AAFX TRADING

Daily Market Lookup

  • The yen eased a bit on Wednesday but held on to most of its overnight gains against the dollar as traders contemplated the shock Tuesday move by the Bank of Japan to adjust its control of bond yields, a slight move away from its ultra-easy monetary policy. The BOJ decided to let long-term yields move 50 basis points either side of its 0% target, wider than the 25 basis point band previously imposed, even as it kept broad policy settings unchanged. The currency market is still digesting the BOJ's policy tweak, said Carol Kong, a currency strategist at the Commonwealth Bank of Australia (OTC:CMWAY). The BOJ decision comes as investors fret about a slowing world economy, sky-high inflation and other central banks' moves to lift interest rates. It also comes in a year when the yen has been exceptionally volatile, with the Japanese authorities stepping into the market in September to prop it up for the first time since 1998 and again in October, when it weakened to a 32-year low of 151.94 per dollar. BOJ Governor Haruhiko Kuroda, who will step down in April, stressed the adjustment was not a prelude to a bigger tweak to the yield curve control policy and an eventual exit from ultra-easy monetary policy. The next policy decision the BOJ takes will likely be a major one, such as changing long-/short-term policy rate targets or terminating yield curve control altogether, according to Goldman Sachs analysts. Junichi Inoue, head of Japanese equities at Janus Henderson Investors, said there was likely to be some volatility for the short term. But he expected the BOJ decision to be "very positive for (the) overall market as it will remove unreasonable prices" such as the yen at 150 per dollar.
  • The U.S. dollar fell and the Japanese yen jumped after the Bank of Japan surprised markets with a policy shift, paving the way for the end of the country's ultra-accommodative monetary policy. The Bank of Japan maintained its benchmark rates at near-zero as widely expected, but also widened the range for yield fluctuations in the benchmark government bonds to between negative 0.5% and 0.5%, from a range of negative 0.25% to 0.25%. The Bank of Japan was forced to intervene to support its currency in October after a sharp drop in the yen this year, driven largely by a widening gap between local and U.S. interest rates. That said, Germany's producer price index eased in November for the second month in a row, adding to signs that high inflation could be waning in Europe's largest economy. Producer prices of industrial products rose 28.2% on the same month last year, compared with a 34.5% year-on-year rise in October, falling 3.9% compared with October.
  • Gold prices hit a one-week high on Wednesday, logging strong gains as the dollar fell sharply against a basket of currencies, although the outlook for the yellow metal remained uncertain amid rising interest rates and fears of a recession. Bullion prices rallied nearly 2% on Tuesday after a spike in the Japanese yen dented the dollar and ratcheted up fears of rising interest rates. This was triggered by the Bank of Japan unexpectedly tweaking its ultra-loose monetary policy for the first time in nearly a decade. The BOJ increased the range within which the yields on benchmark Japanese government bonds are allowed to fluctuate, signaling that it may be open to tightening policy next year. The move follows hawkish signals from several other developed market central banks, and indicates that global interest rates are likely to rise further in 2023. While such a scenario bodes poorly for non-yielding assets such as gold, the prospect of an ensuing economic slowdown also boosted the yellow metal’s safe haven appeal. Softer-than-expected U.S. housing data also ramped up fears of a recession in 2023 - a scenario that could benefit gold, amid some speculation that the Federal Reserve is close to ending its cycle of interest rate hikes. This has seen the dollar relinquish a chunk of its gains this year. The greenback is now trading near six-month lows, after the Fed raised interest rates by a relatively smaller margin earlier this month. Still, investors remain uncertain over where U.S. interest rates will peak. Hawkish signals from other major central banks have also brewed uncertainty over monetary policy going into 2023. Other precious metals rallied on Tuesday and were trading steady on Wednesday. But gains in the red metal were constrained by growing uncertainty over an economic reopening in major importer China, which is struggling with an unprecedented spike in COVID-19 infections. Fears of a potential recession in 2023 have also weighed on copper prices in recent sessions, given the metal’s close relationship with economic growth.
  • Oil prices crept higher on Wednesday as data signaled a bigger-than-expected weekly draw in U.S. inventories, although concerns over adverse weather conditions weighed on the outlook for near-term demand. Data from the American Petroleum Institute showed that U.S. inventories fell by a bigger than expected 3 million barrels in the week to December 16, heralding a similar trend in official data that is expected to show a 1.7 million barrel drop in inventories later in the day. The drop in inventories comes amid supply disruptions caused by the temporary closure of the Keystone pipeline. Crude prices benefited from a weakening dollar this week, especially after the Bank of Japan tweaked its ultra-dovish policy for the first time in nearly a decade. The move propped up the yen and pushed the dollar close to a six-month low, which is beneficial for commodities priced in the greenback. Prices were also helped by a commitment by the U.S. government to begin refiling its Strategic Petroleum Reserve from February, which sent a buy signal to markets. But on the other hand, a worsening outlook for a storm in the midwestern United States pointed to potential travel disruptions during the year-end holiday season, which could further dent demand for fuel. U.S. supplies are also set to increase with the full restart of the Keystone pipeline on the horizon. Growing gasoline inventories also showed that fuel demand still remained weak in the world’s largest oil consumer. While oil prices rose in recent sessions, they are still nursing sharp losses this year as rising interest rates and high inflation fed into concerns over a potential recession in 2023. Even as the BOJ’s policy shift dented the dollar, it indicates that almost all major central banks in developed markets are gearing up to tighten policy in 2023, which could further dent crude demand. Hawkish signals from the Federal Reserve, European Central Bank, and the Bank of England had rattled crude markets last week. Uncertainty over China's economic reopening, as the country grapples with rising COVID-19 cases, is also expected to weigh on crude in the near-term.

 

 
Intraday RESISTANCE LEVELS
21st December 2022 R1 R2 R3
GOLD-XAU 1,814-1,826 1,834 1,840-1,849
Silver-XAG 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 1.2170-1.2290 1.2350-1.2410 1.2490-1.2550
USD/JPY 132.90-134.10 134.90 135.40-136.00

Intraday SUPPORTS LEVELS
21st December 2022 S1 S2 S3
GOLD-XAU 1,808-1,800 1,790-1,781 1,774-1,759
Silver-XAG 23.60-23.00 22.50 22.20-21.90
Crude Oil 76.10-74.50 74.10-73.30 71.70-70.90
EURO/USD 1.0580 1.0520-1.0490 1.0450-1.0390
GBP/USD 1.2120-1.2090 1.2030 1.1950-1.1890
USD/JPY 131.90 131.10 130.40-129.50

Intra-Day Strategy (21st 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 Tuesday made its intraday high of US$1821.01/oz and low of $1784.47/oz. Gold is up by 1.68% at US$1817.58/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 1824-1879 keeping stop loss closing above 1879, targeting 1808-1790-1774 and 1759-1750-1736. Buy in between 1800-1768 with risk below 1750, targeting 1814 and 1826-1834-1847.

 
Intraday Support Levels
S1     1,808-1,800
S2     1,790-1,781
S3     1,774-1,759
Intraday Resistance Levels
R1     1,814-1,826
R2     1,834
R3     1,840-1,849

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 Tuesday made its intraday high of US$24.24/oz and low of US22.87/oz settled up by 5.07% at US$24.13/oz.

Technicals in Focus:

On daily charts, silver is sustaining below 100DMA (21.00), breakage above will lead to 21.60. 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 23.60-20.30, 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 24.00-25.00 with stop loss above 25.00; targeting 22.10-21.70 and 21.30-20.70-20.10.

 
Intraday  Support Levels
S1     23.60-23.00
S2     22.50
S3     22.20-21.90

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

TECHNICAL INDICATORS
Name   Value Action
14DRSI   65.927 Buy
20-DMA   22.72 Buy
50-DMA   21.59 Buy
100-DMA   21.00 Buy
200-DMA   21.26 Buy
STOCH(5,3)   55.507 Sell
MACD(12,26,9)   0.715 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Tuesday made an intra‐day high of US$76.89/bbl, an intraday low of US$74.44/bbl, and settled up by 0.334% to close at US$75.98/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.

 
Intraday Support Levels
S1     76.10-74.50
S2     74.10-73.30
S3     71.70-70.90

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

TECHNICAL INDICATORS
Name   Value Action
14DRSI   45.721 Sell
20-DMA   76.90 Sell
50-DMA   80.45 Sell
100-DMA   84.67 Sell
200-DMA   87.54 Sell
STOCH(5,3)   60.08 Sell
MACD(12,26,9)   -1.787 Buy

EUR/USD

AAFX TRADING

EUR/USD on Tuesday made an intraday low of US$1.0578/EUR, a high of US$1.0658/EUR, and settled the day down by 0.468% to close at US$1.0622/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     1.0580
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 Tuesday made an intra‐day low of US$1.2084/GBP, a high of US$1.2222/GBP, and settled the day up 0.282% to close at US$1.2177/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     1.2120-1.2090
S2     1.2030
S3     1.1950-1.1890

Intraday Resistance Levels
R1     1.2170-1.2290
R2     1.2350-1.2410
R3     1.2490-1.2550

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

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 Tuesday 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 132.90-136.00 with risk above 136.00 targeting 131.90-131.10-130.40 and 129.50-129.00. Long positions above 131.90-129.00 with targets of 132.90-134.10-134.90 and 135.40-136.00-137.70 with stops below 129.00.

 
Intraday Support Levels
S1     131.90
S2     131.10
S3     130.40-129.50

INTRADAY RESISTANCE LEVELS
R1     132.90-134.10
R2     134.90
R3     135.40-136.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   31.0145 Buy
20-DMA   136.69 Buy
50-DMA   139.40 Buy
100-DMA   139.30 Buy
200-DMA   135.08 Buy
STOCH(9,6)   26.40 Buy
MACD(12,26,9)   -1.967 Sell

AAFX TRADING
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