Daily Markets

• Oil prices fell on Wednesday as an unexpected build in crude and fuel inventories in the United States, the world's biggest oil consumer, and economic uncertainty reignited demand worries. Both contracts rose on Monday and Tuesday, rebounding from a sharp selloff in the first week of 2023 U.S. crude oil stockpiles jumped by 14.9 million barrels in the week ended Jan. 6, sources said, citing data from the American Petroleum Institute (API). At the same time, distillate stocks, which include heating oil and jet fuel, rose by about 1.1 million barrels. Analysts polled by Reuters had expected crude stocks to fall by 2.2 million barrels and distillate stocks to drop by 500,000 barrels. The large increase in U.S. inventories in the API estimates has dragged down oil prices, while the risk of recession is also capping the oil price uptrend in the short run, said analyst Leon Li at CMC Markets. Traders will be looking out for inventory data from the U.S. Energy Information Administration due later on Wednesday to see if it matches the preliminary view from API. The oil market has been pulled lower by worries that sharply higher interest rate hikes to tame inflation would trigger a recession and curtail fuel demand. The prevailing market sentiment is bearish on the demand side, with China still dealing with a widespread COVID-19 outbreak and the U.S. and Europe at risk of economic slowdowns, with supply disruptions minimal for the time being, Claudio Galimberti, a senior vice president at Rystad Energy, said by email. The market structure for futures reflects that weakness with both the front-month Brent and WTI contracts remaining in contango, where prompt month prices are trading lower than forward month prices, typically a sign that there is less short-term demand for oil. Prices gained earlier this week on hopes for fuel demand growth in China, the world's second-largest oil consumer, after it eased its COVID-19 curbs and allowed the resumption of international travel. The big focus this week is on U.S. inflation data, due on Thursday. If inflation comes in below expectations that would drive the dollar down, analysts said. A weaker dollar can boost oil demand as it makes the commodity cheaper for buyers holding other currencies.

Gold – XAU

Gold on Tuesday made it’s intraday high of US$1880.66/oz and low of $1867.71/oz. Gold is up by 0.282% at US$1876.75/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 1887-1927 keeping stop loss closing above 1927, targeting 1869-1860-1849 and 1834-1826-1808. Buy in between 1879-1800 with risk below 1800, targeting 1,879-1887-1900 and 1907-1927.

Silver - XAG

Silver on Tuesday made its intraday high of US$23.76/oz and low of US23.42/oz settled down by 0.122% at US$23.59/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 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 24.40-26.20 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$76.10/bbl, an intraday low of US$74.06/bbl, and settled down by 0.255% to close at US$74.88/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 75.20-81.40 with stop loss at 81.40; targeting 75.20-74.10-72.90 and 72.10-71.40-70.10. Buy above 74.10-70.10 with risk daily closing below 70.10; targeting 76.10-77.00-78.10 and 79.00-79.90-80.70.

EUR/USD

EUR/USD on Tuesday made an intraday low of US$1.0711/EUR, a high of US$1.0758/EUR, and settled the day up by 0.494% to close at US$1.0731/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 1.0790-1.0930, targeting 1.0690-1.0650-1.0590 and 1.0520-1.0450-1.0390 with stop-loss at daily closing above 1.0940. Buy above 1.0650-1.0390 with risk below 1.0390 targeting 1.0690-1.0735-1.0790 and 1.0830-1.0900.

GBP/USD

GBP/USD on Tuesday made an intra‐day low of US$1.2109/GBP, a high of US$1.2197/GBP, and settled the day down 0.305% to close at US$1.2145/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 1.2120-1.1890 with a target of 1.2170-1.2290-1.2350 and 1.2390-1.2445 with a stop loss closing below 1.1850. Sell in between 1.2170-1.2445 with targets at 1.2120-1.2040-1.1990 and 1.1890-1.0850-1.0800 with stop loss should be 1.2445.

USD/JPY

USD/JPY on Tuesday made an intra‐day low of JPY131.37/USD and made an intraday high of JPY132.47/USD and settled the day up by 0.270% at JPY132.23/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 132.90-138.00 with risk above 138.00 targeting 131.90-131.10-130.40 and 129.50-128.90. Long positions above 131.90-129.00 with targets of 132.90-134.10-134.90 and 135.70-136.90-137.70 with stops below 130.00.