FX Commentary – Gold Fell For A Second Day

– Safe havens weakened as hopes that the world’s two largest economies could soon make substantial progress in de-escalating their protracted trade dispute. China insiders have also hinted that the upcoming trade talks in early October could lead to a breakthrough.

– The U.S. economy added 130,000 jobs in August, the Labor Department said on Friday. This marked the third straight monthly slowdown in jobs growth. Economists polled by Dow Jones had expected jobs to grow by 150,000 last month. Unemployment remained steady at a rate of 3.7% while wages grew more than expected

– Friday’s data and moves came as investors look for clues about the Federal Reserve’s next monetary policy move later this month. Market expectations for a 25 basis-point rate cut are at 91.2%, according the CME Group’s Fedwatch tool.

– Gold fell 1% on Friday as upbeat remarks from Federal Reserve Chair Jerome Powell and improved risk appetite offset a weaker-than-expected U.S. nonfarm payrolls report, putting bullion on track for a second straight weekly loss.

– The euro was on the back foot on Monday ahead of a ECB meeting later this week at which policy makers are expected to deliver new stimulus to bolster a flagging regional economy. Heightened expectations for an ECB easing come as other global central banks moved on a dovish policy path.

Chart Focus EURUSD
Key Points
1. Buy EUR/USD recommendation
2. Buy EUR/USD at 1.1025. Stop at 1.0980 and target at 1.1110.
3. A weak NFP and expectation of an interest rate cut by the Fed are both weighing of the US$
4. Price is supported at the Fibonacci 38% correction point with MACD turning up from the zero line

Fundamental Comment
1. US NFP declined for a 3rd consecutive month
2. Weak US payroll has increased expectation of a US interest rate cut

Technical Comments
1. Price is supported at the Fibonacci 38% correction point.
2. MACD is turning around from the zero line, hinting of further price upside.

Key Levels

Support 1.10051.09751.0945
Resistance 1.10551.10851.1120

Technical Overview

USD/JPY – Price broke above the range consolidation on Friday and has move higher to 107.22. A price test of 106.70 was successful as price managed to hold above this support. Price is likely to test the high of 107.22 again within the next couple of days. MACD is still bullish while Stochastic is near to the overbought zone.

Support 106.65106.35105.90
Resistance 107.25107.60108.05

AUD/USD – Our buy call from Sep 4 is still pending. Price has risen to a high of 0.6861, missing our profit target at 0.6870. MACD is starting to show divergence warning of a potential high approaching. We would recommend bringing stop higher to 0.6820 while keep profit target unchanged at 0.6870.

Support 0.68350.68050.6760
Resistance 0.68700.68950.6925

GBP/USD – Price rose to a high of 1.2352 on Friday but has been declining since.  We think this decline is a correction that should hold above 1.2020. Stochastic is declining after turning around near the overbought extreme. MACD is bullish and the fast line of MACD indicator is turning around near the zero line and this could be a hint of further price advance.

Support 1.22501.22101.2155
Resistance 1.23051.23501.2405

XAU/USD – Our view for Gold remains unchanged. We think price is going through a bigger correction. Price was capped at 1527.65 and had declined to a low near 1500. While Stochastic has reached the oversold extreme, Stochastic looks weak at the moment. MACD is bearish and 20EMA is bearish and pointing lower as well.

Support 1500.351486.101474.25
Resistance 1515.401525.901539.40

USD/SGD – Price fell to a low of 1.3783 on Friday’s night but our sell order was not filled. Price only reached a high of 1.3840. MACD is showing divergence warning of a possible low in place while Stochastic is rising at the moment. 20EMA is still decline and a steep gradient

Support 1.37801.37401.3705
Resistance 1.38201.38601.3895

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