Daily Market Lookup

• The dollar was down on Thursday morning in Asia, hovering near its lowest level in nearly three years as Democrats cinched both U.S. Senate seats on offer in Georgia’s runoff elections. The USD/JPY pair inched up 0.07% to 103.12. A fresh state of emergency for Tokyo and the neighboring Saitama, Kanagawa and Chiba prefectures is due to be declared in Japan later in the day. In Georgia, the Democrat pair of Jon Ossoff and Raphael Warnock are headed to the Senate after declaring victory over their Republican rivals David Perdue and Kelly Loeffler. The victories clear the way for President-elect Joe Biden to push through his legislative agenda, including more stimulus measures, when his administration takes office on Jan. 20. A Democrat-controlled Senate is considered a net positive for economic growth globally and for most risk assets. However, it is negative for bonds and the dollar as the U.S. budget and trade deficits could widen further. Lawmakers resumed their meeting to certify Biden’s win in the Nov. 3 elections, which were interrupted by supporters of President Donald Trump who stormed Capitol Hill to protest the certification. However, currency markets remained relatively calm even amid the chaotic scenes in Washington D.C. Mizuho Securities chief currency strategist Masafumi Yamamoto sees the dollar’s fortunes split with Democrats controlling both Houses. At the same time, “higher Treasury yields should benefit the dollar against the euro and the yen, because the dollar has underpriced the potential for U.S economic recovery under Biden,” Yamamoto added. Some investors predicted that with the dollar index falling nearly 7% in 2020 and as much as 0.9% in 2021 to date, the greenback could get a bit of respite from some unwinding of a crowded trade.
• The dollar languished near its lowest level in nearly three years on Thursday after Democrats won control of the U.S. Senate, clearing the way for a larger fiscal stimulus under President-elect Joe Biden. Currency markets were largely unperturbed by scenes of chaos in Washington as supporters of outgoing President Donald Trump stormed Capitol Hill. Analysts generally assume a Democrat-controlled Senate would be a net positive for economic growth globally and thus for most risk assets, but negative for bonds and the dollar as the U.S. budget and trade deficits may widen further. Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo, sees the dollar's fortunes split with Democrats controlling both Houses. At the same time, "higher Treasury yields should benefit the dollar against the euro and the yen, because the dollar has underpriced the potential for U.S economic recovery under Biden." The yield on the benchmark 10-year Treasury note was at 1.0456% after climbing as high as 1.054% on Wednesday for the first time since the market mayhem of mid-March. But after a fall of nearly 7% in 2020 for the dollar index and a drop of as much as 0.9% in the new year, the U.S. currency may get a degree of respite from some unwinding of a crowded trade. The remarks by the State Administration of Foreign Exchange (SAFE) on Wednesday follows an advance of around 10% on the greenback since last May as China's economic rebound has led the world's pandemic recovery.
• Oil was up Thursday morning in Asia, steadying as the focus moved from the chaos in Washington D.C. to the likelihood of tighter fuel supplies in the wake of Saudi Arabia’s decision to cut output. Saudi Arabia surprised the market with its unilateral pledge to cut one million barrels per day (bpd) of output in February and March. The announcement was made after Organization of the Petroleum Exporting Countries and allies, or OPEC+, wrapped up its Joint Ministerial Monitoring Committee and 13th OPEC and non-OPEC Ministerial Meeting earlier in the week. In the U.S., supporters of President Donald Trump swarmed Capitol Hill, where lawmakers were meeting to certify President-elect Joe Biden’s victory in the Nov. 3 presidential elections. The disrupted meeting resumed as lawmakers were escorted back into the building. Some investors remained optimistic about WTI futures’ prospects. The black liquid is mostly traded using the greenback, which was down on Thursday morning. Meanwhile, U.S. crude oil supply data from the U.S. Energy Information Administration released earlier in the day also boosted sentiment. The draw of 8.010 million barrels for the last week of 2020 was bigger than the 2.133-million-barrel draw in forecasts prepared by Investing.com and the 6.065-million-barrel draw for the previous week. Data from the American Petroleum Institute released on Tuesday showed a draw of 1.663 million barrels. However, the drop in crude oil stocks typically takes place at the end of each year as energy companies take oil out of storage to dodge tax bills. Oil prices rose almost 1% on Thursday after a fall in U.S. stockpiles added further support following the unilateral decision by Saudi Arabia, the world's biggest exporter, to cut output over the next two months. It was not immediately clear how the storming of the U.S. Capitol by supporters of President Donald Trump would impact oil markets, although some analysts believe President-elect Joe Biden's administration will clamp down on U.S. oil production. Saudi Arabia, the world's biggest oil exporter, said it would voluntarily cut 1 million barrels per day (bpd) of output in February and March, after OPEC+, which groups the Organization of the Petroleum Exporting Countries and other producers, including Russia, met earlier this week. A lower dollar, which makes oil cheaper because the commodity is mostly traded using the greenback, is also supporting prices, analysts said. U.S. crude stocks dropped and fuel inventories rose, the Energy Information Administration said on Wednesday. Crude inventories were down by 8 million barrels in the week to Jan. 1 to 485.5 million barrels, against a Reuters poll showing analysts expected a 2.1 million-barrel decline. The drop in crude stocks is a typical year-end occurrence as energy companies take oil out of storage to avoid tax bills. A sustained rise in WTI prices, though, may result in a resurgence in U.S. output. Trump supporters swarmed the U.S. Capitol on Wednesday, sending it into lockdown, as Vice President Mike Pence refused a demand from the president to cancel his loss to President-elect Biden. Police have declared the situation secure and the certification of the election result has resumed.

Gold – XAU

Gold on Wednesday made its intraday high of US$1959.27/oz and low of US$1900.72/oz. Gold down 1.61% at US$1917.67/oz.

Technicals in Focus:

In daily charts, prices are below 50DMA (1899) and breakage above will call for 1916. MACD is above zero line and histograms are also increasing trend and it will bring upward stance in the upcoming sessions. RSI is in neutral region and more upside is expected before it gets stretched. Stochastic Oscillator is in oversold territory and giving negative crossover to bearish stance for intraday trade.

Trading Strategy: Buy on Dips

Based on the charts and explanations above; buy above 1918-1878 with risk below 1878, targeting 1948-1955 and 1965-1973. Sell below 1931-1973 keeping stop loss closing above 1973, targeting 1918-1900-1885 and 1878-1860.

Silver - XAG

Silver on Wednesday made its intraday high of US$27.91/oz and low of US$26.57/oz settled down by 0.727% at US$27.27/oz.

Technicals in Focus:

On daily charts, silver is sustaining below 50DMA (24.30), breakage above will lead to 25.00. MACD is below zero line and histograms are decreasing trend and it will bring bearish stance in the upcoming sessions. RSI is approaching neutral 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: Buy on Dips

Based on the charts and explanations above, sell in between 27.30-28.90 with stop loss above 28.90; targeting 27.00-26.50-26.05 and 25.60-25.05-24.50. Buy silver in between 27.00-25.05, targeting 27.30-27.65-28.00 and 28.50-29.00 with stop loss should be place on the breakage below 24.60.

Oil - WTI

Crude Oil on Wednesday made an intra‐day high of US50.93/bbl, intraday low of US$49.48/bbl and settled up by 1.263% to close at US$50.48/bbl.

Technicals in Focus:

On daily charts, oil is sustaining above its 20DMA i.e. 45.74 which is a support level and breakage below will call for 45.74. MACD is above zero line and histograms are in increasing mode will bring bullish stance in the upcoming sessions. The Stochastic Oscillator is in overbought region and giving positive crossover for confirmation of bullish stance; while the RSI is in neutral region and more upside can be expected to reach the overbought region, which is highly probable.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; buy above 50.50-46.50 with risk daily closing below 46.50 and targeting 51.20-51.90 and 52.50-53.00. Sell in between 51.25-53.50 with stop loss at 53.50; targeting 50.25-49.30-48.50-47.00 and 46.45-45.60.

EUR/USD

EUR/USD on Wednesday an intraday low of US$1.2264/EUR, high of US$1.2348/EUR and settled the day up by 0.353% to close at US$1.2322/EUR.

Technicals in Focus:

On daily charts, prices are sustaining below 20DMA (1.2177), which become immediate resistance level, break above will target 1.1970. MACD is above zero line and histograms are increasing mode which will bring bullish view. Stochastic is in overbought territory and giving negative crossovers to signal for bearish outlook for intraday. 14D RSI is currently in overbought region and giving no directions to consider right now.

Trading Strategy: Neutral to Buy

Buy above 1.2250-1.1840 with risk below 1.1800, targeting 1.2300-1.2350 and 1.2400-1.2475-1.2545. Sell below 1.2300-1.2545 targeting 1.2245-1.2190-1.2150 and 1.2090-1.2050-1.1990 with stop-loss at daily closing above 1.2545.

GBP/USD

GBP/USD on Wednesday made an intra‐day low of US$1.3536/GBP, high of US$1.3669/GBP and settled the day up by 0.110% to close at US$1.3606/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 20DMA (1.3134) is become immediate 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 above zero line but histograms are increasing lead to upward movement.

Trading Strategy: Neutral to Sell

Based on the charts and explanations above; sell in between 1.3590-1.3900 with targets at 1.3540-1.3470 and 1.3400-1.3340-1.3240 stop-loss should be 1.3900. Buy above 1.3540-1.3240 with targets 1.3670-1.3710-1.3800 and 1.3860-1.3900 with stop loss closing below 1.3200.

USD/JPY

USD/JPY on Wednesday made intra‐day low of JPY102.59/USD and made an intraday high of JPY103.18/USD and settled the day down by 0.382% at JPY103.70/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 200DMA (108.30), which is initial 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 in neutral territory and signaling to sell as it has given negative crossover to confirm bearish stance.

Trading Strategy: Neutral to Sell

Sell below 103.80-108.00 with risk above 108.00 targeting 103.10-102.50-102.05 and 101.60-101.20. Long positions above 103.10-101.00 with targets of 103.80-104.50 and 105.00-105.40 with stop below 105.00.