AAFX TRADING

Daily Market Lookup

  • The U.S. dollar climbed strongly Tuesday ahead of the week's key economic data. Tuesday's main economic release is the U.S. manufacturing PMI for December, which is expected to show the sector still in contraction territory. However, most eyes will be on the Federal Reserve minutes on Wednesday and U.S. jobs data later in the week to set the early thinking on interest rates in the new year. The Fed raised interest rates by 50 basis points last month, a reduction in size after delivering four consecutive 75 basis point hikes, but has said it may need to keep interest rates higher for longer to tame inflation. USD/JPY fell 0.1% to 130.69, with the yen handing back gains after climbing to a seven-month high against the dollar following the Bank of Japan's decision last month to raise its bond-yield cap. Adding to the expectations that the Japanese central bank was reconsidering its current monetary stance was a Nikkei report, released over the weekend, that said the BOJ was considering raising its inflation forecasts in January. Governor Haruhiko Kuroda has dismissed the chance of a near-term exit from the ultra-loose monetary policy, but the central bank was forced to support the yen late last year as it weakened to a 32-year low against the dollar as the U.S. Federal Reserve aggressively tightened to combat inflation. Elsewhere, EUR/USD fell 0.9% to 1.0566, ahead of the release of key German inflation data, which is expected to show a reduction in annual inflation to 9.1% in December, from 10.0% the prior month. The state of North Rhine-Westphalia - Germany's largest by population and economic output - said annual inflation slowed to 8.7% in December from 10.4% in November and a peak of 11% in October. However, food prices - the largest part of many families' monthly outgoings - rose another 0.5%, leaving them up 13.8% on the year. More worryingly, the overall CPI without volatile food and energy prices rose 1.0%, pushing the annual 'core' measure of inflationup to 4.9% from 4.6%. GBP/USD fell 0.8% to 1.1951, ahead of the release of the manufacturing PMI release for December, which is expected to show this important sector remains in contraction territory. This represents a drop from last month's reading of 49.4, and the fifth straight month that the manufacturing PMI has spent in contraction territory.
  • Most Asian currencies rose slightly on Wednesday as a recovery in the dollar appeared to have run out of steam, with markets now awaiting fresh cues on U.S. monetary policy from the minutes of the Federal Reserve’s December meeting. Regional currencies came under pressure on Tuesday as sentiment was dented by a warning from the International Monetary Fund (IMF) on a potential recession, while concerns over rising COVID-19 cases in China also weighed. This saw the dollar rally more than 1% against a basket of currencies, causing most Asian units to reverse gains made at the beginning of the year. But a rally in the dollar appeared to have stalled on Wednesday, aiding regional units. The Chinese yuan rose 0.2% on Wednesday, while the South Korean won added 0.5%. The Japanese yen rose 0.3%, but traded below a seven-month high hit against the dollar on Tuesday. Data from Japan showed that manufacturing activity contracted for a second consecutive month, as local producers contend with runaway inflation and laggard international demand. The dollar index and dollar index futures traded slightly lower, but retained a bulk of recent gains and traded just below a two-week high. Focus is now squarely on the minutes of the Federal Reserve’s December meeting, with markets waiting to see if more policymakers supported the slowing of interest rate hikes in the coming months Markets are currently pricing in an over 90% possibility that the Fed will temper its hawkish rhetoric and hike rates by an even smaller 25 basis points in February. This also comes amid an increasing number of signs that U.S. inflation has peaked. But given that U.S. inflation is still trending well above the Fed’s annual target range, the central bank is broadly expected to keep policy tight in the coming months. Broader Asian currencies were mildly positive, with markets also positioning for key U.S. business activity and nonfarm payrolls data due this week. After a warning on a potential recession from the IMF, markets were closely watching any economic readings from major economies China’s COVID-19 crisis was also in focus after President Xi Jinping struck a more cautious tone in his new year’s address than markets were anticipating. The country is grappling with a massive spike in infections after it relaxed several anti-COVID restrictions in December.
  • Oil edged lower on Wednesday after slumping in the previous session, weighed down by concerns about weak demand due to the state of the global economy and China's rising COVID cases. Brent futures for March delivery fell 43 cents to $81.67 a barrel, a 0.5% loss, by 0700 GMT. U.S. crude dropped 39 cents, or 0.5%, to $76.54 per barrel.
  • Both benchmarks plunged more than 4% on Tuesday, with Brent suffering its biggest one-day loss in more than three months. The Chinese government also increased export quotas for refined oil products in the first batch for 2023, signalling expectations of poor domestic demand. Top oil exporter Saudi Arabia may further cut the prices for its flagship Arab Light crude grade to Asia in February, after they were set at a 10-month low for this month, as concerns of oversupply continued to cloud the market. The head of the International Monetary Fund warned that much of the global economy would see a tough year in 2023 as the main engines of global growth - the United States, Europe and China - were all experience weakening activity. The Fed also raised interest rates by 50 basis points (bps) in December after four consecutive increases of 75 bps each. If the Fed intensifies its rate hikes, that could slow the economy and hamper fuel consumption. Lending oil some support, the dollar weakened on Wednesday after posting big gains in the previous session. A weaker dollar typically boosts demand for oil as dollar-denominated commodities become cheaper for holders of other currencies. U.S. crude oil stockpiles likely rose 2.2 million barrels, with distillate inventories expected down, a preliminary Reuters poll showed on Monday. Industry group American Petroleum Institute is due to release data on U.S. crude inventories at 4.30 p.m. EDT (2030 GMT) on Wednesday. The Energy Information Administration, the statistical arm of the U.S. Department of Energy, will release its own figures at 10.30 a.m. (1430 GMT) on Thursday.

 

 
Intraday RESISTANCE LEVELS
4th January 2023 R1 R2 R3
GOLD-XAU 1,860-1,869 1,879 1,887-1,900
Silver-XAG 24.90-25.50 25.90 26.20-26.90
Crude Oil 76.10-77.00 78.10-79.90 80.70-81.40
EURO/USD 1.0720 1.0790-1.0830 1.0900-1.0940
GBP/USD 1.2120 1.2170-1.2290 1.2350-1.2410
USD/JPY 130.40-131.10 131.90 134.10-134.90

Intraday SUPPORTS LEVELS
4th January 2023 S1 S2 S3
GOLD-XAU 1,849-1,840 1,834-1,826 1,814-1,800
Silver-XAG 24.10-23.90 23.00-22.50 22.20-21.90
Crude Oil 75.20-74.50 74.10 73.50-72.90
EURO/USD 1.0620-1.0580 1.0520-1.0490 1.0450-1.0390
GBP/USD 1.2030-1.1990 1.1950-1.1890 1.0850-1.0800
USD/JPY 129.50-129.00

Intra-Day Strategy (4th January 2023)
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 Wednesday made its intraday high of US$1849.92/oz and low of $1824.35/oz. Gold is up by 0.634% at US$1839.32/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 1860-1900 keeping stop loss closing above 1900, targeting 1849-1834-1826 and 1808-1790. Buy in between 1849-1800 with risk below 1800, targeting 1860-1,870-1,879 and 1887-1900

 
Intraday Support Levels
S1     1,849-1,840
S2     1,834-1,826
S3     1,814-1,800
Intraday Resistance Levels
R1     1,860-1,869
R2     1,879
R3     1,887-1,900

Technical Indicators

Name   Value Action
14DRSI  

59.473

Buy
20-DMA   1787.74 Buy
50-DMA  

1756.61

Buy
100-DMA   1747.67 Buy
200-DMA   1764.79 Buy
STOCH(5,3)   44.601 Buy
MACD(12,26,9)   17.589 Buy

Silver - XAG

AAFX TRADING

Silver on Tuesday made its intraday high of US$24.53/oz and low of US23.87/oz settled down by 0.154% at US$23.99/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     24.10-23.90
S2     23.00-22.50
S3     22.20-21.90

Intraday  Resistance Levels
R1     24.90-25.50
R2     25.90
R3     26.20-26.90

TECHNICAL INDICATORS
Name   Value Action
14DRSI   63.604 Buy
20-DMA   23.37 Buy
50-DMA   22.22 Buy
100-DMA   21.43 Buy
200-DMA   21.46 Buy
STOCH(5,3)   68.779 Sell
MACD(12,26,9)   0.619 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Tuesday made an intra‐day high of US$81.53/bbl, an intraday low of US$76.72/bbl, and settled down by 3.93% to close at US$77.33/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 76.10-81.40 with stop loss at 81.40; targeting 75.20-74.10 and 73.50-72.90. Buy above 75.20-71.70 with risk daily closing below 71.00; targeting 76.10-77.00-78.10 and 80.70-81.40-82.35.

 
Intraday Support Levels
S1     75.20-74.50
S2     74.10
S3     73.50-72.90

Intraday Resistance Levels
R1     76.10-77.00
R2     78.10-79.90
R3     80.70-81.40

TECHNICAL INDICATORS
Name   Value Action
14DRSI   43.438 Sell
20-DMA   77.81 Sell
50-DMA   79.97 Sell
100-DMA   84.00 Sell
200-DMA   86.87 Sell
STOCH(5,3)   29.120 Sell
MACD(12,26,9)   -0.0026 Buy

EUR/USD

AAFX TRADING

EUR/USD on Tuesday made an intraday low of US$1.0519/EUR, a high of US$1.0682/EUR, and settled the day down by 1.064% to close at US$1.0545/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     1.0620-1.0580
S2     1.0520-1.0490
S3     1.0450-1.0390

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

TECHNICAL INDICATORS
Name   Value Action
14DRSI   61.310 Buy
20-DMA   1.0558 Sell
50-DMA   1.0384 Buy
100-DMA   1.0293 Buy
200-DMA   1.0421 Buy
STOCH(5,3)   46.295 Buy
MACD(12,26,9)   0.0081 Buy

GBP/USD

AAFX TRADING

GBP/USD on Monday made an intra‐day low of US$1.2009/GBP, a high of US$1.2106/GBP, and settled the day up 0.342% to close at US$1.2091/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 1.2030-1.0800 with a target of 1.2090-1.2120-1.2170 and 1.2280-1.2350-1.2410 with a stop loss closing below 1.1950. Sell in between 1.2120-1.2410 with targets at 1.2030-1.1950-1.1870 and 1.0850-1.0800 with stop loss should be 1.2630.

 
Intraday Support Levels
S1     1.2030-1.1990
S2     1.1950-1.1890
S3     1.0850-1.0800

Intraday Resistance Levels
R1     1.2120
R2     1.2170-1.2290
R3     1.2350-1.2410

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

48.122

Buy
20-DMA   1.2087 Buy
50-DMA   1.1931 Buy
100-DMA   1.1880 Buy
200-DMA   1.211 Buy
STOCH(5,3)   18.944 Buy
MACD(12,26,9)   0.0035 Sell

USD/JPY

AAFX TRADING

USD/JPY on Tuesday made an intra‐day low of JPY129.50/USD and made an intraday high of JPY131.39/USD and settled the day up by 0.175% at JPY131.00/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 134.10-136.00 with risk above 136.00 targeting 132.90-131.90-131.10 and 130.40-129.50-129.00. 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     129.50-129.00
S2    
S3    

INTRADAY RESISTANCE LEVELS
R1     130.40-131.10
R2     131.90
R3     134.10-134.90

TECHNICAL INDICATORS
Name   Value Action
14DRSI   40.943 Buy
20-DMA   135.22 Buy
50-DMA   138.12 Buy
100-DMA   138.63 Buy
200-DMA   134.98 Buy
STOCH(9,6)   88.583 Buy
MACD(12,26,9)   -1.746 Sell

AAFX TRADING
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