Daily Market Lookup

• The dollar inched up on Wednesday morning in Asia as investors await the U.S. Federal Reserve’s policy decision, to be handed down later in the day The AUD/USD pair inched up 0.01% to 0.7744, with Australian markets returning from a holiday. The riskier AUD continued Tuesday’s rally as better-than-expected inflation figures were released earlier in the day. The Consumer Price Index (CPI) rose 0.9% both quarter-on-quarter and year-on-year during the fourth quarter of 2020. The safe-haven dollar also saw declines against riskier currencies after the International Monetary Fund upgraded its forecast for 2021 global growth boosting hopes for a global economic recovery from COVID-19 The institution now expects the global economy to grow 5.5% this year, a 0.3 percentage point increase from October 2020’s forecasts, and global gross domestic product to expand by 4.2% in 2022. However, it also warned that new COVID-19 variants could pose a risk to economic recovery. U.S. Treasury yields also declined overnight, with questions remaining as to the timing and size of a $1.9 trillion stimulus package proposed by U.S. President Joe Biden and increasing caution among investors. The questions arose after Senate Majority Leader Chuck Schumer earlier in the week raised the possibility that Democrats could try to pass much of the package with a majority vote. However, it also remains to be seen if negotiations with their Republican colleagues will be enough to override the latter’s objections to the package’s price tag, among other aspects. Investors will be looking to Fed Chairman Jerome Powell’s comments as the Fed wraps up its first policy meeting of 2021 and hands down its policy decision later in the day. He is widely expected to renew a commitment to the current ultra-easy policy.
• The dollar was trapped on the back foot against major peers on Wednesday as markets wait on comments from Federal Reserve Chair Jerome Powell, who is likely to renew a commitment to ultra-easy policy. The greenback held declines against riskier currencies, with pandemic recovery hopes getting a boost as the International Monetary Fund upgraded its forecast for 2021 global growth. Treasury yields, whose rise had supported the dollar at the start of this year, declined overnight amid caution about the eventual size of and potential delays to President Joe Biden's $1.9 trillion fiscal stimulus plan. Powell is due to speak at a news conference after the Fed's two-day policy meeting that ends Wednesday. Traders are also keenly watching progress on the U.S. stimulus front after Senate Majority Leader Chuck Schumer said Democrats may try to pass much of the President's massive spending package with a majority vote, but it is not clear if they have the numbers to override Republican objections.
• Oil prices climbed on Wednesday after industry data showed U.S. crude stockpiles fell unexpectedly last week and China, the world's second-biggest oil user, reported its lowest daily rise in COVID-19 cases, bolstering hopes of a pick-up in demand. The American Petroleum Institute (API) reported crude oil inventories in the United States, the world's biggest oil consumer, fell by 5.3 million barrels in the week to Jan. 22 compared with analysts' expectations in a Reuters poll for a build of 430,000 barrels. However, the data showed gasoline stocks rose by 3.1 million barrels, which was much more than expected. The API data showed distillate fuel inventories, which include diesel and heating oil, rose by 1.4 million barrels, compared to expectations for a draw of 361,000 barrels and refinery runs fell by 76,000 barrels per day. Having climbed to multi-month highs at the start of the year, the rally in oil prices appears to have run out of steam and has been range-bound in recent weeks, analysts said. Still, prices were supported by easing worries about a sharp drop in travel over the Lunar New Year in China, the world's largest oil importer, as the number of COVID-19 cases appears to be declining. Official data showed 75 new confirmed cases of COVID-19 on Wednesday, the lowest daily rise since Jan. 11. Typically, hundreds of millions of Chinese travel during the Lunar New Year holiday, which starts on Feb. 11. However, government officials have been urging people not to travel to help contain the recent increase in coronavirus infections.
• Gold was down on Wednesday morning in Asia, ahead of the U.S. Federal Reserve policy decision due to be handed down later in the day. The Fed concludes a two-day policy meeting and will hand down its policy decision later in the day. The central bank is widely expected to keep policy steady. Investors also await details on the timing and size of further U.S. stimulus measures. Senate Majority Leader Charles Schumer said on Tuesday that a vote on a budget resolution, a possible first step towards passing a $1.9 trillion stimulus package proposed by President Joe Biden could take place as early as the following week. Schumer added that the Senate would move forward with Biden’s plan, and without Republican lawmakers’ support if necessary. The International Monetary Fund upgraded its forecast for 2021 global growth, saying that it now expects the global economy to grow 5.5% this year, a 0.3 percentage point increase from October 2020’s forecasts, and global gross domestic product to expand by 4.2% in 2022. However, it also warned that new COVID-19 variants could pose a risk to economic recovery. The number of global COVID-19 cases also surpassed the 100 million mark as of Jan. 27, according to Johns Hopkins University data. On the supply front, Chinese net gold imports via Hong Kong rose for a second consecutive in December, despite imports for the year falling 85% as COVID-19 dealt a blow to consumption of the yellow metal. Although the country reported 75 new daily of COVID-19 cases on Wednesday, the lowest daily rise since Jan. 11, travel over the upcoming Lunar New Year holidays has been discouraged to prevent the spread of the virus.

Gold – XAU

Gold on Tuesday made its intraday high of US$1861.62/oz and low of US$1848.31/oz. Gold down 0.238% at US$1850.61/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 1845-1800 with risk below 1800, targeting 1854-1867-1878 and 1890-1900-1910. Sell below 1854-1910 keeping stop loss closing above 1910, targeting 1845-1835 and 1828-1817-1810.

Silver - XAG

Silver on Tuesday made its intraday high of US$25.64/oz and low of US$25.18/oz settled up by 0.493% at US$25.44/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 25.60-28.00 with stop loss above 28.00; targeting 25.05-24.45-24.00 and 23.60-23.20. Buy silver in between 25.05-23.20, targeting 25.60-26.05-26.50 and 27.00-27.65-28.00 with stop loss should be place on the breakage below 24.60.

Oil - WTI

Crude Oil on Tuesday made an intra‐day high of US53.17/bbl, intraday low of US$52.24/bbl and settled down by 0.310% to close at US$52.65/bbl.

Technicals in Focus:

On daily charts, oil is sustaining above its 20DMA i.e. 48.34 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 52.50-48.50 with risk daily closing below 48.50 and targeting 53.00-53.60-54.00 and 54.60 55.00-55.70. Sell in between 52.60-55.70 with stop loss at 55.70; targeting 51.90-51.20 and 50.25-49.30-48.50.

EUR/USD

EUR/USD on Tuesday an intraday low of US$1.2107/EUR, high of US$1.2175/EUR and settled the day up by 0.171% to close at US$1.2159/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

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.

GBP/USD

GBP/USD on Tuesday made an intra‐day low of US$1.3608/GBP, high of US$1.3743/GBP and settled the day up by 0.438% to close at US$1.3734/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 20DMA (1.3610) 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 1.3800-1.3990 with targets at 1.3650-1.3590 and 1.3540-1.3470-1.3400 stop-loss should be 1.3900. Buy above 1.3650-1.3240 with targets 1.3710-1.3800-1.3860 and 1.3910-1.3990 with stop loss closing below 1.3200.

USD/JPY

USD/JPY on Tuesday made intra‐day low of JPY103.66/USD and made an intraday high of JPY103.66/USD and settled the day down by 0.036% at JPY103.75/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.