Daily Markets

• Asian currencies weakened sharply on Monday, with the Chinese yuan nearing a record low in offshore trade as the dollar rallied after U.S. President Donald Trump delivered on his threat of more trade tariffs. Regional currencies were caught in a global sell-off in risk-driven assets after Trump over the weekend announced 25% import tariffs on Canada and Mexico, and a 10% duty on China. All three countries vowed retaliation, marking the start of a renewed global trade war. Japan’s yen weakened slightly less than its peers due to a hawkish Bank of Japan and its status as a safe haven bid. The USD/JPY pair rose 0.3%. Asian currencies were also pressured by strong U.S. inflation data which, coupled with Trump’s tariffs, pointed to fewer interest rate cuts in the coming months. Mainland Chinese markets remained closed for the week-long Lunar New Year holiday, with trade only set to resume on Tuesday. Trump hit China with a 10% import tariff- a move that bodes poorly for China’s export-heavy economy. But given that China has trimmed its trade exposure to the U.S. in recent years, analysts bet that the economic impact of the new tariffs may not be as dire as initially feared. Beijing decried Trump’s tariffs, and vowed retaliation. The country is also expected to dole out bumper stimulus measures to offset the economic impact of Trump’s tariffs. Private purchasing managers index data showed Chinese business activity remained soft in January. The Caixin manufacturing PMI read below expectations for the month, although it just managed to stay in expansion territory. Still, analysts cautioned that Trump’s willingness to carry out his hawkish tariff agenda heralded higher duties in the coming months. The dollar index and dollar index futures both surged about 1.3% in Asian trade, reaching a near one-month peak. The greenback was also back in sight of an over two-year high hit in January. Trump’s tariffs- which will take effect from Tuesday- are expected to be inflationary, given that they will be paid by U.S. importers. Sticky inflation in turn is expected to give the Federal Reserve less impetus to cut interest rates sooner, while also pressuring the U.S. economy. PCE price index data- the Fed’s preferred inflation gauge- rose as expected in December, data showed on Friday. The print rose further above the Fed’s 2% annual target, and also factored into expectations that U.S. interest rates will remain high for longer.

Gold – XAU

Gold on Friday its intraday high of US$2817.04/oz and low of $2757.87/oz. Gold is up by 0.124% at US$2798.43/oz.

Technicals in Focus:

On the daily charts, gold trades higher than 20DMA (2197). If it drops below this level, it could lead to 2,100. The MACD is currently above the zero line and the histograms are showing an increasing trend, indicating that there may be upward movement in the coming sessions. The RSI is currently at 83.04, which is in the overbought region, suggesting there may be selling pressure in the next 2 to 3 sessions. The Stochastic Oscillator is also in the overbought territory but has given a positive crossover, indicating a bullish stance for intraday trades, but rebound in expected in all the overbought indicators.

Trading Strategy: Sell on Strength

Sell below 2,800 keeping stop loss closing above 2800, targeting 2738-2726-2694 and 2680-2649-2635. Buy in between 2780-2649 with risk below 2640 targeting 2,770-2,780-2789.

Silver - XAG

Silver on Friday its intraday high of US$31.69/oz and low of US$31.10/oz settle down by 0.955% at US$31.29/oz.

Technicals in Focus:

On daily charts, silver is sustaining above 20MA (25.05), breakage above will lead to 23.73. MACD is below the zero line and histograms are increasing trend, bringing a bullish stance in the upcoming sessions. RSI is in the oversold region, indicating a sell signal for now. The Stochastic Oscillator is in the overbought region and gives a positive crossover to show an upside move for the intraday trade.

Trading Strategy: Buy on Dips

Buy in between 30.10-27.50, targeting 30.70-31.30 and 32.10-32.60 and 33.10-33.80-34.20 with stop loss should be placed on the breakage below 27.00. Sell in between 30.90-34.30 with a stop loss above 35.00 targeting 29.10-28.60 and 28.10-27.60.

Oil - WTI

Crude Oil on Friday intra‐day high of US$73.42/bbl, an intraday low of US$71.64/bbl, and settled up by 0.831% to close at US$71.64/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 73.90-83.85 with stop loss at 84.00; targeting 77.80-77.10-76.50 and 75.70-75.05-73.40. Buy above 73.00-64.05 with risk daily closing below 64.00, targeting 74.05-75.70-76.50 and 77.10-77.80-78.85..

EUR/USD

EUR/USD on Friday made an intraday low of US$1.0385/EUR, a high of US$1.0467/EUR, and settled the day down by 0.291% to close at US$1.0387/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 1.0250-1.0840, targeting 1.0340 and 1.0290-1.0210 with stop-loss at daily closing above 1.1400. Buy above 1.0210-1.0110 with risk below 1.0110 targeting 1.0400 and 1.0490-1.0540-1.0600.

GBP/USD

GBP/USD on Friday low of US$1.2384/GBP, a high of US$1.2471/GBP, and settled the day down by 0.152% to close at US$1.2384/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 50DMA (1.2674) is becoming a support 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 1.2250-1.2040 with a target of 1.2340-1.2390-1.2440 and 1.2510-1.2590-1.2650-1.2750 with a stop loss closing below 1.2040. Sell in between 1.2290-1.2960 with targets at 1.2250 and 1.2210-1.2150-1.2070 with a stop loss of 1.3000.

USD/JPY

USD/JPY on Friday an intra‐day low of JPY153.90/USD an intraday high of 155.21/USD, and settled the day up by 0.756% at JPY155.20/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 100DMA (155.35), 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 155.00-159.50 with risk above 160.00 targeting 156.00-155.25-154.30 and 153.80-153.00-152.10. Long positions above 154.50-149.00 with targets of 155.25-156.00-156.50 and 157.20-157.90-158.50 with stops below 149.00.