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DAILY ANALYSIS

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Forecasting Strategy for Short Term Trade

EUR/USD

EUR/USD has gained traction in the early trading hours of the European session on Tuesday but seems to be having a difficult time clearing 1.1300. Ahead of the high-tier data releases from the US on Wednesday and Thursday, the pair is unlikely to break out of its trading range.

Later in the session, the European Commissions's preliminary Consumer Confidence Index data for December will be looked upon for fresh impetus. A softer-than-forecast print could hurt the euro but it would be surprising to see the pair fall sharply as the Omicron variant is widely expected to weigh on sentiment.

USD/JPY

The USD/JPY broke above 113.75 and climbed to 113.98, reaching the highest level since last Thursday. It is hovering near the highs supported by higher US yields. The combination of higher US yields and an improvement in risk sentiment boosted the USD/JPY pair. The dollar is higher versus European majors, but not against emerging market and commodity currencies due to the improvement in risk appetite.

The short-term technical outlook for USD/JPY now is biased to the upside after breaking the 113.75/80 resistance area. Now it is looking at the 114.00 area. Above the next level stands at 114.20 that is the last protection to last week top at 114.27. A daily close above 114.40 would increase the odds of more gains ahead.

GBP/USD

GBP/USD gained traction in the early European session on Brexit headlines and climbed to the 1.3250 area. With trading action turning subdued the pair seems to have gone into a consolidation phase. Investors eye Omicron-related news. Sterling has gathered recovery momentum after dipping below 1.3200 on Monday and continues to edge higher in the early trading hours of the European session. Some inspiring Brexit headlines seem to be helping the British pound find demand but the pair could struggle to stretch higher if the UK decides to impose additional Omicron-related restrictions.

AUD/USD

The trend of AUD/USD over the last six months has been for tests of support at 0.7000, as a stronger USD, divergence in the outlook for monetary policy normalisation between the Fed and the RBA, and concerns over supply chain disruptions, particularly as they relate to demand from China, have all had impacts. The stronger USD continues to be an influence, and the present move is seen in the form of consolidation, as other factors have turned somewhat in favour of the AUD.”

“Though market pricing for RBA hikes is still rich to RBA guidance on when inflation will sustainably reach target, and the lift off timing between the RBA and FOMC is uneven, the implied cash rates between Australia and the US in 1-years time are widening in favour of AUD. The latest levels are around 97bps vs 73bps. That widening has been supportive of the recovery in AUD/USD.”

XAU/USD

Gold slide during the New York session, trading at $1.788 at the time of writing. The appetite for risk assets fueled by vaccines helped tame the Omicron variant and the US FDA was set to allow Pfizer, and Merck's Covid-19 medication pill boosted the US dollar, hurting safe-haven gold.

Meanwhile, the US Dollar Index, which measures the greenback's value against a basket of six currencies, was barely down around 0.05%, holding at 96.50. Contrary to that, US Treasury yields rallied with the benchmark 10-year interest rate at 1.487%, eight basis points higher than Monday's session.

WTI

WTI is battling a monthly resistance line after its biggest gain in more than two weeks the previous day. That said, the oil benchmark retreated to $71.22 early Wednesday morning in Asia. The black gold is benefiting from the market's optimism to overcome the virus crisis. However, the weekly industrial inventory report by the American Petroleum Institute (API) couldn't do much to help buyers despite marking a surprise draw of -3.67 million versus -0.815 million for the week ended Dec. 17.

Global policy reluctance to panic over the latest spread of the South African variant of the covid, dubbed as Omicron, seems to have supported the sentiment, as well as oil prices of late.

#NKE

Nike reported earnings results for its second quarter of fiscal year 2022 on Dec. 21 (the companys fiscal year ends May 31). Revenue grew 1.1% year-over-year to $11.36 billion and was $110 million better than Wall Street analysts had anticipated. Earnings per share of 83 was up 5 cents, or 6.4%, from the prior year and 21 cents above estimates. Nike Direct sales grew 9% to $4.7 billion. Nike Brand Digital had a 12% improvement in the quarter, driven by a 40% increase in North America.

A combination of margin expansion in Nike Direct, better mix, lower markdowns and favorable currency exchange helped deliver a gross margin of 45.9%, which was a 280 basis point expansion from the prior year. Offsetting this was a lower margin on full-price merchandise as the company saw higher costs from freight and logistics. Nike shares closed at 166.63, increase 9.65 or 6.15%. 

#BA

The stock market held strong gains in afternoon trading Tuesday. The Nasdaq 100 found its footing after a 1% intraday gain turned slightly negative in early trading. Micron Technology (MU) was the best gainer in the Nasdaq 100, helped by a strong earnings report and bullish guidance. Top gainers in the Dow Jones Industrial Average included Nike stock and Boeing stock.

Boeing (BA) added 5% on news UPS ordered 19 new widebody freighter aircraft from the aerospace giant. Terms weren't disclosed. The Dow Jones industrials were up 1.6%. The shares of Boeing closed at 199.52, move up 11.04 or 5.86%.GBP/USD gained traction in the early European session on Brexit headlines and climbed to the 1.3250 area. With trading action turning subdued the pair seems to have gone into a consolidation phase. Investors eye Omicron-related news. Sterling has gathered recovery momentum after dipping below 1.3200 on Monday and continues to edge higher in the early trading hours of the European session. Some inspiring Brexit headlines seem to be helping the British pound find demand but the pair could struggle to stretch higher if the UK decides to impose additional Omicron-related restrictions.Boeing (BA) added 5% on news UPS ordered 19 new widebody freighter aircraft from the aerospace giant. Terms weren't disclosed. The Dow Jones industrials were up 1.6%. The shares of Boeing closed at 199.52, move up 11.04 or 5.86%.GBP/USD gained traction in the early European session on Brexit headlines and climbed to the 1.3250 area. With trading action turning subdued the pair seems to have gone into a consolidation phase. Investors eye Omicron-related news. Sterling has gathered recovery momentum after dipping below 1.3200 on Monday and continues to edge higher in the early trading hours of the European session. Some inspiring Brexit headlines seem to be helping the British pound find demand but the pair could struggle to stretch higher if the UK decides to impose additional Omicron-related restrictions.

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