Daily Market Lookup

• Asian stocks nudged higher on Thursday after see-sawing through a subdued session on concerns over China's economic outlook, while an anti-climactic end to the latest chapter in the Brexit saga offered sterling a moment's peace. China's Premier Li Keqiang took to the radio to promise increased government investment this year. The country's central bank did its part by injecting more cash into the financial system, bringing the amount for the week to a massive 1.14 trillion yuan ($168.74 billion). Stoking some caution was news that a bipartisan group of U.S. lawmakers introduced bills on Wednesday that would ban the sale of U.S. chips or other components to Huawei Technologies Co Ltd or other Chinese telecommunications companies that violate U.S. sanctions or export control laws. That came shortly before the Wall Street Journal reported federal prosecutors were investigating allegations that Huawei stole trade secrets from U.S. businesses. Such moves could inflame tensions between Beijing and Washington and make a trade deal yet harder. Separately, Handelsblatt reported the German government is actively considering stricter security requirements and other ways to exclude Huawei from a buildout of fifth-generation (5G) mobile networks. Also lurking in the background were worries the U.S. government shutdown was starting to take a toll on its economy. White House economic adviser Kevin Hassett said the shutdown would shave 0.13 percent off quarterly economic growth for each week it goes on. As expected, British Prime Minister Theresa May narrowly won a confidence vote overnight and invited other party leaders for talks to try to break the impasse on a Brexit divorce deal. An outline for Plan 'B' is due by Monday and the market assumes there will have to be an extension of the Article 50 exit date past March 29.
• The British pound was little changed on Thursday in Asia after UK Prime Minister Theresa May's government survived a vote of no-confidence. The news followed the hefty defeat of the prime minister's withdrawal deal in the U.K. parliament on Wednesday. May now has until next week to table an outline for a plan “B.” The market now believes there may an extension of the Article 50 exit date past the original March 29 deadline. Bank of Japan Governor Haruhiko Kuroda warned on Thursday the ageing societies could lead to falling fund demand, which would keep interest rates lower and in turn making the job of the central bank more difficult. The focus will be back on the fundamentals, with the Brexit vote and UK PM May’s leadership challenge now out of the way, although the Brexit-related headlines will continue to drive the sentiment around the major European currencies. Today’s EUR macro calendar sees the releases of the Eurozone final CPI at 1000 GMT alongside the Eurozone construction output numbers. Meanwhile, the UK docket remains absolutely data-empty. The NA session offers plenty of event risks, including the US weekly jobless claims, Philly Fed manufacturing index and Canadian ADP employment change data, all of which will be released parallelly at 1330 GMT. Later in the American mid-morning, the speech by the FOMC member Quarles will be released at 1545 GMT. The US government shutdown will continue to remain a drag on the broader market sentiment.
• Oil prices dipped on Thursday as U.S. crude production quickly approached an unprecedented 12 million barrels per day (bpd) just as worries about weakening demand emerge. American crude oil production reached a record 11.9 million bpd in the week ending Jan. 11, the EIA said on Wednesday, up from 11.7 million bpd last week, which was already the highest national output in the world U.S. output has soared by 2.4 million bpd since January 2018, stoking fears of a supply glut. The EIA also said gasoline stockpiles climbed 7.5 million barrels last week, far exceeding analyst expectations in a Reuter’s poll for a 2.8 million-barrel gain. At 255.6 million barrels, gasoline stocks were at their highest weekly level since February, 2017. Distillate stockpiles, which include diesel and heating oil, raised by 3.0 million barrels, versus expectations for a 1.6 million-barrel increase, the EIA data showed. Along with the surge in U.S. crude output, exports from the United States are also rising, hitting a record 3.2 mn bpd by the end of last year. Norbert Ruecker, head of commodity research at Swiss Julius Baer, said "the United States is moving forward towards energy independence and is set to become a petroleum net exporter next year thanks to rising shale output". Soaring U.S. supply comes amid concerns over stuttering demand-growth due to a global economic slowdown, which some analysts believe will turn into a recession. To stem a lurking petroleum glut, the Middle East-dominated OPEC and non-OPEC producer Russia are leading efforts to cut supply. This has prevented crude prices from falling much lower despite softening demand and the surge in U.S. output.

Gold – XAU

Gold on Wednesday made its intraday high of US$1295.08/oz and low of US$1286.35/oz. Gold up by 0.315% at US$1287.47/oz.

Technicals in Focus:

In daily charts, prices are above 200DMA (1251) and breakage below will call for 1246-1236. 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: Buy on Dips

Based on the charts and explanations above; buy above 1289-1260 with risk below 1260, targeting 1300-1309 and 1315-1324. Sell below 1300-1324 keeping stop loss closing above 1324, targeting 1289-1284-1274 and 1266-1260.

Silver - XAG

Silver on Wednesday made its intraday high of US$15.63/oz and low of US$15.48/oz. Silver settled down by 0.051% at US$15.56/oz.

Technicals in Focus:

On daily charts, silver is sustaining above100DMA (14.50), 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 15.40-14.75 targeting 15.60-15.80-16.00 and 16.40-16.80.; stop breakage below 14.75. Sell below 15.60-17.00 with stop loss above 17.00; targeting 15.40-15.10-14.90 and 14.75 14.40.

Oil - WTI

Crude Oil on Wednesday made an intra‐day high of US$52.51/bbl, intraday low of US$51.53/bbl and settled up by 0.651% to close at US$52.56/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 52.70-54.00 with stop loss at 54.00; targeting 51.70-51.00-50.20 and 49.50-49.00. Buy above 52.50-49.00 with risk daily closing below 49.00 and targeting 53.00-53.50 and 54.00-54.60.

EUR/USD

EUR/USD on Wednesday made an intraday low of US$1.1377/EUR, high of US$1.1424/EUR and settled the day down by 0.297% to close at US$1.1390/EUR.

Technicals in Focus:

On daily charts, prices are sustaining above 100DMA (1.1475), which become immediate resistance level, break below will target 1.1560-1.1600. 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 sell.

Trading Strategy: Neutral to Buy

Buy above 1.1390-1.1265 with risk below 1.1250, targeting 1.1420-1.1490-1.1560 and 1.1620-1.1660. Sell below 1.1420-1.1590 targeting 1.1390-1.1345 and 1.1305-1.1265 with stop-loss at daily closing above 1.1590.

GBP/USD

GBP/USD on Wednesday made an intra‐day low of US$1.2823/GBP, high of US$1.2896/GBP and settled the day up by 0.163% to close at US$1.2879/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 1.2900-1.3050 with targets at 1.2850-1.2800-1.2700 and 1.2750-1.2660. Buy above 1.2850-1.2600 with targets 1.2900-1.2940 and 1.3010-1.350 with stop loss closing below 1.2550.

USD/JPY

USD/JPY on Wednesday made intra‐day low of JPY108.36/USD and made an intraday high of JPY109.18/USD and settled the day up by 0.408% at JPY109.07/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 109.10-111.00 with risk above 111.00 targeting 108.50-108.10-107.70 and 107.05-106.60. Long positions above 108.50-106.60 with targets of 109.10-109.60 and 110.20-111.00 with stop below 107.00.