Markets Neutral After Fed's Minutes

U.S. Dollar Index (USDX)

The dollar index showed a neutral reaction to the minutes released yesterday, as other readings showed that U.S. manufacturing activity contracted for a second straight month in December.

Sentiment towards the dollar was dented in recent sessions by the possibility of a U.S. recession, as well as expectations of smaller near-term hikes in interest rates. Markets are positioning for a 25 basis point hike by the Fed in February.

Technically, the chart remains committed to the downtrend despite the horizontal fluctuations. 20 periods moving average is still above the current price level and signals further decline. RSI and MACD show an increase in volatility.

Pivot Point: 104.20

SUPPORT	RESISTANCE
104.00	104.40
103.70	104.60
103.30	105.00

Japanese Yen (USDJPY)

The Bank of Japan is putting more emphasis on an inflation gauge that excludes fuel costs and will likely raise its projections for the index’s growth in quarterly forecasts due this month, said three sources familiar with its thinking.

The upgrade would underscore the central bank’s growing conviction that robust domestic demand will allow firms to raise prices and keep inflation sustainably around its 2% target in coming years.

The yen rose 0.4% to 132.13 against the greenback, sticking close to a seven-month high hit earlier this week. Still, the yen has been at the edge since early December after the BoJ unexpectedly struck a hawkish tone in its final meeting for 2022. Markets are pricing in the possibility of the bank eventually reversing its ultra-loose monetary policy later this year.

Technically, the pair remains in the declining channel drawn on the daily chart while the hourly chart shows possibility of fluctuations between 132.15 and 132.70.

Pivot Point: 132.30

SUPPORT	RESISTANCE
132.05	132.70
131.35	132.80
131.00	133.15

Spot Gold (XAUUSD)

Gold prices rose to a near seven-month high on Thursday after the minutes of the Federal Reserve’s December meeting showed that policymakers unanimously supported raising interest rates at a slower pace, offering some relief to metal markets battered by rising borrowing costs.

The prospect of smaller interest rate hikes by the Fed weighed on the dollar, fuelling more bets that the greenback had peaked after a stellar run in 2022, and is likely to weaken further in the coming months. Spot gold rose slightly to $1,855.45 before declining to $1,850 per ounce.

Spot gold daily chart shows a continuation of the uptrend while the hourly chart shows fluctuations between 1,840 and 1,850. On the hourly chart, RSI shows overbuying and signals a possibility of a decline to relieve the buying pressure, meanwhile, the MACD intersects with the moving average and signals a divergence and a slight decline.

Pivot Point: 1,850

SUPPORT	RESISTANCE
1,835	1,855
1,830	1,860
1,825	1,865

WTI Futures (CL-OIL)

Oil prices rose on Thursday following a series of steep declines as investors looked to a potential slowdown in U.S. interest rate hikes, with the focus now turning to weekly inventory data to gauge the strength of year-end oil consumption.

Crude prices lost between 4% and 7% in the first two trading days of 2023, as rising COVID-19 cases in China and a warning of a potential recession from the International Monetary Fund drummed up fears of laggard demand in the coming months.

Brent oil futures rose 0.8% to $78.68 a barrel, while West Texas Intermediate crude futures rose 1.3% to $73.75 a barrel.

American Petroleum Institute data showed on Wednesday that U.S. crude inventories rose by 3.3 million barrels in the last week of December. But the bulk of this increase appeared to be driven by continued releases from the Strategic Petroleum Reserve, indicating that underlying fuel consumption remained robust through the holiday season.