Daily Market Lookup

• The dollar edged down against the euro as upbeat German business morale data supported the common currency, while a modest improvement in investors' appetite for riskier currencies weighed on the safe-haven dollar German business morale rose more than expected in December as the outlook for Europe's largest economy improved despite the energy crisis and high inflation, a survey showed on Monday. The U.S. currency, which rallied for much of this year on a hawkish Federal Reserve and rising geo-political tensions, has come under pressure in recent weeks as investors bet the central bank may have limited room to keep on with its inflation-fighting interest rate hikes. Last week, Chair Jerome Powell said the Fed will deliver more interest rate increases next year despite a possible U.S. recession, with rates expected to peak above 5%. European Central Bank vice-president Luis de Guindos said on Monday it would keep raising euro zone rates to curb inflation and was not considering revising its own mid-term inflation goal of 2%. The Australian dollar, viewed as a liquid proxy for risk appetite, was 0.19% higher after President Xi Jinping and his senior officials pledged to shore up China's battered economy next year in the face of the worsening spread of COVID-19 in the capital Beijing. The dollar was 0.2% higher against the Japanese yen after falling as much as 0.7% in the session on a report Japan is considering revising a key monetary policy after a new Bank of Japan governor is appointed in April. The government will consider revising a joint statement it signed in 2013 that commits the central bank to meeting a 2% inflation target as soon as possible, sources said. South Africa's rand jumped more than 2% after its President Cyril Ramaphosa was re-elected as the leader of the ruling party African National Congress (ANC).
• The U.S. dollar weakened in early European trade Monday, with the yen in demand following a report that the Japanese authorities could be set to adjust the country's inflation target. USD/JPY fell 0.6% to 135.84 after local Japanese press reported over the weekend that the country's Prime Minister Fumio Kishida was considering issuing a joint statement with the Bank of Japan, probably next year, which would allow more flexibility around the 2% inflation goal. Such a move would likely mean a potential policy shift in the central bank's ultra-accommodative stance, which has seen Japanese interest rates stick to near zero while other major central banks have aggressively hiked rates to combat soaring inflation, to the detriment of the yen. The BoJ holds its final meeting for the year early Tuesday and is widely expected to hold interest rates at the current ultra-low levels. However, any commentary on a possible shift in tone will be closely watched. The Federal Reserve, the European Central Bank, the Bank of England and the Swiss National Bank, among others, raised interest rates by 50 basis points last week, and hinted at further hikes ahead with inflation remaining highly elevated. This is expected to show a small improvement to 87.4 from 86.3, following on from last week's PMI data, which showed that the downturn in German economic activity moderated for a second straight month, indicating that a likely recession in the bloc will be shallower than previously thought. ECB Vice-President Luis de Guindos speaks in Madrid later Monday, and his comments will be studied after his ECB colleague Klaas Knot said on Friday that the central bank has a long way to go in raising interest rates than the Federal Reserve, but ultimately won't raise its rates to the same level as its U.S. counterpart.
• Oil prices edged up on Tuesday, supported by a softer dollar and a U.S. plan to restock petroleum reserves, but gains were capped by uncertainty over the impact of rising COVID-19 cases in top oil importer China. Oil prices have been buoyed by a U.S. plan announced last week to buy up to 3 million barrels of oil for the Strategic Petroleum Reserve following this year's record release of 180 million barrels from the stock. A weaker greenback has also supported prices, making oil cheaper for those holding other currencies. However, analysts said clear signs of growing demand were needed for prices to climb further. While China has been relaxing pandemic restrictions, the surge in COVID-19 cases has been bearish for the oil markets due to uncertainties about the country's economic recovery, said Tina Teng, an analyst at CMC Markets. Business confidence in China had fallen to its lowest since Jan. 2013, reflecting the impact of a surge in COVID-19 cases on economic activity after the country eased pandemic control measures, a survey by World Economics showed on Monday. Global recession fears were outweighing supply issues too and capping oil price gains, added Teng. U.S. crude oil stocks were expected to have dropped last week by about 200,000 barrels, while gasoline and distillates inventories were seen higher, a preliminary Reuters poll showed on Monday. 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.

Gold – XAU

Gold on Monday made its intraday high of US$1798.62/oz and low of $1783.70/oz. Gold is down by 0.282% at US$1787.57/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.

Silver - XAG

Silver on Monday made its intraday high of US$23.40/oz and low of US22.82/oz settled down by 0.815% at US$22.98/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$76.60/bbl, an intraday low of US$74.01/bbl, and settled up by 1.903% to close at US$75.84/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 76.00-81.40 with stop loss at 81.60; targeting 76.10-75.25-74.10 and 73.30-72.60-71.90. Buy above 74.50-71.00 with risk daily closing below 71.00; targeting 76.10-77.00-78.60 and 79.70-80.50-81.40.

EUR/USD

EUR/USD on Monday made an intraday low of US$1.0575/EUR, a high of US$1.0657/EUR, and settled the day up by 0.468% to close at US$1.0606/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.

GBP/USD

GBP/USD on Monday made an intra‐day low of US$1.2120/GBP, a high of US$1.2241/GBP, and settled the day up 0.0675% to close at US$1.2143/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 Monday made an intra‐day low of JPY135.74/USD and made an intraday high of JPY137.15/USD and settled the day down by 0.756% at JPY136.89/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.