Daily Market Lookup

• The dollar made small but broad gains on Tuesday and held a resurgent euro at bay as traders awaited U.S. inflation data, wary it could unleash bets on faster interest rate hikes. Stunningly strong U.S. labour data last week has put extra focus on inflation - forecast at a four-decade high 7.3% - in the lead up to March's Federal Reserve meeting. Futures markets are pricing an almost 1-in-3 chance of a 50 basis point rate rise and the prospect of aggressive hikes has been supporting the dollar. On Monday, bitcoin and the Australian dollar had posted gains as equity markets rallied in Europe, but the latter was a bit softer on Tuesday as a cautious mood prevailed in Asia. Bitcoin punched through its 50-day average to top $44,000 for the first time in nearly a month on Monday and held there in Asia for a gain of more than 17% in four sessions. A quiet data calendar awaits on Tuesday, with a U.S. small business survey due later in the day. U.S. inflation data is due on Thursday.
• The dollar was up on Tuesday morning in Asia. A strong euro remained just below strong resistance levels as U.S. inflation data due later in the week, wary that it could trigger gains for the U.S. currency. The euro jumped 2.7% during the previous week after the ECB sprang a surprise hawkish shift in tone during the previous week. The single currency has held gains but was unable to beat resistance around the $1.1483 mark. European bond yields were on an upward trend and the euro last bought $1.1441. A much stronger-than-expected U.S. jobs report during the previous week emphasized the spotlight on inflation, as investors bet on the implications for the U.S. Federal Reserve’s monetary policy tightening deadline. Futures markets are pricing a 1-in-3 chance that the Fed will hike interest rates by 50-basis points in March 2022, and the probability of aggressive hikes afterward has given the dollar a boost. Although Tuesday looks to be quiet in terms of data releases, investors are already looking ahead to the U.S. inflation data, including the consumer price index, due on Thursday.
• Gold was down on Tuesday morning in Asia, although persistent inflationary pressuring gave the safe-haven yellow a boost. Investors also await U.S. inflation data later in the week. The U.S. data, including the consumer price index, is due on Thursday. It also remains to be seen how the data will impact the U.S. Federal Reserve’s timeline to tighten its monetary policy. Markets are now pricing in a one-in-three chance that the Fed will hike interest rates in March 2022. Across the Atlantic, there is no need for big monetary policy tightening in the euro zone as inflation is set to fall back and could stabilize at about 2%, European Central Bank President Christine Lagarde said on Monday. She added that high energy prices, a key driver of inflation, are likely to eat into household purchasing power. Meanwhile, Cleveland Fed President Loretta Mester speaks on Wednesday, with Bank of England Governor Andrew Bailey following a day later. The ongoing geopolitical tension in Eastern Europe over Ukraine also continues, but French President Emmanuel Macron warned that the coming days will be crucial after meeting with Russian counterpart Vladimir Putin. However, Putin hinted that some progress had been made in the talks.
• Oil prices eased on Tuesday ahead of the resumption of indirect talks between the United States and Iran which may revive a nuclear deal that could lead to the removal of sanctions on Iranian oil sales, increasing global supplies. Both oil contracts have touched recent seven-year tops, supported by strong global demand, ongoing tensions in Eastern Europe and potential supply disruptions due to cold U.S. weather conditions. The talks on reviving the 2015 Iran nuclear deal, which are taking place in Vienna, will resume on Tuesday after a 10-day pause. The United States has restored some sanctions waivers, while Iran is demanding a full removal of sanctions and a U.S. guarantee of no further punitive steps. While optimism over the U.S.-Iran talks spurred some profit taking, oil's price weakness will likely be short-lived as the oil market remains in a supply deficit, said OANDA analyst Edward Moya. Saudi Aramco (SE:2222) said on Saturday it had raised prices for all crude grades it sells to Asia in March from February, in line with market expectations, reflecting firm demand in Asia and stronger margins for gasoil and jet fuel. In the United States, refineries in Texas were knocked out of production on Friday by a citywide power outage, as freezing temperatures from an Arctic cold front swept the Gulf Coast, though some refineries are recovering or have since returned back to near normal operations. U.S. crude oil and gasoline stockpiles also likely rose last week, while distillate inventories were seen falling, a preliminary Reuters poll showed on Monday. Crude inventories were seen increasing by about 700,000 barrels in the week to Feb. 4.

Gold – XAU

Gold on Monday made its intraday high of US$1823.49/oz and low of US$1792.09/oz. Gold up 0.167% at US$1820.29/oz.

Technicals in Focus:

In daily charts, prices are above 200DMA (1809) and breakage below will call for 1790. MACD is above zero line and histograms are also 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 neutral territory and giving negative crossover to bearish stance for intraday trade.

Trading Strategy: Buy on Dips

Buy in between 1814-1769 with risk below 1769, targeting 1818-1832-1841 and 1849-1856. Sell in between 1818-1860 keeping stop loss closing above 1860, targeting 1804-1790-1783 and 1777-1769-1760.

Silver - XAG

Silver on Monday made its intraday high of US$23.09/oz and low of US$22.99/oz settled up by 2.213% at US$22.99/oz.

Technicals in Focus:

On daily charts, silver is sustaining below 100DMA (26.62), breakage above will lead to 27.60. 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 oversold region and giving positive crossover to show upside move for the intraday trade.

Trading Strategy: Buy on Dips

Buy in between 22.50-20.50, targeting 23.15-23.70-24.10 and 24.55-24.90- 25.40 with stop loss should be place on the breakage below 20.50. Sell in between 23.10-25.40 with stop loss above 25.40; targeting 22.50-22.10-21.90 and 21.40-21.00.

Oil - WTI

Crude Oil on Monday made an intra‐day high of US91.48/bbl, intraday low of US$89.57/bbl and settled down by 0.137% to close at US$90.51/bbl.

Technicals in Focus:

On daily charts, oil is sustaining above its 20DMA i.e. 68.50 which is a support level and breakage below will call for 65.40. MACD is above zero line and histograms are in increasing mode will bring bullish stance in the upcoming sessions. The Stochastic Oscillator is in neutral 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 Sell

Sell in between 91.00-94.00 with stop loss at 94.00; targeting 90.00-89.50-882.20 and 87.60-86.20-85.60. Buy above 90.00-87.60 with risk daily closing below 87.60 and targeting 91.00-91.90-92.55 and 93.25-94.00.

EUR/USD

EUR/USD on Monday made an intraday low of US$1.1414/EUR, high of US$1.1464/EUR and settled the day down by 0.206% to close at US$1.1440/EUR.

Technicals in Focus:

On daily charts, prices are sustaining above 50DMA (1.347), which become immediate support, break below will target 1.1270. MACD is above zero line and 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 in neutral region and giving no directions to consider right now.

Trading Strategy: Neutral to Buy

Buy above 1.1400-1.1220 with risk below 1.1220, targeting 1.1485-1.1525-1.1570 and 1.1620-1.1650. Sell below 1.1485-1.1650, targeting 1.1420-1.1385-1.1310 and 1.1250-1.1200-1.1170 with stop-loss at daily closing above 1.1650.

GBP/USD

GBP/USD on Monday made an intra‐day low of US$1.3489/GBP, high of US$1.3550/GBP and settled the day up by 0.509% to close at US$1.3534/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 100DMA (1.3760) 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 overbought territory and giving positive crossover to confirm bullish stance. MACD is above zero line but histograms are increasing lead to upward movement.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; buy in between 1.3500-1.3350 with target 1.3590-1.3640-1.3700 and 1.3750-1.3800-1.3840 with stop loss closing below 1.3300. Sell in between 1.3590-1.3840 with targets at 1.3500-1.3440-1.3390 and 1.3300-1.3250 with stop loss should be 1.3790.

USD/JPY

USD/JPY on Friday made intra‐day low of JPY114.76/USD and made an intraday high of JPY115.42/USD and settled the day up 0.209% at JPY115.18/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 114.90-116.50 with risk above 116.50 targeting 14.50-113.90 and 113.20-112.70-112.50. Long positions above 114.50-112.50 with targets of 114.65-115.00-115.50 and 116.00-116.50-116.90 with stop below 112.50.