Daily Market Report - Tuesday, Dec 20, 2022


The Japanese Yen remains one of the strongest currency pairs of this week. USD/JPY fell 3% to its 4-month-low on Tuesday following the Bank of Japan expanded its band on yield curve control to 0.50%. As of this writing, USDJPY trades below 132.50. The strong momentum lifted after the Bank of Japan surprised markets Tuesday morning by increasing the upper limit of its tolerance band on 10-year government bonds to 0.5% from 0.25%. The central bank also kept its ultra-low benchmark interest rates unchanged, as widely expected.

“Through these steps, the BOJ will aim to achieve its price target by enhancing the sustainability of monetary easing under this framework,” BOJ said in a statement.


Global stocks and US futures remain under pressure. The strong bearish momentum is fueled by the enduring pressure from expectations of an aggressive interest rate hike from the European Central Bank and Federal Reserve. Investors are also concerned that the central bank's aggressive rate hikes may lead to a recession. "Based on the information that we have available today, that predicates another 50 basis point rise at our next meeting and possibly at the one after that, and possibly thereafter.” - Lagarde said last week.


Crude oil futures hold steady while the upside momentum is limited due to the Covid cases rising rapidly in China. Moving ahead, global cues such as the FED's hawkish stance, trends in dollar strength and US crude inventory report are expected to drive investors' sentiments in the remaining days of this week.


In the currency market, the U.S. Dollar Currency Index tracks the greenback against six major currencies struggling to find the upside momentum. Meanwhile, EURUSD hovers near the session highs supported by hawkish comments from European Central Bank policymaker Peter Kazimir. The inflation outlook requires the European Central Bank to continue with its strong policy response, and interest rates will need to go into "restrictive" territory and stay there longer - Peter Kazimir said.


The precious metal climbs to a fresh weekly high of $1807 on Tuesday boosted by the weak US dollar. Moving ahead to the North American session, gold traders should closely monitor the release of US housing data.

Economic Outlook

On the data front, the Reserve Bank of Australia released the last meeting minutes on Tuesday Morning. "Members emphasised that the Board's priority is to re-establish low inflation and return inflation to the 2 to 3 per cent target over time." – the minutes said.

Moving ahead today, the important events to watch:

US – Building permits and housing starts: GMT – 13.30

Canada – Retail sales: GMT – 13.30

Coronavirus update:

Worldwide, more than 653 million people have been confirmed infected and more than 6.66 million have died. The United States has confirmed over 99.8 million cases and has had more than 1.08 million deaths from COVID-19, the highest total in the world.

Technical Outlook and Review

For today, the key resistance is located above 1.0670, a break above this level will confirm a possible move to 1.0700/30. On the downside, any meaningful pullback now seems to find some support near the 1.0600 and 1.0570 zones.

The important levels to watch for today: Support- 1.0600 and 1.0570 Resistance- 1.0670 and 1.0700.

GOLD: The metal rebounded back to above 1805 during the European session. For today, the next resistance is located around 1810, a break above this level will confirm a possible move to 1818/20. On the flip side, any break below 1800 then the next support near 1795 followed by the 1790 level.

The important levels to watch for today: Support- 1800 and 1790 Resistance- 1810 and 1818.

Quote of the day - If your goal is to trade like a professional and be a consistent winner, then you must start from the premise that the solutions are in your mind and not in the market. Mark Douglas.

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