Daily Market Lookup

• The dollar edged lower against the euro on Tuesday after data showed euro zone business activity made a surprise return to modest growth in January, while U.S. business activity shrank for a seventh straight month. While U.S. business activity shrank in January, the downturn moderated across both the manufacturing and services sectors for the first time since September and business confidence strengthened as the new year began. Fed fund futures see only two more quarter-point rate hikes by the Fed to a peak of around 5% by June, before it starts cutting rates later in the year. The Federal Reserve itself has insisted it still has 75 bps of increases in the pipeline. Still, the dollar, which briefly gained on the euro after the U.S. data, slipped to trade lower on the day, not far from the 9-month lows hit in the previous session. The common currency was backed by survey data supporting the view that the euro zone economy was weathering a winter of intense price pressures reasonably well, analysts said. Surveys showed euro zone business activity made a surprise return to modest growth in January, and service-sector activity in Germany expanded for the first time since June, although price pressures remained sticky. A stronger economy could potentially allow the European Central Bank to raise interest rates more aggressively as it tackles inflation. Last week, the dollar fell to as low as 127.215 yen, its weakest since May, ahead of a Bank of Japan policy review at which investors bet the central bank might signal the end of its stimulus program. The BOJ, however, left policy unchanged, giving the dollar some respite. Sterling was one of the worst-performing major currencies against the dollar, falling 0.34% on the day to $1.2334, after a survey showed British private-sector economic activity fell at its fastest rate in two years in January.
• Gold prices fell on Wednesday, retreating further from a near nine-month peak hit in the previous session, as some investors booked profit ahead of U.S. economic data that could steer the Federal Reserve's policy tightening path. Market focus is now on the fourth-quarter U.S. GDP data due on Thursday, which could set the tone for the Fed's Jan. 31-Feb. 1 policy meeting. Gold could gain if there are signs that the U.S. economy is slowing and the Fed will soon slow its tightening pace and cut interest rates, said Ilya Spivak, head of global macro at Tastylive. Most investors expect the Fed to raise rates by 25 basis points (bps) next week. The U.S. central bank slowed its tightening pace to 50 bps last month after four straight 75-bp hikes. With lower rates translating into lesser returns on interest-bearing assets like government bonds, investors may prefer zero-yield gold. Data showed on Tuesday Swiss exports of gold to countries including China, Turkey, Singapore and Thailand surged to multi-year highs in 2022.
• Crude oil prices inched higher on Wednesday as optimism for a demand recovery in China and expectations that major producers will maintain current output policy offset global recession worries. Analysts from the Bank of America (NYSE:BAC) Securities said the reopening of the Chinese economy after years of tough COVID restrictions could unleash a large wave of pent-up demand over the next 18 months. On the supply side, volumes should remain steady for the medium term as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, is expected to keep its output policy unchanged. An OPEC+ panel is likely to endorse the producer group's current oil output policy when it meets next week, five OPEC+ sources said on Tuesday, as hopes for higher Chinese demand are balanced by worries over inflation and the global economy. OPEC+ in October decided to trim output by 2 million barrels per day from November through 2023 on a weaker economic outlook. However, gains in oil prices were capped by a bigger-than-expected build in U.S. oil inventories that was reported after the market settled on Tuesday. U.S. crude stocks rose by about 3.4 million barrels in the week ended Jan. 20, according to market sources citing American Petroleum Institute figures. That was triple the forecast for an about 1 million build in a preliminary Reuters poll on Monday. Nissan's Kikukawa, however, expects the build "to be temporary as the supply disruptions from a cold snap in the United States a few weeks ago would only impact data in the next couple of weeks". Official data from the U.S. Energy Information Administration will be released later on Wednesday. Kikukawa expects WTI to trade in a range between $75 and $85 a barrel in the coming weeks. Markets are also watching out for interest rate decisions from central banks for more trading cues. Investors are waiting to see if the U.S. Federal Reserve will "react to recent downside surprise in inflation and growth" when it meets next week, the analyst added.

Gold – XAU

Gold on Tuesday made it’s intraday high of US$1942.39/oz and low of $1917.10/oz. Gold is up by 0.325% at US$1937.14/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 1930-1967 keeping stop loss closing above 1967, targeting 1914-1900-1894 and 1887-1879-1869. Buy in between 1927-1879 with risk below 1879, targeting 1940-1948 and 1955-1967.

Silver - XAG

Silver on Tuesday made its intraday high of US$23.72/oz and low of US23.72/oz settled up by 0.929% at US$23.66/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 23.00-20.30, targeting 24.40-25.00-25.90 and 26.20-26.90 with stop loss should be placed on the breakage below 20.30. Sell in between 24.00-26.20 with stop loss above 26.20; targeting 23.60-23.00-22.10 and 21.70-21.30-20.70.

Oil - WTI

Crude Oil on Tuesday made an intra‐day high of US$82.26/bbl, an intraday low of US$79.71/bbl, and settled down by 1.712% to close at US$80.28/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 80.60-83.40 with stop loss at 83.40; targeting 80.50-79.65-78.95 and 78.10-77.00-76.10. Buy above 81.50-76.10 with risk daily closing below 76.10; targeting 81.70-82.30-82.70 and 83.30-84.00.

EUR/USD

EUR/USD on Tuesday made an intraday low of US$1.0834/EUR, a high of US$1.0897/EUR, and settled the day up by 0.1157% to close at US$1.0883/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 1.0900-1.1100, targeting 1.0830-1.0790-1.0690 and 1.0650-1.0590-1.0520 with stop-loss at daily closing above 1.1100. Buy above 1.0830-1.0520 with risk below 1.0820 targeting 1.0900-1.0945-1.0990 and 1.1050-1.1100.

GBP/USD

GBP/USD on Tuesday made an intra‐day low of US$1.2262/GBP, a high of US$1.2413/GBP, and settled the day down 0.400% to close at US$1.2324/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 1.2350-1.1890 with a target of 1.2390-1.2445-1.2290 with a stop loss closing below 1.1890. Sell in between 1.2445-1.2650 with targets at 1.2350-1.2290-1.2170 and 1.2120-1.2040-1.1990 with stop loss should be 1.2445.

USD/JPY

USD/JPY on Tuesday made an intra‐day low of JPY129.72/USD and made an intraday high of JPY131.11/USD and settled the day down by 0.378% at JPY130.15/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 130.50-133.00 with risk above 133.00 targeting 129.50-129.00-127.45 and 126.90-126.20-125.00. Long positions above 129.50-126.20 with targets of 130.40 and 131.10-131.60-132.00 with stops below 130.00.