Market Talk
Concerns over global growth boosted safe haven currencies overnight and sent the US Treasury yields lower to 2016’s low of 1.6% but stabilization helped to temper worries over slowing global economic growth as a result of trade war between the world’s 2 largest economies. A recovery in the Chinese currency also helped to temper risk aversion.
Worries over global growth remained as gold traded at fresh multiyear highs as trade fears lingered. Gold jumped more than 2%, marking the first time since 2013 the metal traded above $1500. Safe haven JPY and CHF both strengthened during the day but moved away from their strongest point as risk aversion eased.
Australian dollar hit a low of 0.6678, which was the lowest since early 2009, but has managed to recover this morning to 0.6775. Aussie was dragged lower after RBNZ cut rate by a whopping 50bps yesterday. Market is expecting the RBA to follow suit at its next monetary meeting.
Sterling’s recent slide is not yet over as the chances Britain and the European Union part ways without a withdrawal deal have jumped again after arch-Brexiteer Boris Johnson took over as prime minister last month, a Reuters poll found. Johnson has repeatedly said he will take Britain out of the EU on Oct. 31 with or without a deal.
Commodity currencies (Aussie & CAD) are holding decent gains amid calmer risk sentiment following the PBOC fixing the yuan not as weak as estimated this morning. A better Chinese export data released this morning also help to ease worries over global economic growth. Chinese exports are keeping healthy pace despite the global growth slowdown and trade tariffs.
Chart Focus NZD/USD
Key Points
1. Sell NZD/USD recommendation
2. Sell NZD/USD at 0.6485. Stop at 0.6535 and profit target at 0.6380
3. Trade conflict and interest rate differential are against the NZ$
4. Price could fail to move above a key resistance point and MACD is strongly bearish
Fundamental Comment
1. Interest rate differential has increase in US$ favour after RBNZ cuts rate by 50bps yesterday
2. Trade conflict between US and China is likely to weigh on the NZ$
Technical Comments
1. Price could be capped by a strong resistance point
2. MACD is strongly bearish and hinting of another price decline
Key Levels
| Support | 0.6440 | 0.6410 | 0.6375 |
| Resistance | 0.6465 | 0.6495 | 0.6530 |
Technical Overview
USD/JPY – Price re-tested the low of 105.50 again last night but MACD and Stochastic both gave bullish divergence warnings. We think price may have formed a Double Bottom at 105.50 and we are waiting for a confirmation. A price move above 107.10 would confirm the Double Bottom chart pattern. Watch out for the confirmation
| Support | 105.90 | 105.50 | 105.25 |
| Resistance | 106.30 | 106.70 | 107.10 |
EUR/USD – Price has stay above the 20EMA and our view remains unchanged. As long as price can stay above the 20EMA, we see a push towards 1.1280. A move below 1.1150 would negate our bullish view. MACD is support our bullish view. MACD is bullish and is turning up from above the zero line.
| Support | 1.1185 | 1.1150 | 1.1115 |
| Resistance | 1.1225 | 1.1250 | 1.1280 |
GBP/USD – Price is moving in a sideways movement for the past 3 days from 1.2070 to 1.2210. 20EMA is not flat and neutral. If price moves above 1.2210, it is likely to move higher to 1.2360 while a break below 1.2070 is likely to lead to a test of an important support at 1.1185. While within the range, buy low sell high should be the strategy.
| Support | 1.2135 | 1.2100 | 1.2070 |
| Resistance | 1.2170 | 1.2210 | 1.2245 |
XAU/USD – Gold reached a high of 1510.33 overnight. There was no divergence warning from MACD when price reached a new high. Price could still head towards the next resistance point at 1522-1530. Stochastic is in the overbought zone but MACD is indicating a strong bullish trend at the moment.
| Support | 1494.30 | 1480.85 | 1469.90 |
| Resistance | 1510.35 | 1522.50 | 1530.00 |
USD/CHF – Our sell order was filled in the afternoon and last night, price reached our profit target. We are out with a 90 pips profit. Price has made a double bottom and MACD has given a bullish divergence warning. Price may have bottom out at 0.9690. If this low holds, price is likely to test the Fibonacci 50% correction point at 0.9840 over the next few days.
| Support | 0.9740 | 0.9705 | 0.9690 |
| Resistance | 0.9770 | 0.9810 | 0.9835 |
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