Market Talk
– Safe havens slipped on Thursday as global tensions including the U.S.-China trade conflict showed signs of thawing, and risk of a hard Brexit receded, bolstering investor confidence and reducing demand for safe-haven currencies.
– Sterling continued its rally after British lawmakers approved legislation on Wednesday to extend the Brexit deadline for the third time and rejected Prime Minister Boris Johnson’s motion to hold a snap election.
– Gold slumped more than 2% as stronger-than-expected U.S. economic data and hopes of a thaw in the U.S.-China trade war boosted Treasury yields and soothed fears of an economic slowdown, driving a shift back into riskier assets.
– Group of 10 currencies will be driven by the U.S.-China trade war and actions by the U.S. Federal Reserve in coming months, while economic developments in other parts of the world are likely to take second stage, a Reuters poll found.
– Payroll processor ADP said U.S. companies hired 195,000 workers in August, which exceeded the 158,000-worker increase that analysts polled by Reuters had forecast. Traders and analysts await the government’s monthly payrolls report due at 8:30 p.m. tonight as a confirmation of resilience in the labor market.
Chart Focus USD/SGD
Key Points
1. Sell USD/SGD recommendation
2. Sell USD/SGD at 1.3860. Stop at 1.3895 and target at 1.3805
3. Expectation of a rate cut and poor economic data are weighing on the US$
4. Price is capped at the declining 20EMA and Fibonacci 38% point with momentum indicators hinting of further price decline
Fundamental Comment
1. Expectation of a FOMC rate cut has weakened the US$
2. ISM manufacturing data showed a contraction and a reading below 50.
Technical Comments
1. Price advance is likely to be halted by the declining 20EMA and Fibonacci 38% correction.
2. MACD is bearish and Stochastic is weak. Both are hinting of further price decline.
Key Levels
| Support | 1.3825 | 1.3795 | 1.3760 |
| Resistance | 1.3860 | 1.3895 | 1.3915 |
Technical Overview
USD/JPY – Price broke above the range consolidation high of 106.70 and has reached a high of 107.22. MACD has turned bullish and 20EMA is pointing higher. We may see price going higher to 108.00 in the next few days if NFP does not change the outlook.
| Support | 106.65 | 106.35 | 105.90 |
| Resistance | 107.30 | 107.75 | 108.05 |
EUR/USD – We had a sell call but we were stopped out when price reached a high of 1.1083 overnight. Stochastic may be declining but MACD is still bullish and there could be a possible bullish crossover. We think 20EMA support at 1.1015 will be important. A break will bring price lower to 1.0925. If the support holds, price can test the 1.1085 high again.
| Support | 1.1015 | 1.0975 | 1.0940 |
| Resistance | 1.1045 | 1.1085 | 1.1115 |
GBP/USD – Price broke a recent high at 1.2310 and had managed to stay above this point. MACD is bullish but Stochastic is into its overbought extreme. 20EMA is pointing higher and its gradient is steep. This is a hint of a strong bullish trend. A dip to 1.2250 would offer a good buying opportunity for 1.2400
| Support | 1.2310 | 1.2265 | 1.2205 |
| Resistance | 1.2350 | 1.2405 | 1.2450 |
XAU/USD – After reaching a 6-year high, price tumbled to 1505.85 in a correction. We do not think this correction is over as yet. We see a bigger consolidation ahead. Price is likely to be capped at the 20EMA resistance at 1525.80 for another test below 1500 in the next few days. Stochastic remains weak and MACD is still bearish.
| Support | 1513.80 | 1505.80 | 1492.20 |
| Resistance | 1519.85 | 1525.90 | 1539.40 |
AUD/USD – We had a buy call on this pair on 4 Sep and price has reached 0.6825 overnight. Stochastic is into the overbought extreme and is turning lower. MACD while bullish is also declining in a correction. We remain bullish but see a correction. We would recommend bringing stop higher to 0.6780 while keep profit target at 0.6870.
| Support | 0.6795 | 0.6760 | 0.6735 |
| Resistance | 0.6825 | 0.6865 | 0.6895 |
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