Daily Market Lookup

• The dollar was up on Friday morning in Asia to keep going above 90, supported by higher U.S. Treasury yields. Despite the small gain in the morning, analysts expect the greenback will be on a downward tracjectory. “Wide expectations of that huge issuance that’s coming and the support of the Fed mean that we’re looking in the medium-term for further U.S. dollar weakness,” Michael McCarthy, chief strategist at CMC Markets in Sydney, told Reuters. He added that commodity currencies such as the Australian dollar will receive support from the reversal in risk appetite. Investors are also awaiting news of U.S. President Joe Biden’s fiscal spending package, with worries that the proposed $1.9 trillion deal will not come as large as expected. The dollar remained on the back foot on Friday as an improvement in risk appetite sapped demand for the safest assets, with investors taking cheer from U.S. economic data wasn't as bad as feared. Wall Street also provided a lift to sentiment, as stocks rebounded after earnings season got off to a strong start and concerns eased around hedge funds selling long positions to cover shorts. The dollar index was little changed at 90.566 early in the Asian day, after slipping 0.1% overnight. The gauge is still on track for a 0.4% weekly advance following safety buying at the start of the week amid concerns that President Joe Biden's fiscal spending package will not be as large as the proposed $1.9 trillion. However, many analysts expect the dollar to return to the downward trend that saw it lose nearly 7% of its value last year, particularly with the Federal Reserve committed to ultra-easy monetary policy. "The flipside of the reversal in risk appetite is we're seeing good support for commodity currencies," like the Australian dollar, he added. Bitcoin continued to edge higher, trading at $33,899, after surging more than 10% on Thursday. The world's most popular cryptocurrency has been consolidating since touching a record high of $42,000 earlier this month. After a week trending downwards, gold was up Friday morning in Asia as investors waited for news from the U.S. on a $1.9 trillion stimulus package proposed by President Joe Biden. The moves in gold followed news overnight that U.S. GDP contracted 3.5% for all of 2020, the worst contraction since 1946, after the Second World War. Despite the performance of the U.S. economy in 2020 and the impact of the pandemic across the globe, demand for gold fell to its lowest since 2009, according to the World Gold Council. “The coronavirus pandemic, with its far-reaching effects, was the driving factor behind weakness in consumer demand throughout 2020, culminating in a 14% decline in annual demand to 3,759.6t, the first sub-4,000t year since 2009,” the London-based organization said. The U.S. rescue package could put pressure on gold prices even by helping shore up economic growth. Gold Investors will be on the lookout for clues on the movement of the package and other economic measures to curb the impact of COVID-19. The International Monetary Fund (IMF) said on Thursday that fiscal spending was needed to limit the economic impact of the pandemic. “Because of this crisis, fiscal spending was needed. That increase in fiscal spending alongside the output collapse has raised debt levels to record highs in many countries,” said Gita Gopinath, economic counselor, and director of the research department at IMF. “The fact that we have low interest rates and because we have growth now coming back in 2021, that should help stabilize debt levels in many countries. But it is very important for all countries to have medium-term fiscal frameworks that ensure that debt remains sustainable.”
• Oil prices were mixed on Friday as slowing fuel demand was balanced by a pending supply cut by Saudi Arabia and lower U.S. oil stocks. The slower fuel demand is attributed to delays in vaccine rollouts in the U.S. and EU, a flood of new cases in Israel despite vaccinating its population and a new strain of coronavirus from South Africa reaching the states. “Oil investors’ worries ... around vaccines availability and rollouts, which could lead to protracted lockdowns in Europe, are likely the two most damaging feedback loop culprits on the continually revolving carousel of adverse risks for the oil market,” said Axi global strategist Stephen Innes. However, the market is propped up by supply cuts. Saudi Arabia is set to cut output by 1 million barrels per day (bpd) in February and March The Saudi cut means OPEC+ supply cuts will rise from 7.2 million bpd in January to 8.125 million bpd in February, according to Commonwealth Bank analyst Vivek Dhar. Output curbs in January by the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, also helped. Adding to that, a 9.9 million barrel drawdown in U.S. oil inventories last week and forecasts for a small drop in U.S. oil production in February are supporting factors Oil prices were mixed on Friday as a pending supply cut by Saudi Arabia and lower U.S. oil stocks helped counter risks of slowing fuel demand due to stalled vaccine rollouts and contagious new coronavirus strains. Supply cuts are supporting the market. Saudi Arabia is set to cut output by 1 million barrels per day (bpd) in February and March, and compliance with output curbs by the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, has improved in January. The Saudi cut effectively means OPEC+ supply cuts will rise from 7.2 million bpd in January to 8.125 million bpd in February, Commonwealth Bank analyst Vivek Dhar said. A 9.9 million barrel drawdown in U.S. oil inventories last week and forecasts for a small drop in U.S. oil production in February are also helping support the market. However market gains have been capped by worries about stalled vaccine rollouts and the spread of contagious new variants of the coronavirus. Analysts pointed to news of the South African variant reaching the United States, concerns about a flood of new cases in Israel despite its success in vaccinating its population, and vaccine distribution issues in Europe and the United States as discouraging.

Gold – XAU

Gold on Thursday made its intraday high of US$1863.98/oz and low of US$1833.95/oz. Gold down 0.052% at US$1841.72/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 1835-1800 with risk below 1800, targeting 1845-1854-1867 and 1878-1890-1900. Sell below 1845-1910 keeping stop loss closing above 1910, targeting 1835-1828-1817 and 1810-1800.

Silver - XAG

Silver on Thursday made its intraday high of US$25.69/oz and low of US$24.85/oz settled up by 4.42% at US$26.34/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 Thursday made an intra‐day high of US53.48/bbl, intraday low of US$51.98/bbl and settled down by 1.101% to close at US$51.99/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 51.90-48.50 with risk daily closing below 48.50 and targeting 52.50-53.00-53.60 and 54.00-54.60-55.00. 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 Thursday an intraday low of US$1.2080/EUR, high of US$1.2141/EUR and settled the day up by 0.109% to close at US$1.2119/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 1.2150-1.1840 with risk below 1.1800, targeting 1.1290-1.2300 and 1.2350-1.2400-1.2475. Sell below 1.2150-1.2545 targeting 1.2050-1.1990-1.1960 and 1.1925-1.1870 with stop-loss at daily closing above 1.2545.

GBP/USD

GBP/USD on Thursday made an intra‐day low of US$1.3629/GBP, high of US$1.3745/GBP and settled the day up by 0.300% to close at US$1.3719/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 1.3710-1.3990 with targets at 1.3590-1.3540 and 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 Thursday made intra‐day low of JPY104.04/USD and made an intraday high of JPY104.19/USD and settled the day down by 0.134% at JPY104.19/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 104.50-108.00 with risk above 108.00 targeting 104.00-103.10-102.50 and 102.05-101.60. Long positions above 104.00-101.00 with targets of 103.80-104.50 and 105.00-105.40 with stop below 105.00.