of the previous session's gains on Thursday after British Prime Minister Theresa May survived a no-confidence vote, buying time to try to steer her unpopular Brexit deal through a deeply divided parliament. The euro trod water ahead of a closely-watched policy meeting by the European Central Bank later in the day, after edging higher on news that Italy lowered its deficit target for next year and expected the European Commission to accept its new 2019 budget proposal. In Britain, lawmakers from the ruling Conservatives held a secret ballot on whether they had confidence in May's leadership of the party. Going into the vote and needing backing for her efforts to deliver Brexit, May had assured them that she would not lead the party into the next election due in 2022 She won support from 200 of 317 Conservative lawmakers, and the mutiny by more than a third signaled that she was no closer to getting parliament's approval for her plan to leave the European Union, making it likely that sterling's respite would prove temporary. With Britain due to leave the EU on March 29, parliament's opposition has suddenly opened up possibilities including a potentially disorderly exit with no deal or even another referendum on membership. The ECB is all but certain to formally end its lavish bond purchase scheme on Thursday but will take an increasingly dim view on growth, raising the likelihood that its next step in trimming stimulus will be delayed. Investors are hoping to find out whether the ECB will start raising interest rates before ECB President Mario Draghi's term ends in October next year, he added. Traders said China on Wednesday made its first major purchases of soybeans since U.S. President Donald Trump and his Chinese counterpart Xi Jinping hammered out a temporary trade war truce earlier this month.
• Oil prices gained on Thursday in Asia after the EIA reported a drop in U.S. crude stockpiles. U.S. crude inventories fell by 1.2 million barrels in the week to Dec. 7, the EIA reported. However, the decline was less than expected, as markets previously forecasted a decrease of 3 million barrels. Crude oil prices have also been supported by OPEC-led supply curbs announced last week. The Saudi-dominated Organization of the Petroleum Exporting Countries and its Russian-led allies announced a deal to cut their combined supplies by 1.2 mn bpd over the next six months to clear a global oil glut and pull prices higher. In a separate outlook report, the OPEC said 2019 demand for its crude would fall to 31.44 mn barrels per day, 100,000 bpd less than predicted last month and 1.53 million less than it currently produces. With less than three weeks to the end of 2018, WTI remains down about 15% on the year and some 32% lower from four-year highs of nearly $77 per barrel hit in early October. Brent is down about 10% on the year and some 31% lower from four-year highs of nearly $87 per barrel hit two months ago.

Gold – XAU

Gold on Wednesday made its intraday high of US$1247.10/oz and low of US$1241.93/oz. Gold up by 0.200% at US$1245.36/oz.

Technicals in Focus:

In daily charts, prices are below 200DMA (1255) and breakage above will call for 1266-1274. MACD is above zero line and histograms are increasing trend and it will bring upward stance in the upcoming sessions. RSI is in overbought region and more upside 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: Sell on Strength

Based on the charts and explanations above; sell below 1253-1273 keeping stop loss closing above 1273, targeting 1244-1238-1230 and 1221-1214. Buy above 1244-1200 with risk below 1200, targeting 1253-1260 and 1266-1273.

Silver - XAG

Silver on Wednesday made its intraday high of US$14.78/oz and low of US$14.51/oz. Silver settled up by 1.378% at US$14.71/oz.

Technicals in Focus:

On daily charts, silver is sustaining below 100DMA (14.66), breakage above will lead to 15.10-15.50. 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 positive crossover to show upside move for the intraday trade.

Trading Strategy: Neutral

Based on the charts and explanations above, buy above 14.50-12.40 targeting 14.90-15.10 and 15.60-16.35; stop breakage below 12.40. Sell below 14.80-17.00 with stop loss above 17.00; targeting 13.90-13.50 and 13.00-12.40.

Oil - WTI

Crude Oil on Wednesday made an intra‐day high of US$52.97/bbl, intraday low of US$51.10/bbl and settled down by 1.477% to close at US$51.35/bbl.

Technicals in Focus:

On daily charts, oil is sustaining below its 50DMA i.e. 66.10 which is a resistance level and breakage above will call for 66.80-67.08. 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 52.00-55.40 with stop loss at 55.40; targeting 51.00-50.20 and 49.50-49.00. Buy above 52.00-49.00 with risk daily closing below 49.00 and targeting 52.80-53.30 and 54.05-54.90-55.00.

EUR/USD

EUR/USD on Wednesday made an intraday low of US$1.1314/EUR, high of US$1.1386/EUR and settled the day up by 0.459% to close at US$1.1367/EUR.

Technicals in Focus:

On daily charts, prices are sustaining below 100DMA (1.1621), which become immediate resistance level, break below will target 1.1690-1.1730. MACD is below zero line but histograms are increasing mode which will bring bullish view. Stochastic is in overbought territory and giving positive crossovers to signal for bullish outlook for intraday. 14D RSI is currently approaching oversold region and giving wards directions to consider sell.

Trading Strategy: Neutral to Buy

Buy above 1.1300-1.1160 with risk below 1.1160, targeting 1.1400-1.1450-1.1490 and 1.1540-1.1610. Sell below 1.1400-1.1620 targeting1.1300-1.1260 and 1.1200-1.1160 with stop-loss at daily closing above 1.1620.

GBP/USD

GBP/USD on Wednesday made an intra‐day low of US$1.2476/GBP, high of US$1.2671/GBP and settled the day down by 1.129% to close at US$1.2625/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 100DMA (1.3096) 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 positive crossover to confirm bullish stance. MACD is above zero line but histograms are increasing lead to downward movement.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; sell below 1.2600-1.2810 with targets at 1.2550-1.2490-1.2430 and 1.2360-1.2300. Buy above 1.2550-1.2360 with targets 1.2550-1.2490-1.2430 and 1.2360-1.2300 with stop loss closing below 1.2360.

USD/JPY

USD/JPY on Wednesday made intra‐day low of JPY113.13/USD and made an intraday high of JPY113.51/USD and settled the day up by 0.079% at JPY113.27/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 50DMA (111.82), which is major support on the daily chart. 14-D RSI is currently in overbought region and chances of downward are expected based on RSI. 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 buy as it has given positive crossover to confirm bullish stance.

Trading Strategy: Neutral to Sell

Sell below 113.50-115.50 with risk above 115.50 targeting 112.70-112.10-111.50 and 111.00-110.20. Long positions above 112.70-110.20 with targets of 113.50-114.00 and 114.70-115.50 with stop below 110.50.