Daily Markets

• Most Asian currencies kept to a tight range on Friday, while the dollar steadied after an overnight bounce following strong economic growth data, with a key inflation reading and a Federal Reserve meeting now in focus. Regional currencies were nursing a muted performance for the week, amid renewed pressure from the dollar as markets began steadily pricing out expectations of early interest rate cuts by the Fed. Signs of resilience in the U.S. economy further boosted the greenback on Thursday, as fourth-quarter gross domestic product data grew more than expected. The dollar index and dollar index futures both fell 0.1% in Asian trade. Markets were now awaiting PCE price index data- the Fed’s preferred inflation gauge- due later in the day, for more cues on the bank’s plans to cut rates. The data comes just a few days before the Fed’s first meeting in 2024, where the central bank is widely expected to keep rates on hold. But any signals on planned rate cuts this year will be in close focus. Asian currencies were nursing a weak start to 2024 on growing doubts over early rate cuts by the Fed. But they saw some support this week as China rolled out more stimulus measures, ramping up hopes for a recovery in the region’s largest economy. The Chinese yuan fell 0.1% on Friday, but was set for mild weekly gains amid consistent support from the People’s Bank of China. While more monetary stimulus bodes well for the economy, it also presents more headwinds for the yuan, especially as the PBOC flushes the Chinese economy with more currency. To counter this, the PBOC was seen rolling out a string of stronger midpoints this week, while also potentially buying yuan off the open market to support the currency. While the bank’s reserve requirement ratio cut inspired some optimism over China, analysts still questioned just how much support more liquidity will provide, given that consumer and business spending in the country remains weak. Focus is now on key purchasing managers index data due next week for more cues on the Chinese economy. Broader Asian currencies kept to a tight range. The Japanese yen was flat as data showed consumer price index inflation in Tokyo fell more than expected in January, heralding a similar trend in countrywide inflation. The data comes just a few days after the Bank of Japan signaled more progress towards inflation meeting its 2% annual target, which will allow the bank to begin tightening its ultra-loose policy later this year. This notion spurred some strength in the yen.

Gold – XAU

Gold on Thursday made its intraday high of US$2025.19/oz and low of $2010.74/oz. Gold is down by 0.345% at US$2020.68/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 2029-2100 keeping stop loss closing above 2107, targeting 2020-2005-1990. Buy in between 2020-1990 with risk below 1990 targeting 2039-2050-2058 and 2064-2080-2094.

Silver - XAG

Silver on Thursday made its intraday high of US$22.94/oz and low of US$22.32 /oz settled up by 1.23% at US$22.65/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 22.40-19.30, 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 23.00-27.50 with a stop loss above 27.50 targeting 22.40-21.90 and 21.50-20.90-20.50.

Oil - WTI

Crude Oil on Friday made an intra‐day high of US$77.43/bbl, an intraday low of US$75.11/bbl, and settled up by 2.34% to close at US75.11/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 76.90-79.30 with stop loss at 79.50; targeting 76.50-75.75-74.90 and 74.00-72.90-71.50. Buy above 76.10-67.35 with risk daily closing below 67.00; targeting 77.35-78.00-79.35.

EUR/USD

EUR/USD on Thursday made an intraday low of US$1.08210/EUR, a high of US$1.0901/EUR, and settled the day down by 0.353% to close at US$1.0845/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 1.0950-1.1100, targeting 1.0890-1.0820 and 1.0775-1.0770-1.0640 with stop-loss at daily closing above 1.1100. Buy above 1.0890-1.0650 with risk below 1.0490 targeting 1.1020-1.1105-1.1145-1.1200 and 1.1245-1.1275.

GBP/USD

GBP/USD on Thursday made an intra‐day low of US$1.2681/GBP, a high of US$1.2742/GBP, and settled the day down by 0.118% to close at US$1.2706/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 1.2650-1.2050 with a target of 1.2730-1.2790-1.2850 and 1.2890-1.2950 1.2990-1.3040 with a stop loss closing below 1.2050. Sell in between 1.2720-1.2950 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 JPY146.697/USD, an intraday high of JPY148.69/USD, and settled the day down by 0.675% at JPY148.28/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 147.90-150.50 with risk above 151.00 targeting 146.95-146.50145.80 and 145.00-144.0-143.00. Long positions above 146.80-140.90 with targets of 148.00-148.55-149.20 and 149.90-150.50 with stops below 140.00.