Market Talk
– US Treasury Secretary Steven Mnuchin told CNBC that a trip to Beijing to restart trade negotiations has not been scheduled as yet lowering hope of a speedy resolution to the U.S.-China trade war. There are growing worries the Sino-U.S. trade war was fast morphing into a technology cold war between the world’s two largest economies
– Restrictions on Chinese telecom giant Huawei have led China to rethink its entire economic relationship with the U.S., according to a report from The South China Morning Post. China is considering dropping purchases of natural gas from the U.S.
– Minutes of the U.S. Federal Reserve’s last meeting out on Wednesday underlined its readiness to be patient on policy “for some time” given the uncertain global outlook. There was no surprise from what was previously disclosed by Fed’s Chairman Powell.
– Sterling fell within a whisker of a new low for 2019 after PM May’s last gamble on getting her Brexit withdrawal bill through parliament backfired. May’s proposal have reportedly angered her own party’s lawmakers to an extent that they want her immediate resignation.
– There is German Flash PMI at 3.30pm today and Ifo business climate at 4pm. US PMI is at 9.45pm and New Home Sales is at 10pm.
Chart Focus AUD/JPY
Key Points
1. Trading sell AUD/JPY recommendation
2. Sell AUD/JPY at 75.90. Stop at 76.30 and target at 75.15
3. Sino-US trade conflict will weigh on Aussie dollar and favour safe haven JPY
4. Bearish momentum and a Descending Triangle are hint of another price decline.
Fundamental Comments
1. Sino-US trade conflict will weigh on Aussie dollar, which is a proxy for the Chinese currency Yuan
2. Sino-US trade conflict will increase risk aversion and favour safe haven JPY.
Technical Comments
1. A possible Descending Triangle is in the process of forming, hinting of another price decline.
2. MACD is bearish and is turning lower. Stochastic is turning lower as well.
Key Levels
| Support | 75.60 | 75.30 | 74.80 |
| Resistance | 75.90 | 76.20 | 76.60 |
Technical Overview
USD/JPY – Price is currently sitting on the 20EMA support at 110.20. Stochastic is moving lower but has not yet reached the oversold extreme zone. However MACD is still bullish and showing a bullish MACD hook. Price can go in either direction at this current location. We would recommend a wait and see approach on the next price reaction at 20EMA point.
| Support | 110.20 | 109.95 | 109.50 |
| Resistance | 110.65 | 110.95 | 111.25 |
EUR/USD – Price is breaking below a 2-day low support at 1.1135. MACD is bearish and is turning lower. Stochastic has turned lower and is heading back into oversold extreme again. This is a hint of a strong bearish trend. Our view remains the same as yesterday and we are looking for a price test of 1.1100.
| Support | 1.1135 | 1.1105 | 1.1090 |
| Resistance | 1.1170 | 1.1195 | 1.1225 |
GBP/USD – Sterling continued its decline overnight into this morning. Stochastic is into the oversold extreme but MACD is strongly bearish and its decline and has yet to show a divergence warning. 20EMA is bearish and its gradient is steep. This is a hint of a strong bearish trend.
| Support | 1.2595 | 1.2560 | 1.2525 |
| Resistance | 1.2620 | 1.2685 | 1.2730 |
XAU/USD – Our view remains unchanged from yesterday. We believe the rally had ended at 1303 and price is likely to test the previous low at 1266. 20EMA has capped price advance overnight at 1277.30 and as long as this resistance holds, we could see 1266 within the next 48 hours. MACD is bearish and Stochastic is turning lower.
| Support | 1269.40 | 1266.20 | 1259.50 |
| Resistance | 1275.30 | 1280.60 | 1288.60 |
CAD/JPY – Yesterday our sell call was filled and price came within a whisker of stop loss order at 82.65. Price has declined lower to current rate of 81.95. We would recommend bring stop lower to 82.20 and keeping profit target at 81.70. Stochastic is moving lower but MACD is still bullish.
| Support | 81.70 | 81.45 | 81.10 |
| Resistance | 82.15 | 82.55 | 82.95 |
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