FX Commentary 5 April 2019

Market Talk

– Xinhua reported this morning that Chinese President Xi Jinping had said progress was being made and called for an early conclusion of negotiations. Liu He said new consensus was reached in text on trade deal. This followed Trump’s comment that a deal could be done in 6 weeks.

– US jobless claims dropped by 10k to 202k in the prior week, which was a 49-year low, pointing to sustained labour market strength and lifted sentiment. US$ was stronger as a result and Gold experienced a sharp drop on the release of this data. Investors will get a clearer picture of the U.S. labour market tonight, when the Non-Farm payrolls report will be announced at 8.30pm.

– Italy is reported to cut its 2019 GDP growth forecast to 0.1% from 1%. Germany leading economic institutes have cut 2019 German’s growth forecast to 0.8% from 1.9%. EUR/USD dropped as a result as growth forecasts prompted fears about weakening growth in the Euro zone.

– PM May is on a tight time line. She planned to have a deal approval by UK parliament to be submitted to EC’s Tusk to avoid a no deal Brexit on 12th April as well as avoid a long extension. European Council’s President Tusk is reported to offer UK a 12 month “flexible” extension to Brexit date.

– US Non-Farm Payroll will be announced at 8.30pm tonight. Canadian Employment data is also on the same time slot.

Chart Focus AUD/USD

Key Points

1. Buy AUD/USD recommendation

2. Buy AUD/USD at 0.7125. Stop at 0.7090 and target at 0.7200

3. A pause in USD rate hike and recent poor US data is weighing on the US$

4. Price has reversed from a support with bullish MACD and Stochastic turning higher

Fundamental Comments

1. A pause in USD rate hike is aiding the Australian dollar’s strength

2. Recent poor US data is weighing on the US$

Technical Comments

1. Price has broken above a declining trendline after a successful test of 0.7050 support.

2. MACD is bullish and is turning up together with Stochastic indicator.

Key Levels

Support 0.7120 0.7095 0.7060
Resistance 0.7150 0.7170 0.7205

Technical Overview

USD/JPY – We have called for 111.70 over the past 3 days and price has finally reached this level, going to a high of 111.79. MACD and Stochastic have given divergence warnings and we are wary of price forming a top. Tonight, there is an important US data which could determine this pair direction as well. We will wait for the data and get clue for the next directional movement.

Support 111.55 111.15 110.95
Resistance 111.90 112.15 112.50

EUR/USD – Price may have broken out of a Falling Wedge chart pattern but there was no traction in its advance. Instead price is moving sideways. MACD is flat and not indicative of any direction at the moment. Stochastic is in neutral zone. We will wait for better direction from NFP tonight.

Support 1.1200 1.1180 1.1140
Resistance 1.1250 1.1285 1.1315

GBP/USD – Price has dropped back below 1.3090 and negated our bullish view from yesterday. MACD is still bullish and Stochastic is into oversold extreme. 20EMA is flat and neutral at the moment. There is still a possibility of price moving higher but most likely to 1.3180. We remain bullish on this pair.

Support 1.3075 1.3035 1.2980
Resistance 1.3140 1.3185 1.3210

XAU/USD – The drop to 1280.60 came a day late. We had expected the drop the day before but it did not materialize. This could mean the decline is over and a possible rally ahead. However MACD is weak and has not turned bullish as yet. Tonight NFP could also provide a direction for gold. We will wait till tonight to get a better clue on Gold.

Support 1280.60 1276.40 1274.60
Resistance 1290.60 1296.60 1299.80

USD/CAD – Our buy call yesterday was not filled as price only reached a low of 1.3343. Price has gone up to 1.3373. Range was narrow for yesterday as market could be waiting for Canadian Employment data tonight at 8.30pm. Tonight data is likely to determine Canadian next direction. Watch the data tonight for clue.

Support 1.3330 1.3295 1.3250
Resistance 1.3370 1.3420 1.3450

Related Posts

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.