AAFX TRADING

Daily Market Lookup

  • The U.S. dollar soared on Thursday, led by strong gains against the yen, sterling, and commodity currencies, as investors fretted about the risk of recession with the Federal Reserve likely to raise interest rates well into next year. The greenback's allure was magnified, amid worsening risk appetite as stocks fell. Like the Fed, the European Central Bank raised interest rates for the fourth time in a row, although by less than at its last two meetings, pledged further hikes and laid out plans to drain cash from the financial system as part of its fight against runaway inflation. ECB President Christine Lagarde, in her press briefing, said upside inflation risks remain, which necessitates more tightening. The Bank of England also raised its key interest rate by a further half-percentage point on Thursday and indicated more hikes were likely. Investors though bet that the BoE might be getting close to the end of its increases in borrowing costs. The Fed projected at least an additional 75 bps of increases in borrowing costs by the end of 2023. Its projection of the target federal funds rate rising to 5.1% in 2023 is slightly higher than investors expected. Powell was also particularly hawkish in his comments, noting that ongoing rate hikes are appropriate to get sufficiently restrictive. J.P. Morgan Asset Management, in a research note, has increased the odds of recession to 60% from its initial forecast of 50%. The greenback briefly pared gains after data on Thursday showed that U.S. retail sales fell more than expected in November, while the labor market remains tight, with the number of Americans filing for unemployment benefits declining last week. Sterling also fell sharply as investors believe the BOE is nearing the end of its rate hikes. It was last down nearly 2% at $1.2183. The Norwegian krone dropped as well versus the dollar after Norway's central bank raised its benchmark interest rate by 25 basis points to a 13-year high of 2.75% on Thursday, as expected by economists, and said it will "most likely" hike again in the first quarter of 2023. The Swiss franc also fell after Swiss National Bank Chairman Thomas Jordan said it was too early to "sound the all-clear" on high inflation after the central bank hiked interest rates again on Thursday and hinted further increases were still possible. The SNB raised its policy interest rate by 50 basis points to 1% - the central bank's third hike this year as it stepped up its campaign to dampen the rise in prices.
  • Gold prices were muted on Friday after logging sharp losses in the prior sessions as growing fears of a recession were compounded by signals from several major central banks that interest rates were far from peaking. While the yellow metal had caught some bids earlier this week on signs of easing U.S. inflationary pressures, it swiftly reversed this trend after the Fed warned that U.S. interest rates will likely peak at higher-than-expected levels. This was followed by the European Central Bank also signaling that it will continue raising rates, with headline inflation continuing to trend above the bank’s target range. A batch of weak U.S. and euro zone economic data also showed that both economies are struggling under the yoke of high inflation and rising interest rates The yellow metal was also set to lose around 1.1% this week, rattled by a recovery in the dollar as investors sought safe haven in the greenback. Gold has largely lost its status as a safe haven this year, as rising U.S. interest rates pushed up the opportunity cost of holding non-yielding assets. This saw the dollar largely overtake gold as the market’s favored safe haven, despite growing fears of a U.S. recession. Other precious metals were also subject to steep selling this week, given that the Fed’s comments blindsided investors hoping for a shift in the central bank’s hawkish rhetoric. Platinum futures were set to lose 2% this week, while silver futures were down 1.9%. Even so, a majority of investors are still pricing in a smaller, 25 basis point hike by the Fed in February. Among industrial metals, copper suffered deeper losses this week as rising COVID-19 infections in major importer China added another degree of uncertainty to markets already reeling from worsening growth prospects. While China’s relaxing of nationwide anti-COVID measures initially drove bids into copper, the resulting spike in infections swiftly culled any hopes for a quick reopening in the world’s largest copper importer.
  • Oil dipped on Friday as the market assessed the aftermath of interest rates hikes at central banks, but were poised for the biggest weekly gains in 10 weeks amid supply disruption concerns and China's demand recovery hopes. Both benchmarks fell 2% in the previous session over strong dollars and rate hikes from the central banks in Europe. The U.S. Federal Reserve indicated it will raise interest rates further next year, even as the economy slips toward a possible recession. On Thursday, the Bank of England and the European Central Bank raised interest rates to fight inflation. But the oil benchmarks are on track for their biggest weekly gains since early October, with market sentiment buoyed by potential supply tightness after Canada's TC Energy (NYSE:TRP) Corp shut its Keystone pipeline following a leak and by a demand resumption prospect in 2023. The International Energy Agency projections of Chinese oil demand recovering next year after a 2022 contraction to 400,000 barrels per day (bpd). The agency raised its 2023 oil demand growth estimate to 1.7 million bpd. OPEC on Tuesday stuck to its forecasts for global oil demand growth of 2.55 million bpd this year and 2.25 million bpd in 2023 after several downgrades, saying that while economic slowdown was "quite evident" there was potential upside such as from a relaxation of China's zero-COVID policy. Analysts from J.P.Morgan Commodity Research also expect the United States to start replenishing its strategic petroleum reserves in the first quarter of 2023. But the oil market is still mounted by downside pressures, including the slow recovery of China's demand due to a swelling number of COVID infections and a supply overhang in the West of Suez market. Investors are very cautious now as the market is full of variables, said analysts from Haitong Futures.

 

 
Intraday RESISTANCE LEVELS
16th December 2022 R1 R2 R3
GOLD-XAU 1,790-1,800 1,808-1,814 1,826-1,834
Silver-XAG 23.60-24.00 24.35-24.90 25.50-25.90
Crude Oil 77.00 78.60-79.70 80.50-81.40
EURO/USD 1.0660-1.0720 1.0790-1.0830 1.0900-1.0940
GBP/USD 1.2280-1.2350 1.2410-1.2490 1.2550-1.2630
USD/JPY 137.70-138.10 138.70 140.20-142.00

Intraday SUPPORTS LEVELS
16th December 2022 S1 S2 S3
GOLD-XAU 1,781-1,774 1,759 1,750-1,740
Silver-XAG 23.30-23.00 22.50 22.20-21.90
Crude Oil 76.10-75.25 74.50-74.10 73.30-71.70
EURO/USD 1.0610-1.0580 1.0520-1.0490 1.0450-1.0390
GBP/USD 1.2190-1.2120 1.2090 1.2030-1.1950
USD/JPY 136.50-137.00 136.00-135.40 134.90-134.10

Intra-Day Strategy (16th December 2022)
GOLD-XAU Sell on Strength
Silver-XAG Buy on Dips
Crude Oil Neutral to Sell
EUR/USD Neutral to Sell
GBP/USD Neutral to Buy
USD/JPY Neutral to Sell

Gold – XAU

AAFX TRADING

Gold on Thursday made its intraday high of US$1808.54/oz and low of $1773.74/oz. Gold is down by 1.686% at US$1776.73/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 1800-1879 keeping stop loss closing above 1879, targeting 1790-1774 and 1759-1750-1736. Buy in between 1781-1768 with risk below 1750, targeting 1790-1800-1814 and 1826-1834-1847.

 
Intraday Support Levels
S1     1,781-1,774
S2     1,759
S3     1,750-1,740
Intraday Resistance Levels
R1     1,790-1,800
R2     1,808-1,814
R3     1,826-1,834

Technical Indicators

Name   Value Action
14DRSI  

55.000

Buy
20-DMA   1772.99 Buy
50-DMA  

1743.27

Buy
100-DMA   1740.25 Buy
200-DMA   1762.25 Buy
STOCH(5,3)   26.992 Buy
MACD(12,26,9)   18.767 Buy

Silver - XAG

AAFX TRADING

Silver on Thursday made its intraday high of US$23.92/oz and low of US22.95/oz settled down by 3.45% at US$23.07/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.

 
Intraday  Support Levels
S1     23.30-23.00
S2     22.50
S3     22.20-21.90

Intraday  Resistance Levels
R1     23.60-24.00
R2     24.35-24.90
R3     25.50-25.90

TECHNICAL INDICATORS
Name   Value Action
14DRSI   62.026 Buy
20-DMA   22.48 Buy
50-DMA   21.37 Buy
100-DMA   20.85 Buy
200-DMA   21.19 Buy
STOCH(5,3)   70.609 Sell
MACD(12,26,9)   0.776 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Thursday made an intra‐day high of US$77.80/bbl, an intraday low of US$75.40/bbl, and settled down by 1.246% to close at US$76.37/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 77.00-81.40 with stop loss at 81.60; targeting 76.10-75.25-74.10 and 73.30-72.60-71.90. Buy above 76.10-71.00 with risk daily closing below 71.00; targeting 77.00-78.60 and 79.70-80.50-81.40.

 
Intraday Support Levels
S1     76.10-75.25
S2     74.50-74.10
S3     73.30-71.70

Intraday Resistance Levels
R1     77.00
R2     78.60-79.70
R3     80.50-81.40

TECHNICAL INDICATORS
Name   Value Action
14DRSI   38.70 Sell
20-DMA   77.51 Sell
50-DMA   81.60 Sell
100-DMA   85.74 Sell
200-DMA   88.24 Sell
STOCH(5,3)   33.505 Sell
MACD(12,26,9)   -3.009 Buy

EUR/USD

AAFX TRADING

EUR/USD on Thursday made an intraday low of US$1.0591/EUR, a high of US$1.0735/EUR, and settled the day down by 0.518% to close at US$1.0626/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 1.0650-1.0930, targeting 1.0610-1.0580-1.0520 and 1.0490-1.0450-1.0390 with stop-loss at daily closing above 1.0940. Buy above 1.0610-1.0390 with risk below 1.0390 targeting 1.0650-1.0720-1.0790 and 1.0830-1.0900-1.0940.

 
Intraday Support Levels
S1     1.0610-1.0580
S2     1.0520-1.0490
S3     1.0450-1.0390

Intraday  Resistance Levels
R1     1.0660-1.0720
R2     1.0790-1.0830
R3     1.0900-1.0940

TECHNICAL INDICATORS
Name   Value Action
14DRSI   67.654 Buy
20-DMA   1.0388 Sell
50-DMA   1.0213 Buy
100-DMA   1.0190 Buy
200-DMA   1.0392 Buy
STOCH(5,3)   70.532 Buy
MACD(12,26,9)   0.0123 Buy

GBP/USD

AAFX TRADING

GBP/USD on Thursday made an intra‐day low of US$1.2155/GBP, a high of US$1.2426/GBP, and settled the day down 1.924% to close at US$1.2176/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.

 
Intraday Support Levels
S1     1.2190-1.2120
S2     1.2090
S3     1.2030-1.1950

Intraday Resistance Levels
R1     1.2280-1.2350
R2     1.2410-1.2490
R3     1.2550-1.2630

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

56.516

Buy
20-DMA   1.2123 Buy
50-DMA   1.1882 Buy
100-DMA   1.1848 Buy
200-DMA   1.2115 Buy
STOCH(5,3)   37.651 Buy
MACD(12,26,9)   0.0015 Sell

USD/JPY

AAFX TRADING

USD/JPY on Thursday made an intra‐day low of JPY135.23/USD and made an intraday high of JPY138.17/USD and settled the day up by 1.703% at JPY137.76/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 137.70-144.50 with risk above 144.50 targeting 136.60-136.00-135.40-134.90-134.10. Long positions above 136.50-133.60 with targets of 137.70-138.10-138.90-140.20-142.00 with stops below 133.00.

 
Intraday Support Levels
S1     136.50-137.00
S2     136.00-135.40
S3     134.90-134.10

INTRADAY RESISTANCE LEVELS
R1     137.70-138.10
R2     138.70
R3     140.20-142.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   34.408 Buy
20-DMA   141.65 Buy
50-DMA   142.80 Buy
100-DMA   140.63 Buy
200-DMA   134.90 Buy
STOCH(9,6)   14.057 Buy
MACD(12,26,9)   -1.290 Sell

AAFX TRADING
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