What You Need to Know

Gold prices rose to its highest since last April; markets predict it may go as high as 2000 an ounce this year gauge by lower inflationary pressure in the U.S. and dovish monetary policy from the Fed. In Asia, China’s economic data reflects healthier than the market expects, with a GDP growth rate at 3% year-on-year and a lower unemployment rate. China’s economic recovery may have spurred the oil prices and put pressure on the global inflation rate. Elsewhere, Japanese Yen investors are awaiting for BoJ rate decision on Wednesday ( 18th January) and Japan CPI data which is set to release on Friday ( 20th January), to gauge future price movement. 

Look Out For

Current rate hike bets on 1st February Fed interest rate decision: 

25 bps (93.2%) VS 50 bps (6.8%) 

Market Overview

Economic Calendar

Market Movements

DXY

The global equity market extended its rallies on Monday, with investors bracing for easing inflation expectations and a less aggressive rate hike decision from the central banks. Risk appetite in the financial market remains resilient, which prompted investors to shift their portfolio from the safe-haven US Dollar. The US Dollar continues to hover at a 9-month low, weighed down by falling US bond yields. After China reopened its economy, the loosening of global supply bottlenecks in recent months prompted a disinflationary shock, which increased the probability of a soft landing for the global economic recovery. 

The Dollar Index is trading lower following the prior breakout below the previous support level. MACD has illustrated increasing bearish momentum, while RSI is at 54, suggesting the index might extend its losses as the RSI stays below the midline. 

Resistance level: 105.20, 108.35

Support level: 101.30, 99.50

XAU/USD

The depreciation of the US Dollar continues to underpin the dollar-denominated asset such as gold, with market participants bracing for another round of more minor rate hike decisions from the Federal Reserve. Since early November, the inflationary pressures have diminished while market participants anticipate less aggressive monetary policy from the Federal Reserve, thanks to the easing supply bottlenecks after China lifted Covid-19 restrictions.  

Gold prices are trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 74, suggesting the commodity is entering the overbought territory. 

Resistance level: 1920.00, 1980.00

Support level: 1870.00, 1820.00

EUR/USD

The dollar index rebounded after trading in a bearish trend for the past week, and the pair’s uptrend has slowed. Several Fed officials will be giving speeches this week and earning reports from some major companies will be released this week; investors may gauge it to understand the U.S. economy better. Most importantly, the Eurozone CPI will be released on Wednesday (18th January); a higher-than-expected reading may spur the Euro higher against the dollar. 

The buying momentum slowed as the RSI reading dropped to near the 50 level. For the MACD indicator, the MACD line and the Signal line have crossed on the above and are falling, suggesting the bullish momentum for the pair is diminishing. 

Resistance level: 1.0988, 1.1150

Support level: 1.0743 1.0495

BTC/USD

BTC prices have been hovering near the 21000 level for the past few trading days and back to the pre-FTX crisis price level. Cryptocurrency market capitalization is approaching the $1 trillion mark reflecting a rising risk appetite of investors toward the crypto market. Cooling inflation rate in the U.S. made investors optimistic that the Fed will at least soften the rate hiking policy, as a lower borrowing cost benefits the investors. China reopening its economy and releasing better-than-expected economic data may have also spurred BTC prices. 

After gaining some 25% over the week, BTC has stayed flat lately on the top. The RSI dropped slightly but still remained in the overbought zone suggesting a strong buying power for BTC. The MACD depicts a slowdown in bullish momentum where the MACD line and the signal line has crossed. 

Resistance level:21767, 22529

Support level: 20723, 19630

HK50

The Hang Seng index fell 1.1% to 21506 points in early trade on Tuesday following China’s latest economic data release. China’s economy last year grew at the second slowest pace at the since the 1970s as Covid restrictions hammered activity. However, the data is showing a better-than-expectation reading in the fourth quarter and December, and it adds optimism that it may be on the way to recovery. China’s GDP grew by 3% in 2022, and in the final quarter, it showed 2.9% growth, which is better than the forecast 1.8%. The government had initially set a growth target of “around 5.5%,” although Covid lockdowns and the sudden dismantling covid restrictions in December put that GDP goal out of reach. But in fact, this is a positive GDP figure to lay a solid ground for coming economic growth in the country. 

As mentioned yesterday, the index might have some technical retracement in the short term. But for the overall outlook, the index is still trading in positive momentum and hopes for recovery after quite some time. MACD has illustrated increasing bullish momentum ahead. While RSI is at 64, suggesting the index remains in bullish momentum as well. 

Resistance level: 22519, 23590

Support level: 21209，20015

GBP/USD 

The pound dropped 0.68% to $1.2182 against the dollar on Monday as investors await UK job data and inflation data, which will be released by this week. The unemployment data will be released later today, while inflation data will be released on Wednesday, providing evidence of Britain’s economic sentiment towards the end of last year. 

As we can see, the overall trend remains strong. The MACD line remains above zero line, indicating a bullish momentum ahead. While RSI is trading at 49, it suggests the pair is in decisive momentum. Investors can keep an eye on today’s economic data for further trading signals. 

Resistance level: 1.2343, 1.2662

Support level: 1.1936, 1.1649

USDJPY

The Japanese Yen surged to a more than seven-month peak against the Greenback amid market participants expecting the BoJ would abandon or make further amendments to its yield control policy. Despite the Bank of Japan purchasing almost 5 trillion yen of bonds on Friday in its largest daily operation on record, 10-year yields still surged to 0.51%, exceeding Bank of Japan target yields.

USDJPY is trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum. However, RSI is at 35, suggesting the pair is entering the oversold territory. 

Resistance level: 131.60, 135.20

Support level: 127.15, 123.70

CL OIL

Oil prices dropped 1.6% to $78.72 per barrel as a technical retrace. Besides, investors are also ahead of monthly analysis data about the supply and demand level of the global oil market in 2023 from OPEC. China’s economic data is supposed to have little impact on oil prices, but oil prices remain unchanged as of writing. Investors might be worried about the global recession risk. According to commodities research from Goldman Sachs Group Inc, they expect commodities to have the strongest outlook of any asset class in 2023, with the inventories for almost every key raw material being critically low. 

Crude oil prices fell could be a technical retrace, as the overall trend is still strong. However, MACD has illustrated diminishing bearish momentum. While RSI is at 57, suggesting the oil remains in bullish momentum. 

Resistance level: 81.01, 85.16

Support level: 76.79, 73.52