Daily Market Lookup

• The dollar was firm on Tuesday leading in to the release of U.S. inflation data and the final Federal Reserve meeting of the year, with investors waiting to update interest rate outlooks. A month ago, a small surprise to the downside unleashed a wave of bond-buying and dollar selling on the expectation that inflation had peaked. The U.S. figures, due at 1330 GMT, will test that assumption, while the Fed decision on Wednesday should provide some reasonably instant feedback from policymakers. Economists polled by Reuters expect November core inflation to be steady at 0.3% month-on-month but see moderation in the annual pace, with headline prices seen 7.3% higher than a year earlier. The U.S. dollar has been supported by high and rising interest rate expectations as the Fed has hiked its benchmark funds rate to counter inflation, leaving the currency vulnerable to selling if inflation seems to be cooling. The dollar index hovered at 105.01 on Tuesday, down from a 20-year high of 114.78 in late September. Market projections for the peak in U.S. interest rates have also slipped, with futures pricing indicating the Fed funds rate - currently set between 3.75% and 4% - staying below 5% The Fed is widely expected to hike the funds rate by 50 basis points on Wednesday, a step down in pace after four consecutive 75 bp hikes. Like the Fed, all are expected to hike by 50 bps. Later on Tuesday, British labour data is due, as well as surveys of German business conditions and sentiment.
• The dollar gained against most currencies on Monday in choppy trading ahead of key data expected to show U.S. inflation moderating in November on a year-on-year basis, and a Federal Reserve decision that likely slows the pace of rate increases at the conclusion of its two-day policy meeting on Wednesday. Since a peak in late September, the dollar index has declined by more the 8%, with the greenback expected to have diminished appeal with lower yields in assets such as Treasuries as the Fed slows down. In afternoon trading, the dollar rose 0.8% against the Japanese currency to 137.71 yen The euro was flat against the dollar, trading at $1.0535. The single European currency has gained almost 8% so far in the fourth quarter, with investors having previously banked on the European Central Bank sticking to a course of aggressive rate hikes. Consumer inflation data for November lands on Tuesday and is expected to show a 6.1% rise on a year-on-year basis in the core reading, which excludes food and energy prices, down from 6.3% in October. This week is also one of the most macro-packed so far this year, with four major central banks holding their final policy meetings of 2022. The Fed, the ECB, Bank of England and Swiss National Bank will all release rate decisions this week. The Fed is widely expected to deliver a rate hike of 50 basis points (bps) after a series of 75-basis-point increases. Investors will be keen to find out whether the Fed's rate forecasts exceed 5%. For now, fed funds futures have priced in a terminal rate, or the level in which the Fed will stop hiking, of 4.984%, seen hitting in May. The offshore Chinese yuan slipped 0.3% against the U.S. currency to 6.996 per dollar, further pressured by worries over a potential spike in COVID cases as China eases its stringent COVID-19 restrictions.
• Oil extended gains on Tuesday as a key pipeline bringing the resource to the United States remained shut, adding to concerns about potential tight supply in the world's biggest crude consumer. Concerns about Russian oil output have arisen since President Vladimir Putin said on Friday that Russia could cut production The closure of TC Energy (NYSE:TRP) Corp's Keystone Pipeline, which ships about 620,000 barrels-per-day of Canadian crude from Alberta to the United States, has tightened supplies and raised the prospect that inventories at the Cushing, Oklahoma, storage hub will decline. Cushing is also delivery point for the WTI crude futures contract. Keystone has remained shut since a 14,000-barrel leak in the U.S. state of Kansas was reported on Dec. 7. TC Energy has not released a timeline for a restart of the line, which carries crude to refineries in the Midwest and Gulf Coast. Expectations are that the pipeline closure will cause U.S. crude inventories to decline. Seven analysts polled by Reuters estimated, on average, that stockpiles dropped by 3.9 million barrels in the week to Dec. 9. The poll was conducted ahead of reports from the American Petroleum Institute on Tuesday, and the Energy Information Administration, the statistical arm of the U.S. Department of Energy, due on Wednesday. Expectations that loosening COVID-19 restrictions in China, the second-biggest oil user globally, will boost demand also supported oil's advances. Analysts from Bank of America (NYSE:BAC) said that a successful economic reopening in China, combined with a dovish pivot by the U.S. Federal Reserve on its interest rate increases, could boost fuel demand and propel Brent oil prices above $90 a barrel. China scrapped some of its strict COVID curbs over the past week, including relaxing COVID test requirements and stopping tracking people's travel records for COVID purposes. But they also warned that surging COVID infections in big Chinese cities still reined in market sentiment and more clear signals of demand recovery are needed to give a solid support to oil prices.

Gold – XAU

Gold on Monday made its intraday high of US$1780.77/oz and low of $1767.23/oz. Gold is down by 0.837% at US$1770.89/oz.

Technicals in Focus:

In daily charts, prices are above 200DMA (1809) and breakage below will call for 1790. MACD is above the zero line and histograms are a2lso increasing trend and it will bring an upward stance in the upcoming sessions. RSI is in the overbought region and more upside is expected before it gets stretched. The Stochastic Oscillator is in neutral territory and giving a negative crossover to a bearish stance for intraday trade.

Trading Strategy: Sell on Strength

Sell below 1790-1826 keeping stop loss closing above 1826, targeting 1774-1759 and 1750-1736-1724. Buy in between 1768-1724 with risk below 1700, targeting 1790-1800 and 1808-1814-1826.

Silver - XAG

Silver on Monday made its intraday high of US$23.52/oz and low of US23.10/oz settled down by 0.593% at US$23.29/oz.

Technicals in Focus:

On daily charts, silver is sustaining below 100DMA (26.62), breakage above will lead to 27.60. MACD is below the zero line and histograms are decreasing trend and it will bring a bearish stance in the upcoming sessions. RSI is approaching the neutral region, indicating a buy signal for now. The Stochastic Oscillator is in the oversold region and gives a positive crossover to show an upside move for the intraday trade.

Trading Strategy: Buy on Dips

Buy in between 23.00-20.30, targeting 23.30-23.60 and 24.00-24.40-25.00 with stop loss should be placed on the breakage below 20.00. Sell in between 23.40-25.00 with stop loss above 25.00; targeting 22.10-21.70 and 21.30-20.70-20.10.

Oil - WTI

Crude Oil on Monday made an intra‐day high of US$73.98/bbl, an intraday low of US$70.42/bbl, and settled up by 1.019% to close at US$73.69/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 the zero line and histograms are in increasing mode will bring a bullish stance in the upcoming sessions. The Stochastic Oscillator is in the neutral region, giving a positive crossover for confirmation of a bullish stance; while the RSI is in the 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 74.50-79.60 with stop loss at 81.60; targeting 74.10-73.30-72.60 and 71.90-71.00. Buy above 74.10-66.00 with risk daily closing below 66.00; targeting 74.5-75.25 and 76.10-77.00.

EUR/USD

EUR/USD on Monday made an intraday low of US$1.0505/EUR, a high of US$1.0578/EUR, and settled the day up by 0.0389% to close at US$1.0531/EUR

Technicals in Focus:

On daily charts, prices are sustaining above 50DMA (1.0736), which becomes immediate support, a break below will target 1.0647. MACD is above the zero line and histograms are increasing mode which will bring a bullish view. Stochastic is in overbought territory and giving positive crossovers to the bullish outlook for intraday. 14D RSI is currently in a neutral region and giving no directions to consider right now.

Trading Strategy: Neutral to Sell

Sell below 1.0580-1.0830, targeting 1.0520-1.0490-1.0450 and 1.0390-1.0290-1.0210 with stop-loss at daily closing above 1.0545. Buy above 1.0520-1.0290 with risk below 1.0290 targeting 1.0570-1.0610-1.0650 and 1.0720-1.0770.

GBP/USD

GBP/USD on Monday made an intra‐day low of US$1.2205/GBP, a high of US$1.2298/GBP, and settled the day up 0.103% to close at US$1.2264/GBP.

Technicals in Focus:

On daily charts, prices are sustaining below 20DMA (1.2113) is becoming a resistance level. 14-D RSI is currently in a neutral region and direction is difficult to predict on RSI bases. The Stochastic Oscillator is in overbought territory and gives a positive crossover to confirm bullish a stance. MACD is above the zero line but histograms are increasing leading to movement.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; buy in between 1.2200-1.1950 with a target of 1.2280-1.2350-1.2410 and 1.2490-1.2250-1.2630 with a stop loss closing below 1.1950. Sell in between 1.2280-1.2630 with targets at 1.2200-1.2190-1.2090 and 1.2030-1.1950-1.1870 with stop loss should be 1.2630.

USD/JPY

USD/JPY on Friday made an intra‐day low of JPY135.59/USD and made an intraday high of JPY136.90/USD and settled the day up by 0.905% at JPY137.66/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 the overbought region and chances of downward are expected based on RSI. MACD is above the 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 a negative crossover to confirm a bearish stance.

Trading Strategy: Neutral to Sell

Sell below 137.00-144.50 with risk above 144.50 targeting 136.60-136.00-135.40-134.90. Long positions above 136.50-133.60 with targets of 137.00-137.70 and 138.10-139.00-140.20 with stops below 143.00.