FX Commentary – Gold Nears A 6-Year High

Market Talk
– Sterling posted a brief rise against the dollar late on Tuesday after UK lawmakers approved a motion to seize control of parliamentary time to try to block Britain leaving the European Union without a deal, opening the door for a possible Brexit delay.
– Institute for Supply Management reported U.S. manufacturing activity at 49.1 compared to the previous month of 51.2.  US ISM manufacturing survey sinks to its lowest level since 2016 as trade dispute with China weighs on the US economy.
– Signs of a slowing economy could put pressure on the Federal Reserve to reverse the four rate hikes implemented in 2018, starting with a cut  at Sep 17-18 FOMC meeting. Expectations of a rate cut are weighing on the US$.
– Gold hovers near a more than six-year high on heightened fears of a global recession following weak U.S. data, the prolonged Sino-U.S. trade dispute which could weigh on global growth and Brexit uncertainties.
– Tonight at 10pm, Bank of Canada will announce its overnight rate. No change is expected from the central bank. Current overnight rate stands at 1.75%.

Chart Focus AUD/USD
Key Points

1. Buy AUD/USD recommendation
2. Buy AUD/USD at 0.6770. Stop at 0.6720 and target at 0.6870
3. Expectation of a US rate cut is weighing on the US$ after its economy went into a contraction.
4. Price has broken above a trendline with MACD turning bullish and moving higher.

Fundamental Comment
1. US ISM data showed manufacturing activities went into an economic contraction
2. Expectation of a US interest rate cut is weighing on the US$

Technical Comments
1. Price has broken above a downtrend line.
2. MACD has turned bullish and is turning up.

Key Levels

Support 0.67600.67350.6705
Resistance 0.67950.68200.6865

Technical Overview

USD/JPY – Price moved near to the range low, registering a low at 105.73. Price has bounced back higher above 106.00 again. We expect the range of 106.60 to 105.60 to continue again for today. Both Stochastic and MACD are flat and neutral at the moment.

Support 105.90105.60105.30
Resistance 106.35106.65106.95

EUR/USD – Price may have risen from the low but 20EMA is still bearish. Price is still below the Fibonacci 50% correction point of the decline from 1.1163 to 1.0925. Stochastic may be rising but MACD is still bearish. We remain bearish. We see a price test to 1.1040 but from this point a possible decline back to test the low again

Support 1.09651.09251.0880
Resistance 1.09851.10151.1050

GBP/USD – Price has climbed on hopes after opposition lawmakers managed to table a motion to block a no-deal Brexit. While price is above the 20EMA, there is a strong resistance at 1.2140. While Stochastic is rising, MACD is still bearish. We see price resistance at 1.2175 and we remain bearish.

Support 1.20901.20451.1985
Resistance 1.21351.21751.2230

XAU/USD – We had a buy call yesterday at 1524.40 which was filled when price declined to 1523.90. However price missed our target at 1550.20, reaching a high of 1550.02. Stochastic is turning down from the overbought extreme but MACD has turned bullish. We would recommend bringing stop higher to cost at 1524.40 while keeping target unchanged

Support 1534.401526.551516.50
Resistance 1546.551554.901564.30

AUD/JPY – Our stop was triggered at 71.55 last night. We have a loss of 15 pips. Stochastic is still rising but is about to reach the overbought zone. MACD has turned bullish and we think the uptrend can still continue higher to 72.50. 20EMA is pointing up and support our bullish view.

Support 71.8071.5571.25
Resistance 72.0572.4072.90

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