FX Commentary 24 April 2019

Market Talk

– US Press Secretary Sanders said in a statement that Trade Rep Lighthizer and Treasury Secretary Mnuchin will be heading to Beijing for talks that will begin on April 30 to meet with Chinese Vice-Premier Liu He. This is likely to boost market sentiment with a possible trade deal agreement in sight.

– U.S. New Homes Sales for March was 30K more than the previous month and 45K above forecast, which was near to a 1.5 years high. These further eased concerns of a slowdown in the world’s biggest economy after strong Retail Sales data earlier in the week.

– The Canadian dollar declined to a four-week low of C$1.3443 against the US$ overnight amid expectations that the Bank of Canada (BoC) would forgo language pointing to further interest rate hikes. Canada’s central bank is expected to hold its benchmark interest rate steady at a policy meeting at 10pm tonight.

– Aussie CPI was below forecast and Aussie dollar slipped to a 6-week low of 0.7030 against the US$. RBA has recently opened the door towards monetary policy easing and today’s data is likely to reinforced market view of a Aussie rate cut

– Tonight at 10pm, there is BoC rate statement with press conference at 11.15pm. Tomorrow, Australia and New Zealand are both on holiday.

Chart Focus AUD/USD

Key Points

1. Sell AUD/USD recommendation

2. Sell AUD/USD at 0.7040. Stop at 0.7080 and target at 0.6950

3. Soft inflation data increases the prospect of RBA rate cut which is causing a widening of the US-AUD yields differential

4. Price broke a support with Stochastic and MACD showing potential for further decline.

Fundamental Comments

1. Soft inflation data reinforced the prospect of monetary easing by RBA

2. US-AUD bond yields spread is in favour of the US$

Technical Comments

1. Price broke a important support level at 0.7050

2. MACD and Stochastic are both declining and has potential to decline further

Key Levels

Support 0.7000 0.6980 0.6950
Resistance 0.7050 0.7080 0.7120

Technical Overview

USD/JPY – Our position from 18th April is still pending and price is not going anywhere. We would recommend closing the position at our entry of 111.90. We are expecting this pair to be quiet with an extended Japanese holiday next week. Stay on the side for now.

Support 111.65 111.25 108.85
Resistance 111.85 112.15 112.45

EUR/USD – Our short position was filled at 1.1250 when price went to a high of 1.1260. Our profit target at 1.1205 was filled last night. We made a gain of 45 pips on this short term trading sell call. There was a Hammer candlestick pattern made at the low and this could be a hint of a market bottom. MACD has divergence warning as well.

Support 1.1190 1.1160 1.1120
Resistance 1.1225 1.1260 1.1300

GBP/USD – Price broke a low of 1.2975 to reach a low 1.2925. 20EMA is declining and Stochastic is also declining. The trend is bearish and only a move above 1.3025 would negate this bearish view. A rally to 1.2975 would be a good location to short for a test of 1.2880.

Support 1.2920 1.2880 1.2830
Resistance 1.2945 1.2975 1.3025

XAU/USD – Yesterday, we lowered our stop to 1281.10 and target to 1269.50. Our profit target was filled last night at 1269.50. The low of 1266.10 was made with MACD and Stochastic showing bullish divergences. There is a possibility that the decline from 1310 is completed now and price could be moving higher in the next few days. We will watch for confirmation of this reversal.

Support 1266.10 1259.65 1253.55
Resistance 1272.80 1280.80 1289.30

USD/CAD – Price was trapped in a range of 1.3280 to 1.3400 for the past 3 weeks. Last night we saw a break of the upper boundary at 1.3400 and price reached a high of 1.3455. MACD is bullish and rising. Stochastic is still rising but is close to the overbought zone. 20EMA is rising and indicating a bullish trend. We think the rally can continue to 1.3500.

Support 1.3440 1.3400 1.3370
Resistance 1.3470 1.3505 1.3560

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