Daily Market Lookup

• Asian share markets sank on Tuesday as heightened worries about a slowing global economy sent Wall Street stocks skidding to their lowest levels in more than a year. In addition, the National Association of Home Builders Housing Market Index indicated U.S. homebuilder sentiment had fallen to a three-and-a-half-year low. It was the second consecutive month of disappointing reading. The gloomy data came after weak economic news from China and Europe late last week. The Federal Reserve is widely expected to raise interest rates on Wednesday, which would be its fourth hike this year. But many investors now expect signs of economic turbulence to prompt the Fed to signal a slowdown in the pace of tightening next year. On Monday, U.S. President Donald Trump and his top trade adviser ratcheted up their criticism of the central bank's monetary tightening. White House trade adviser Peter Navarro amplified those remarks a few hours later, calling the Fed "crazy" for having signaled that it would continue to raise rates next year. The Fed said in September that its policymakers see three more rate hikes in 2019 while money market futures are pricing in less than one such move. The specter of a "dovish rate hike" kept the dollar in check. China's Xi on Tuesday called for the implementation of reforms but offered no new specific measures in a speech that marked the 40th anniversary of the country's move toward market liberalization. China is also expected to hold its annual Central Economic Work Conference later this week, where key growth targets and policy goals for 2019 will be discussed.
• The dollar was fragile in Asian trade on Tuesday as markets speculated growth worries will prompt the Federal Reserve to signal a pause to its monetary tightening cycle at this week's meeting. Asian equities were hit hard after a rout on Wall Street overnight following a drum roll of weak data globally, reinforcing bets the Fed's widely expected rate hike on Wednesday would usher in a slowdown, or even a pause, to three years of steady rate increases. Senior Fed officials, including Fed Chairman Jerome Powell, have recently become more cautious about the policy outlook that underlined a shift in market sentiment from a few months ago on rising signs of a slackening in the global economy. While the U.S. central bank's latest median dot plot projections from September indicated its willingness to raise rates three times in 2019, the interest rate futures market is pricing in only one more rate hike for 2019. This mismatch largely reflects a belief that higher U.S. borrowing costs will likely hurt U.S. growth and ultimately force the Fed to hit the pause button on its monetary tightening. The U.S. economy, which has been growing strongly this year, has started to show signs of fatigue, adding to growing evidence elsewhere including in Europe and China of cooling momentum. Yet it may not be all gloom for the greenback. Some analysts think dollar strength can return if the Fed remains relatively confident about next year's monetary tightening path. In a tweet overnight, U.S. President Donald Trump took another swipe at the Fed's expected rate increase this week, saying it was 'incredible' for the central bank to even consider tightening given the global economic and political uncertainties. The markets, however, looked past Trump's now-familiar comments on the Fed. Commodity currencies such as the Canadian dollar and Norwegian crown were under pressure as oil prices tumbled overnight on signs of oversupply in the United States and on demand concerns stoked by the slowing global economy. With the Fed widely expected to deliver its fourth rate hike of the year at the conclusion of its two-day policy meeting on Wednesday, markets were focusing more on the central bank's monetary policy outlook for the coming year, with many analysts predicting a more dovish outlook. In September, the Fed projected three rate increases for next year, but some are expecting the Fed policymakers to signal just two rate hikes for next year as global growth continues to show signs of moderating.
• Brent crude prices dropped more than $1 on Tuesday, falling for a third straight session, as reports of inventory builds and forecasts of record shale output in the United States, now the world's biggest producer, stoked worries about oversupply. Concerns over future oil demand amid weakening global economic growth and doubts over the effectiveness of planned production cuts led by the OPEC also pressured prices, traders said. Both U.S. crude and Brent have shed more than 30 percent since early October due to swelling global inventories, with WTI now trading at levels not seen since October 2017. Oil production from seven major U.S. shale basins is expected to climb to more than 8 million barrels per day (bpd) by the end of the year for the first time, the U.S. Energy Information Administration said on Monday. Meanwhile, inventories at the U.S. storage hub of Cushing, Oklahoma, delivery point for the WTI futures contract, rose by more than 1 million barrels from Dec. 11 to 14, traders said, citing data from market intelligence firm Genscape on Monday. With oil prices falling, unprofitable shale producers will eventually stop operating and cut supply, although that will take some time, analysts said. The United States has surpassed Russia and Saudi Arabia as the world's biggest oil producer, with overall crude production climbing to a record of 11.7 million bpd. Supply curbs agreed by OPEC and its Russia-led allies might not bring about the desired results, though, as U.S. output goes on increasing and Iran keeps pumping out more oil, analysts said. Some have also expressed doubts over Russia's commitment to the cuts agreed with OPEC. Oil output from Russia has been at a record high of 11.42 million bpd so far in December.

Gold – XAU

Gold on Monday made its intraday high of US$1248.08/oz and low of US$1235.73/oz. Gold down by 0.529% at US$1245.58/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 1253-1274 keeping stop loss closing above 1274, targeting 1244-1236-1230 and 1221-1214. Buy above 1244-1207 with risk below 1207, targeting 1253-1260 and 1266-1274.

Silver - XAG

Silver on Monday made its intraday high of US$14.68/oz and low of US$14.52/oz. Silver settled up by 0.480% at US$14.63/oz.

Technicals in Focus:

On daily charts, silver is sustaining above100DMA (14.55), breakage below will lead to 14.30-13.60. 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 Friday made an intra‐day high of US$53.12/bbl, intraday low of US$51.09/bbl and settled down by 2.88% to close at US$51.46/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 49.50-52.60 with stop loss at 52.40; targeting 49.00-48.10 and 47.20-46.50. Buy above 49.00-46.50 with risk daily closing below 46.50 and targeting 49.50-50.10 and 51.00-52.00-52.80.

EUR/USD

EUR/USD on Monday made an intraday low of US$1.1296/EUR, high of US$1.1357/EUR and settled the day up by 0.398% to close at US$1.1364/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 Monday made an intra‐day low of US$1.2561/GBP, high of US$1.2646/GBP and settled the day up by 0.142% to close at US$1.2616/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 1.2660-1.2850 with targets at 1.2600-1.2550-1.2490 and 1.2430-1.2360. Buy above 1.2600-1.2360 with targets 1.2660-1.2700 and 1.2760-1.2850 with stop loss closing below 1.2360.

USD/JPY

USD/JPY on Monday made intra‐day low of JPY112.67/USD and made an intraday high of JPY113.51/USD and settled the day down by 0.450% at JPY112.82/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 112.50-115.50 with risk above 115.50 targeting 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.