Market Talk
-Chinese state media reported
Thursday that officials from the U.S. and China held a phone call Thursday
morning and agreed to meet in early October for another round of trade
negotiations after the Hang Seng index surged more than 4% on Wednesday
following the withdrawal of a controversial extradition bill.
– Safe-haven suffered on Wednesday as risk appetite improved and investors moved into riskier currencies. The Aussie dollar changed hands at $0.6800 after rising from the $0.676 handle in the previous session. JPY, CHF and Gold retreated overnight.
– The Canadian dollar spiked sharply after the Bank of Canada left interest rates on hold and sounded less dovish than the market had expected. BOC kept overnight rate unchanged at 1.75% and repeats its stance that “current degree of monetary policy stimulus remains appropriate”
– The British pound hovered around a one-week high on Thursday after lawmakers in U.K. defeated British Prime Minister Boris Johnson in parliament on Wednesday, moving to prevent him from taking the country out of the European Union without a formal agreement on October 31 and rejecting his snap election request two weeks before Brexit deadline.
– Tonight we have ADP Non-Farm data which could be a preview to Friday’s Non-Farm Payroll. Data is scheduled at 8.15pm tonight.
Chart Focus EUR/USD
Key Points
1. Sell EUR/USD recommendation
2. Sell EUR/USD at 1.1025. Stop at 1.1055 and target at 1.0930
3. Expectations of an ECB rate cut and interest rate differential are both in the US$ favour.
4. Price halted at a Fibonacci 50% correction point and momentum indicators have reached their peak and could be turning lower.
Fundamental Comment
1. Weak Euro zone PMI is leading to expectations of an ECB rate cut.
2. Interest rate differential is in the US$ favour
Technical Comments
1. Price correction had halted just before the Fibonacci 50% of the decline from 1.1163 to 1.0925
2. Stochastic and MACD are turning down after reaching an extreme point
Key Levels
| Support | 1.1005 | 1.0975 | 1.0925 |
| Resistance | 1.1045 | 1.1070 | 1.1115 |
Technical Overview
USD/JPY – Price tested the range high of 106.70 as risk receded following a resumption of trade talk. But price was unable to move above the range and had slipped back into the range. We are expecting the range consolidation to continue again for today. Stay aside for the moment.
| Support | 106.25 | 105.90 | 105.60 |
| Resistance | 106.70 | 106.95 | 107.30 |
USD/SGD – Price reached a low of 1.3820 this morning and this could be a temporary low. On the 4-hourly chart, a textbook Hammer candlestick pattern had appeared and the following candlestick was a long green candle. Stochastic has turned up from oversold extreme. We are expecting a price movement higher to 1.3920 in the next couple of days.
| Support | 1.3820 | 1.3800 | 1.3760 |
| Resistance | 1.3860 | 1.3890 | 1.3940 |
GBP/USD – Price has moved higher as risk of a hard Brexit receded. 20EMA is now bullish and pointing higher. Its gradient is steep as well. MACD is bullish but Stochastic has reached its overbought extreme point. There may be a small correction lower to 1.2160 before price test the high of 1.2310 again.
| Support | 1.2210 | 1.2160 | 1.2105 |
| Resistance | 1.2260 | 1.2310 | 1.2380 |
XAU/USD – Yesterday, we had raised stop higher to cost at 1524.40 and had kept profit target unchanged at 1550.20. Last night price reached a high of 1556.85 before tumbling lower. We bagged a big profit of $25.80 from this trade. Price is likely to consolidate further after reaching a new 6-year high at 1556.85. Stay aside for the next few days
| Support | 1541.58 | 1534.40 | 1526.55 |
| Resistance | 1548.55 | 1556.85 | 1564.30 |
AUD/USD – Our buy call yesterday was filled and price is currently at 0.6800. We would recommend bringing stop higher to 0.6760 and keeping profit target unchanged at 0.6870. Stochastic is into overbought extreme but Stochastic remains strong. MACD is bullish and rising.
| Support | 0.6795 | 0.6760 | 0.6735 |
| Resistance | 0.6825 | 0.6865 | 0.6895 |
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