FX Commentary 15 April 2019

Market Talk

– The US$ ended the week at its lowest against the euro in more than two weeks as risk appetite was whetted by better-than-expected data from China that helped boost confidence about the health of the world economy.

– Investors cheered Chinese data showing exports rebounded in March to a five-month high while new bank loans jumped by far more than expected. Total bank lending in the first three months of 2019 hit a record quarterly tally of 5.81 trillion yuan.

– U.S. Treasury Secretary Steven Mnuchin said on Saturday a U.S.-China trade agreement would go “way beyond” previous efforts to open China’s markets to U.S. companies and hoped that the two sides were “close to the final round” of negotiations.

– Group of 20 industrialized nations have called for a trade truce in a sign that world leaders are prepared to take action to curtail risks of a global economic slowdown. Demand for safe haven assets eased. JPY was trading at its lowest level since 5 Mar 2019 while Aussie dollar surged to a 7-week high at 0.7190

– No major data for tonight but tomorrow morning at 9.30am, there is RBA Monetary Policy Meeting minutes to watch out for.

Chart Focus Gold

Key Points

1. Sell Gold recommendation

2. Sell Gold at 1289.50. Stop at 1295.80 and target at 1271.50

3. Cost of carry does not favour Gold while an increase in risk appetite weighs on Gold

4. A potential 3-wave correction could be unfolding with MACD confirming this down move

Fundamental Comments

1. An increase in risk appetite has moved interest away from Gold

2. Cost of carry does not favour Gold

Technical Comments

1. A potential 3-wave correction could be unfolding after failure to move above 1311.

2. MACD has turned bearish and could be moving lower, bring price down with it.

Key Levels

Support 1286.80 1280.20 1276.30
Resistance 1291.20 1298.50 1304.50

Technical Overview

USD/JPY – Price moved to a high of 112.09 this morning and could be moving lower to consolidate after Stochastic reached its overbought extreme. MACD and 20EMA are both bullish and rising. If the consolidation can hold above the 20EMA point of 111.70, there could be another test of this morning’s high at 112.09.

Support 111.80 111.40 111.15
Resistance 112.15 112.45 112.65

EUR/USD – Price has moved above 1.1315 but we think there could be potential to 1.1330 to 1.1345 as MACD is still bullish and rising and has not shown any divergence warning. Stochastic is close to the overbought extreme but not deep into it. 20EMA is still bullish and price is above this 20EMA. A move below 1.1250 would negate our bullish view.

Support 1.1285 1.1250 1.1210
Resistance 1.1320 1.1345 1.1390

GBP/USD – Price has been capped by 1.3125 on four occasions in the past 8 trading days and the low has been rising. This resistance could be the point to watch as a move above could trigger a move to 1.3225. MACD is flat and neutral at the moment. Stochastic is in the middle of its range. Watch 1.3125 or 1.3045 for direction clue. We prefer 1.3125 and a movement higher.

Support 1.3070 1.3045 1.3010
Resistance 1.3100 1.3125 1.3170

AUD/USD – Our buy call was not filled as price dipped to a low of 0.7123, missing our buy order at 0.7120. Price has moved higher to 0.7190. While price reached this high, both MACD and Stochastic have not followed price in making higher high, resulting in divergence warnings. Price could be moving lower to 0.7150 and this support is important and will determine the next price direction. Watch for the reaction at 0.7150.

Support 0.7150 0.7120 0.7085
Resistance 0.7190 0.7220 0.7245

USD/SGD – On Friday, we recommended bringing stop loss higher to cost at 1.3530. The stop was triggered and we are out with no loss. Price has failed to reach its target at 1.3600 but instead reversed course from 1.3578. The downtrend could be on its way towards the previous low at 1.3498. MACD has turned bearish but Stochastic is into oversold extreme.

Support 1.3510 1.3485 1.3450
Resistance 1.3535 1.3575 1.3615

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