Daily Markets

• Most Asian currencies stuck to a tight range on Wednesday, while the dollar languished near five-month lows amid persistent bets that the Federal Reserve will begin cutting interest rates early in 2024. Regional currencies logged sharp gains in December after the Fed said it was done raising interest rates, with recent softer-than-expected inflation data suggesting that the bank could trim rates by as soon as March 2024. But December’s gains only served to trim steep losses in Asian currencies so far this year, as high U.S. interest rates and a largely resilient dollar spurred steady outflows from risk-heavy, high-yielding currencies through the year. Most Asian units were set for a muted end to 2023, although their outlook appeared somewhat brighter as the Fed flagged plans for interest rate cuts in the coming year. But while markets were optimistic over early cuts, the bank provided little cues on the timing of the planned cuts. Dovish signals from regional central banks also weighed on some Asian currencies. The Japanese yen fell 0.1% after the summary of opinions of the Bank of Japan’s December meeting showed most policymakers supported keeping monetary policy ultra-dovish in the near-term. While the central bank has flagged plans to eventually begin tightening policy in 2024, it provided scant cues on the timing of such a move A dovish BOJ made the yen the worst-performing Asian currency in 2023, with the unit set for an over 8% loss against the dollar this year. Broader Asian units were also set for an underwhelming performance in 2023, as most regional central banks paused their rate hike cycles this year amid some cooling in inflation. The Australian dollar rose 0.2% on Wednesday and was set to rise 0.2% in 2023. Focus was also on a Reserve Bank of Australia meeting next week, with the bank widely expected to keep rates on hold. The Indian rupee was set to lose 0.6% in 2023 after sinking to record lows earlier in the year, while the South Korean won was down nearly 3% for the year. The Chinese yuan was also among the worst performers for 2023, and was set for a 3.6% loss this year amid worsening sentiment towards the country. A post-COVID economic rebound largely failed to materialize this year. Focus was now on purchasing managers index data for December, due next week, after a series of weak prints over the past three months. The currency was set to lose nearly 2% in 2023, with a bulk of its losses coming in December after the Fed signaled it was done raising interest rates and will look at cuts in 2024. The signals saw traders pivoting out of the dollar and into more risk-driven assets. Markets now expect the Fed to cut rates between three to five times in 2024, although the bank has given few signals on the breadth of the planned rate cuts. Fed officials also recently warned that bets on early rate cuts were unfounded, especially as inflation remained sticky.

Gold – XAU

Gold on Thursday made its intraday high of US$2088.29/oz and low of $2064.53/oz. Gold is down by 0.5819% at US$2065.28/oz.

Technicals in Focus:

On the daily charts, gold trades higher than 20DMA (1953). If it drops below this level, it could lead to 1,927. The MACD is currently below the zero line but the histograms are showing an increasing trend, indicating that there may be upward movement in the coming sessions. The RSI is currently at 45.31, which is in the neutral region, suggesting there may be more selling pressure before it rebounds. The Stochastic Oscillator is also in the oversold territory but has given a positive crossover, indicating a bullish stance for intraday trades.

Trading Strategy: Sell on Strength

Sell in between 2080-2107 keeping stop loss closing above 2107, targeting 2064-2054-2040 and 2032-2020-2005. Buy in between 2070-2005 with risk below 2005 targeting 2080-2094-2100-2107.

Silver - XAG

Silver on Thursday made its intraday high of US$24.47/oz and low of US$23.93/oz settled down by 1.240% at US$23.95/oz.

Technicals in Focus:

On daily charts, silver is sustaining below 200DMA (22.91), breakage above will lead to 23.51. MACD is below the zero line and histograms are decreasing trend, bringing a bearish stance in the upcoming sessions. RSI is approaching the oversold region, indicating a sell 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 23.40-19.30, targeting 23.50-24.60 and 25.00-25.90 with stop loss should be placed on the breakage below 19.00. Sell in between 24.00-27.50 with a stop loss above 27.50 targeting 23.40-22.40-21.90 and 21.50-20.90-20.50.

Oil - WTI

Crude Oil on Thursday made an intra‐day high of US$74.47/bbl, an intraday low of US$71.79/bbl, and settled down by 2.37% to close at US72.11/bbl.

Technicals in Focus:

On daily charts, oil is sustaining above its 100DMA i.e. 75.37, a support level, and breakage above will call for 77.48. 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 overbought region, giving a negative crossover to confirm a bearish stance; while the RSI is in the neutral region, more upside can be expected to reach the overbought region, which is highly probable.

Trading Strategy: Neutral to Sell

Sell in between 73.00-76.70 with stop loss at 77.00; targeting 72.00 and 71.00-70.10-69.40. Buy above 72.00-67.35 with risk daily closing below 67.00; targeting 73.85-74.90-75.90-76.50 and 77.00-77.60.

EUR/USD

EUR/USD on Thursday made an intraday low of US$1.0482/EUR, a high of US$1.1138/EUR, and settled the day down by 0.389% to close at US$1.1060/EUR.

Technicals in Focus:

On daily charts, prices are sustaining above 100DMA (1.0800), which becomes immediate support, a break below will target 1.0717. MACD is above the zero line and histograms are increasing mode, bringing a bullish view. Stochastic is in oversold territory, giving negative 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 1.1120-1.1100, targeting 1.0940-1.0890-1.0820 and 1.0775-1.0770-1.0640 with stop-loss at daily closing above 1.1100. Buy above 1.1020-1.0490 with risk below 1.0490 targeting 1.1105-1.1145-1.1200 and 1.1245-1.1275.

GBP/USD

GBP/USD on Thursday made an intra‐day low of US$1.2711/GBP, a high of US$1.2826/GBP, and settled the day down by 0.477% to close at US$1.2711/GBP.

Technicals in Focus:

On daily charts, prices are sustaining below 50DMA (1.2297) is becoming a resistance level. 14-D RSI is currently in a neutral region and direction is difficult to predict on an RSI basis. The Stochastic Oscillator is in oversold territory and gives a positive crossover to confirm a bullish 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 1.2790-1.2050 with a target of 1.2850-1.2890-1.2950 and 1.2990-1.3040-1.3090 with a stop loss closing below 1.2100. Sell in between 1.2790-1.2950 with targets at 1.2690-1.2630-1.2540 and 1.2490-1.2440-1.2390 with a stop loss of 1.2950.

USD/JPY

USD/JPY on Thursday made an intra‐day low of JPY140.24/USD, an intraday high of JPY141.80/USD, and settled the day down by 0.322% at JPY141.35/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 100DMA (137.57), major 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 overbought territory and signaling to sell as it has given a negative crossover to confirm a bearish stance.

Trading Strategy: Neutral to Sell

Sell below 142.00-145.90 with risk above 146.00 targeting 143.00-141.60-140.90 and 140.00-138.70-137.90. Long positions above 141.00-137.90 with targets of 142.90-143.20-144.00 and 145.00-146.00-146.80 with stops below 137.90.