Daily Markets

• The dollar rebounded on Friday after Federal Reserve Bank of New York President John Williams pushed back against the market’s rate cut expectations, though the dollar index remained on track for its worst weekly performance in a month. The dollar tumbled broadly after updated interest rate projections of Fed officials released on Wednesday showed an expectation for 75 basis points in cuts in 2024. Fed Chairman Jerome Powell was also interpreted as striking a more dovish tone at the conclusion of the U.S. central bank’s two day meeting, when he said that the tightening of monetary policy is likely over, with a discussion of cuts coming "into view." But Williams said on Friday that "we aren't really talking about rate cuts right now" at the Fed and it's "premature" to speculate about them. Rai also noted that a large part of the move in the dollar this week has been due to rebalancing positions that were heavily tilted towards the greenback and focused in specific currency pairs, such as against the Japanese yen. Traders are pricing in aggressive expectations for rate cuts, with the first reduction seen likely in March and 141 basis points in cuts seen by December. Atlanta Fed President Raphael Bostic said on Friday that the U.S. central bank can begin reducing interest rates "sometime in the third quarter" of 2024 if inflation falls as expected. Chicago Fed President Austan Goolsbee also said that the Fed may soon need to shift its focus to preventing a run-up in unemployment from fighting inflation. Data on Friday showed that production at U.S. factories rose in November, lifted by a rebound in motor vehicle output following the end of strikes, but activity was weaker elsewhere as manufacturing grapples with higher borrowing and softening demand for goods. The euro and sterling were supported on Thursday by the European Central Bank (ECB) and Bank of England pushing back against rate cuts. Investors are nonetheless still betting heavily on rate cuts from both central banks next year. The ECB has more scope than most to ease, according to Pepperstone strategist Chris Weston, given low euro zone growth and a rapid decline in inflation. The euro was also dented by surveys on Friday showing that the downturn in euro zone business activity surprisingly deepened in December. The Bank of Japan is the last of the major central banks to meet this month and the question among traders and investors is whether or not it will signal its intention to ditch its policy of keeping interest rates at rock bottom next week.

Gold – XAU

Gold on Friday made its intraday high of US$2044.80/oz and low of $2015.56/oz. Gold is down by 0.810% at US$2019.76/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 2040-2094 keeping stop loss closing above 2094, targeting 2032-2020-2005 and 1989-1980-1963. Buy in between 2020-1951 with risk below 1951 targeting 2049-2060-2074 and 2080-2094.

Silver - XAG

Silver on Friday made its intraday high of US$24.27/oz and low of US$23.73/oz settled down by 1.257% at US$23.87/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 22.90-19.30, 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 23.40-27.50 with a stop loss above 27.50 targeting 22.40-21.90-21.50 and 20.90-20.50.

Oil - WTI

Crude Oil on Friday made an intra‐day high of US$72.54/bbl, an intraday low of US$70.63/bbl, and settled up by 0.236% to close at US72.12/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 72.50-73.70 with stop loss at 74.00; targeting 71.00-70.10-69.40 and 68.50-67.90-67.35. Buy above 72.00-67.35 with risk daily closing below 67.00; targeting 72.90-73.85-74.20 and 75.10-75.90-76.50.

EUR/USD

EUR/USD on Friday made an intraday low of US$1.0887/EUR, a high of US$1.1003/EUR, and settled the day down by 0.879% to close at US$1.0894/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 1.1020-1.1100, 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 1.0940-1.0490 with risk below 1.0490 targeting 1.0940 and 1.0990-1.1020-1.1060.

GBP/USD

GBP/USD on Friday made an intra‐day low of US$1.2667/GBP, a high of US$1.2789/GBP, and settled the day down by 0.450% to close at US$1.2679/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 1.2630-1.2050 with a target of 1.2730-1.2790-1.2850 and 1.2890-1.2950 with a stop loss closing below 1.2100. Sell in between 1.2700-1.2950 with targets at 1.2630-1.2540-1.2490 and 1.2440-1.2390-1.2300 with a stop loss of 1.2950.

USD/JPY

USD/JPY on Friday made an intra‐day low of JPY141.24/USD, an intraday high of JPY142.91/USD, and settled the day down by 0.262% at JPY142.17/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 141.60-140.90-140.00 and 138.70-137.90-137.10. Long positions above 141.50-137.90 with targets of 142.30-143.20-144.00 and 145.00-146.00-146.80 with stops below 137.90.