Daily Markets

• The U.S. dollar index jumped to a seven-week high in a broad rally on Friday after data showed that employers added far more jobs in January than expected, reducing the chances of near-term Federal Reserve interest rate cuts. Nonfarm payrolls increased by 353,000 last month, beating economists' expectations for a gain of 180,000. Average hourly earnings increased 0.6% after rising 0.4% in December. The dollar had weakened in recent days in line with falling Treasury yields, even after Fed Chair Jerome Powell on Wednesday said that a March rate cut was unlikely. Treasuries benefited from safe haven demand due to renewed concerns about the financial health of U.S. regional banks. But these concerns eased on Friday as U.S. regional bank stocks recovered slightly from a brutal two-day sell-off, helping send yields higher. Recent moves in the dollar and Treasury yields in large part also reflect repositioning, following a strong January for the greenback and higher Treasury yields during the month. The British currency had gained on Thursday after the Bank of England kept interest rates at a nearly 16-year high on Thursday and pushed back against the likelihood of near-term rate cuts.
• Most Asian currencies kept to a tight range on Friday, while the dollar was headed for a negative week ahead of key U.S. nonfarm payrolls data, which is expected to provide more cues on the path of U.S. interest rates. The data comes just a few days after the Federal Reserve kept interest rates steady and shot down expectations for an interest rate cut in March. But Fed Chair Jerome Powell struck a somewhat optimistic note on the U.S. economy, which drove investors into risk-driven assets despite the prospect of higher-for-longer interest rates. The Japanese yen was flat after largely lagging its regional peers in January. But the yen found some resilience in recent sessions amid growing conviction that the Bank of Japan was close to moving away from its ultra-dovish policies this year. After the Fed largely downplayed bets on a March interest rate cut, traders began pricing in a 25 basis point cut in May. While such a scenario bodes well for risk-driven Asian currencies, the Fed has given no indication that it will trim rates by a wide margin in 2024. The central bank reiterated that its plans to cut rates will be largely dictated by the path of inflation, which has so far remained sticky. Nonfarm payrolls data is expected to provide more cues on the labor market. The Fed has also cited a cooling labor market as one of the major factors to drive interest rate cuts.
• Oil prices stabilised in early Asian trading on Monday after sharp falls last week, amid continued attempts to reach a ceasefire in the Israel-Palestinian conflict even as the U.S. planned new strikes on Iran-backed groups. Both benchmarks ended last week down about 7%. They fell 2% on Friday after stronger-than-expected U.S. jobs data suggested interest rate cuts could be further out than expected, and on progress in ceasefire negotiations between Israel and Hamas. However, investors remained wary of any escalation in the Middle East conflict, after the U.S. signaled further strikes on Iran-backed groups in the Middle East in response to a deadly attack on U.S. troops in Jordan. The U.S. also continued its campaign against the Iran-backed Houthis in Yemen, with 36 strikes on Saturday against the groups whose attacks on shipping vessels have disrupted global oil trading routes, although supply has been largely unaffected. On Friday, the U.S. Department of Justice announced sanctions-evasion charges and seizures linked to an oil trafficking network that it says finances Iran's Islamic Revolutionary Guard Corps. It seized more than 520,000 barrels of sanctioned Iranian oil aboard the crude tanker Abyss, which had been anchored in the Yellow (OTC:YELLQ) Sea en route to China. Iran exported between 1.2 million and 1.6 million barrels per day of crude oil through most of 2023, representing 1%-1.5% of global oil supply.
• Gold prices steadied near a two-week high on Friday, crossing key levels as unwavering bets on interest rate cuts by the Federal Reserve weighed on the dollar, with nonfarm payrolls data due later in the day set to provide more cues. The yellow metal largely brushed off signals from the Fed that interest rate cuts will come later than expected this year, instead capitalizing on losses in the dollar and moving closer towards 2024 peaks. But gains in gold prices cooled on Friday as markets hunkered down before the payrolls data, which is largely expected to factor into the Fed’s plans for interest rates. Gold’s recovery also comes after a rough start to 2024, with the yellow metal falling 1.2% as markets began steadily pricing out expectations for a March interest rate cut. While the Fed largely shot down expectations for a rate cut in March, the CME Fedwatch tool showed traders were now pricing in the possibility of a 25 basis point cut in May- which benefited bullion prices. The central bank is also expected to cut rates at least four more times after May, according to Goldman Sachs analysts. While U.S. rates are expected to remain high in the near-term, the prospect of an eventual decline in rates- which was also flagged by Fed Chair Jerome Powell at a meeting earlier this week- bodes well for bullion prices. Still, the Fed has given no clear indication on the timing and scope of its planned rate cuts, and has presented a largely data-driven approach to any rate cuts. To this end, nonfarm payrolls data due later on Friday is expected to largely factor into the Fed’s outlook. The central bank has signaled that a cooling labor market will also be considered when cutting interest rates. Friday’s data is expected to show some cooling in the labor market through January. But the reading has consistently surprised to the upside.

Gold – XAU

Gold on Friday made its intraday high of US$2057.55/oz and low of $2027.81/oz. Gold is down by 0.725% at US$2039.62/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 2038-2100 keeping stop loss closing above 2107, targeting 2020-2005-1990. Buy in between 2030-1990 with risk below 1990 targeting 2039-2050-2058 and 2064-2080-2094.

Silver - XAG

Silver on Friday made its intraday high of US$23.23/oz and low of US$22.38/oz settle down by 2.046% at US$22.68/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$74.46/bbl, an intraday low of US$71.81/bbl, and settled down by 2.06% to close at US72.35/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 72.85-77.30 with stop loss at 77.50; targeting 72.00-71.10-70.50 and 69.90-69.10. Buy above 72.10-69.00 with risk daily closing below 69.00; targeting 72.85-73.70-74.00 and 75.75-76.50-77.30.

EUR/USD

EUR/USD on Friday made an intraday low of US$1.0779/EUR, a high of US$1.0897/EUR, and settled the day down by 0.767% to close at US$1.0784/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 1.0805-1.1100, targeting 1.0890-1.0820 and 1.0775-1.0770-1.0640 with stop-loss at daily closing above 1.1100. Buy above 1.0765-1.0650 with risk below 1.0490 targeting 1.1020-1.1105-1.1145-1.1200 and 1.1245-1.1275.

GBP/USD

GBP/USD on Friday made an intra‐day low of US$1.2613/GBP, a high of US$1.2771/GBP, and settled the day down by 0.860% to close at US$1.2632/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 1.2580-1.2050 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 1.2690-1.2950 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 Friday made an intra‐day low of JPY146.14/USD an intraday high of 148.57/USD, and settled the day up by 1.340% at JPY148.36/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 148.50-151.50 with risk above 151.90 targeting 146.95-146.50145.80 and 145.00-144.0-143.00. Long positions above 147.10-140.90 with targets of 148.00-148.55-149.20 and 149.90-150.50 with stops below 140.00.