Month: August 2019

FX Commentary – Yield Curve Widen Further

Nicholas

Market Talk

– The dollar held gains against the safe-haven yen on Thursday as ebbing recession worries soothed markets after earlier volatility although the pound nursed its losses as investors became increasingly worried about a hard Brexit.

– Britain’s Queen Elizabeth gave the nod to Prime Minister Boris Johnson’s plan to suspend parliament, till Oct 14, leaving opposition lawmakers little time to pass legalization preventing a no-deal Brexit. Chances of a hard Brexit has increased sending Sterling to a six-day low on Wednesday

– Currencies showed little reaction after U.S. Treasury Secretary Steven Mnuchin said he has no intention of intervening in the dollar right now, according to Bloomberg. Traders remain concerned about U.S. currency policy because Trump had complained that the dollar was too strong.

– Investors continue to monitor U.S. Treasury yields. The closely-watched yield spread between the 10-year Treasury note and 2-year note widened further on Wednesday amid developments on the U.S.-China trade front, with the tariff war between the two economic powerhouses recently escalating and further dampening sentiment and raising concerns over the global economic outlook.

– Disappointing data sent NZD and Aussie falling this morning. New Zealand’s August Business Confidence fell to -52.3 vs prior month of -44.3. Australian Private Capital Expenditure for Q2 came in at -0.5% against expectation of +0.4%.

Chart Focus AUD/USD
Key Points

1. Sell AUD/USD recommendation
2. Sell AUD/USD at 0.6725. Stop at 0.6755 and target at 0.6675
3. Poor Aussie data and interest rate differential are in the US$ favour
4. Price is on a declining downtrend and MACD is hinting of more price decline.

Fundamental Comment

1. Poor Aussie Private Capital Expenditure for Q2 is implying a poor economic outlook
2. Interest rate differential is in favour of the US$

Technical Comments

1. Price is on a declining trend channel
2. MACD has turned bearish and is moving lower

Key Levels

Support 0.67200.66950.6675
Resistance 0.67500.67700.6795

Technical Overview

USD/JPY – The sideways consolidation continued yesterday and we are expecting this consolidation to continue again today. The range is smaller today. The two boundaries are at 106.20 and 105.60. MACD is flat and neutral near the zero line. Stochastic is flat in the middle of its range.

Support 105.50105.10104.80
Resistance 105.95106.30106.65

EUR/USD – Price moved in a 26 pips range last night. Although price broke the support at 1.1080, the movement was halted 1.1072. We continue to favour a movement to 1.1050 but Stochastic is turning up. MACD is still bearish and there is still a possibility of price going down to 1.1050. A movement above 1.1120 would negate our bearish view.

Support 1.10501.10251.0995
Resistance 1.10901.11201.1140

GBP/USD – Our sell order was filled when Sterling reached a high of 1.2284. Our profit target at 1.2205 was reached on news of an extension of UK parliament recess. Sterling went as low as 1.2156 before rebounding back to 1.2251. We are expecting price to move lower again today. We see price resistance at 1.2225 and a price test of 1.2160 later today.

Support 1.21951.21501.2110
Resistance 1.22251.22551.2290

EUR/AUD – Price has moved above a recent high at 1.6460. Stochastic is rising and has not yet reached the overbought zone. MACD has turned bullish and is still rising. Momentum indicators are hinting of more price upside. We think price can go higher to the next price resistance at 1.6580 from current 1.6480 level. A price movement below 1.6420 would negate our bullish view.

Support 1.64651.64101.6360
Resistance 1.65151.65451.6580

XAU/USD – Price moved in a sideways range of 1531 to 1547 overnight. We view this sideways movement as part of a 3 parts correction process. One more dip to 20EMA at 1533 could be an opportunity to buy with price expected to test 1554 in the next 48 hours. MACD is still bullish and could be turning up soon. A move below 1523 would negate our bullish view.

Support 1531.451520.101509.10
Resistance 1540.701554.901561.30

Related Posts


CFD Trading – DBS & ThaiBev

Nicholas

DBS Stock Code D05.SGX

Outlook
Price is currently sitting of a previous low support of $24.00. Price could go either way but there is a MACD bullish divergence warning and we think price could be near to a possible low and reversal. On 6th of August when price made a low of $24.80, MACD had a strong momentum low but when price make a lower low at $24.00, MACD’s low on 26th August was higher than the low on 6th August. Yesterday, price managed to stay above the low of the 26th Aug low, which was a good sign. If price can move above $24.37, the price rally could accelerate.

Strategy

$24.15                Buy
$25.20                Price Target
$23.20                Risk Management Stop
3 weeks              Trade Duration

ThaiBev Stock Code Y92.SGX

Outlook
Price reached a high of $0.96 on 22nd Aug and has been on a decline since that day. Price is currently near to the Conversion line at $0.90 which is providing support at the moment. Further below, Base line is another support at $0.875 and there is another previous high support at $0.865. The edge of the cloud at $0.855 is another support area. Price is in a bullish trend at the moment as price is above the cloud. Base and Conversion lines are both below price and both lines had a bullish crossover. We think supports at $0.875 to $0.865 are able to support for another price push higher to $0.960

Strategy

$0.870                Buy
$0.960                Price Target
$0.840                Risk Management Stop
3 weeks              Trade Duration

Related Posts

FX Commentary – Back To Safe Haven

Nicholas

– Pressure was back on the US$ on Wednesday, as nagging fears the Sino-U.S. trade war will drag on and severely hurt US economic growth led to yet another slide in U.S. bond yields. US data did not help either. U.S. consumer confidence inched down in August and growth in home prices hit its slowest pace in nearly seven years.

– Safe-haven Yen, Swiss Franc and Gold got a boost as falls in long-term Treasury yields deepened the inversion of the U.S. yield curve, a phenomenon that has presaged several past U.S. recessions. Gold rose more than 1% as fears of a possible recession gripped investors following an inversion of the yield curve and disappointing U.S. economic data as well as an ongoing U.S.-China trade dispute.

– The euro was flat at $1.1091 after inching down 0.1% on Tuesday when it had managed to recoup some of the intraday losses on hopes that a snap election in Italy could be avoided. Italian turmoil and euro zone dim economic views are likely to weigh on the single currency.

– The British pound rose on Tuesday as opposition parties vowed to try and pass a law to prevent a no-deal Brexit at the end of October, encouraging traders to buy sterling even though most fear the country is headed for a disorderly exit from the EU.

– No major data for tonight. Tomorrow morning at 9am and 9.30am there are ANZ Business Confidence and Australia Private Capital Expenditure data respectively.

Chart Focus GBP/USD
Key Points

1. Sell GBP/USD recommendation
2. Sell GBP/USD at 1.2275. Stop at 1.2325 and target 1.2205
3. Fear of a disorderly exit from EU and interest rate differential are in the US$ favour
4. Price has made a Double Top chart pattern with MACD divergence warning

Fundamental Comment

1. Fear of a disorderly exit from the EU is weighing on the Sterling
2. Interest rate differential is in favour of the US$

Technical Comments

1. Price has made a double top
2. Stochastic and MACD are both warning of a divergence

Key Levels

Support 1.22451.21951.2145
Resistance 1.22751.23101.2365

Technical Overview

USD/JPY – Price bounced higher to 106.40 after touching a low of 104.40 on early Monday morning. MACD failed to turn bullish and Stochastic is about to have a bearish crossover. We are expecting a price pullback 105.30 if 20EMA continues to cap price advance.

Support 105.50105.10104.80
Resistance 105.95106.30106.65

EUR/USD – Price has stabilized but still looks weak. Price could slide lower to 1.1080. MACD is still bearish but the histogram is weak and neutral at the moment. Stochastic is still moving lower. 20EMA is pointing lower.  A break of 1.1080 would see price test the low of 1.1050 again.

Support 1.10801.10501.1025
Resistance 1.11151.11401.1170

AUD/USD – After reaching a high of 0.6788, price has been on a decline. The decline has brought price to 0.6738 but we think it can continue to move lower to 0.6695. Stochastic is moving lower and MACD has turned bearish. Both momentum indicators are hinting of more price decline. A move above 0.6790 would negate our bearish view

Support 0.67200.66900.6675
Resistance 0.67450.67750.6810

NZD/USD – Our buy call on Monday was stopped out at 0.6335 when price reached a low of 0.6325 this morning. A possible bullish divergence could be forming on both the Stochastic indicator as well as the MACD indicator. Price is also at the lower end of its trend channel. We will wait for confirmation signals

Support 0.63250.63000.6285
Resistance 0.63500.63700.6395

XAU/USD – Yesterday, we had a buy call but the price dip missed our entry price by $0.60. Price is now higher but we do not think the uptrend could continue. This rally may be part of a 3 parts correction process and we are expecting another decline to 1526. MACD is bullish but is weaker than yesterday. Stochastic is moving higher but also weaker than yesterday

Support 1531.451520.101509.10
Resistance 1540.701554.901561.30

Related Posts


CFD Indices – Dow Slipped On Yield Curve Inversion

Shueh Ting Wong

Market News

  • Stocks drifted lower on Tuesday, weighed down by financial stocks as a deepening of the Treasury yield curve inversion raised recession worries and uncertainty over any progress in the intensified trade negotiations.
  • Dow Jones index dropped 120 points, closing at 25,777. Both S&P 500 index and Nasdaq Composite index lost more than 0.3%, declining 9 points and 26 points respectively. Bank shares fell broadly. Bank of America fell 1.1% and Citigroup dropped 1.6%.
  • The U.S. Treasury yield inverted again, rekindling fears of a looming recession that spurred a sell-off on Wall Street. The spread between the 10- and 2-year Treasury bond yields fell to negative 5 basis points, its lowest level since 2007.

Market Views

  • Stocks in Asia were mixed on Wednesday morning, following the overnight sell-off in Wall Street, though deeper worries about the global economy are likely to keep a lid on sentiment in the Asian market. Nikkei 225 index was up 30 points but Hang Seng index fell 16 points.
  • On the trade war front side, China’s foreign ministry spokesman, claimed on Tuesday that they had not received any recent telephone call from Washington after Trump said on Monday that Chinese officials had contacted US counterparts and offered to return to the negotiating table to strike a trade deal.

Dow Jones Index
(CFD Symbol: US30)

Trend :
Recommendation :
Last : 25,839
Target price:
Protective stop:

Outlook

The index’s rebound was capped by the 50EMA and the mid-June low resistance level, marking the end of the corrective rally. A bearish long red candlestick followed after a spinning top candlestick formed on last Thursday, reinforcing the bearish trend but the index managed to stay above recent lows. Price is likely to move in sideway manner in between the 50EMA and support at 25,070. A move below 25,070 would target the previous low point at 24,603. Stochastic could be turning down soon and MACD is still bearish at the moment

Trading Idea

Wait for better trading idea

Hang Seng Index
(CFD Symbol: HK50)

Trend :
Recommendation :
Last : 25,701
Target price:
Protective stop:

Outlook

The declining 20EMA is acting as a resistance, capping price’s rebound and marking the end of the consolidation. We expect the index to trend lower and test its previous low at 24,941 again with the steep slope of the 20EMA hinting at the strong downtrend. A move below 24,941 could bring the index lower to 23,890. Stochastic could turn down soon and MACD is still bearish.

Trading Idea

Wait for better trading idea.

Nasdaq 100 Index
(CFD Symbol: USTec)

Trend :
Recommendation :
Last : 7582
Target price :
Protective stop:

Outlook

Price could not break above its previous high of 7780 and has declined lower to 7355. However, price has not been able to break below this low point. A previous attempt was also unsuccessful. Price is likely to move with the resistance at 7780 and support at 7355.  Stochastic is turning down and MACD is still bearish at the moment but the slow line has been climbing higher. Momentum indicators are mixed at the moment.

Trading Idea

Wait for better trading idea

S&P 500 Index
(CFD Symbol: US500)

Trend :
Recommendation :
Last : 2874
Target price:
Protective stop :

Outlook

The index was capped by its previous high resistance level at 2940 but is supported by the low of 2810. It is likely to move in the range between 2940 and 2810. The 50EMA is falling at the moment, hinting of a declining trend. Price is likely to test the low at 2810 again. A break of 2810 could bring price lower to 2775. Stochastic has turned down while MACD is still bearish with both of the MACD’s lines below the zero line.

Trading Idea

Wait for better trading idea.

Related Posts

Dow Jones Index On A Bollinger Bands Breakout

Nicholas
US30 on 1H chart

The US stock market is about to open. On the hourly US30(Dow Jones Index) there is a breakout of the Bollinger Bands on the upper band. At least for the next few hours, this index could be heading higher to 26,300 to 26,400 from current breakout of 26,023.

MACD is bullish with both its lines above the Zero line. Both lines are moving higher as well. MACD is supportive of further price advance.