Market Talk
– The British pound traded near a five-month high against the dollar and the euro after British Prime Minister Boris Johnson and European Union leaders agreed a new deal for Britain to exit the bloc, averting a disorderly exit at the end of Oct 31.
– Johnson still needs to sell this agreement to skeptical lawmakers when parliament sits on Saturday for a meaningful vote. Northern Ireland’s Democratic Unionist Party said it remained opposed to the proposed agreement, making it uncertain if the deal will be able to get passed the U.K. Parliament.
– “Assuming we clear the parliamentary hurdle, the pound has room to rise further because there are a lot of shorts to be unwound,” said Takuya Kanda, general manager of the research department at Gaitame.com Research Institute in Tokyo. “But after that, people will start to question whether this is really good for Britain’s economy, and further gains in sterling could become difficult.”
– Gold rose on Thursday as weak US industrial production data from the United States rekindled fears of an economic slowdown and as concerns surfaced over possible risks to a new Brexit deal.
– China reported 3Q GDP number showing the Chinese economy grew 6.0% from a year ago, which was weaker than market expectation of 6.1%. It was the slowest growth pace in the past 27 years, as trade dispute with the US over the past 15 months weighed on the Chinese economy.
Chart Focus USD/CAD
Key Points
1. Buy USD/CAD recommendation
2. Buy USD/CAD at 1.3135. Stop at 1.3105 and target at 1.3210
3. A poor Canadian job data and interest rate differential are both in the US dollar favour
4. A reversal candlestick pattern coupled with momentum indicators hinting of a low are signs of a possible price rally.
Fundamental Comments
1. Canadian job data reported on Thursday was very poor compared to expectation
2. Interest rate differential is still in the US dollar favour
Technical Comments
1. An inverted Hammer candlestick pattern is hinting of a possible price reversal
2. MACD showed bullish divergence and Stochastic is deep into oversold extreme
Key Levels
| Support | 1.3130 | 1.3100 | 1.3065 |
| Resistance | 1.3160 | 1.3195 | 1.3230 |
Technical Overview
USD/JPY – Our sell call from Wednesday is still pending. Price is down to the 20EMA support at 108.55 and a break will likely see price going lower to 107.95. A move higher to 108.65 will likely see price test the high of 108.95 again
| Support | 108.45 | 108.15 | 107.95 |
| Resistance | 108.70 | 108.95 | 109.60 |
EUR/USD – We were expecting price to be capped at 1.1105 and a pullback to 1.1040. However price has move above 1.1105 to reach a high of 1.1140. Stochastic is still rising but is in the overbought extreme. MACD is bullish. We are expecting price to be supported at 1.1095 for another rally to 1.1190.
| Support | 1.1095 | 1.1060 | 1.1025 |
| Resistance | 1.1140 | 1.1165 | 1.1195 |
GBP/USD – Price spiked higher to 1.2990 on news of a Brexit deal but has pullback ahead of Saturday meaningful vote in parliament. Price trend will likely be decided by Saturday’s vote. For today, we expected first resistance at 1.2905 with 1.2990 providing the next cap. Support is at 1.2750. We expect price to range from 1.2750 to 1.2990
| Support | 1.2835 | 1.2780 | 1.2740 |
| Resistance | 1.2905 | 1.2965 | 1.2990 |
XAU/USD – Price has stayed with in wide range of 1504 to 1474 in the past 1 week. At the moment, we do not see any clues to a change of this range. MACD is now flat and neutral. Stochastic is near to the overbought zone. 20EMA is also flat. Wait for better trading idea.
| Support | 1486.70 | 1474.10 | 1462.30 |
| Resistance | 1495.60 | 1504.10 | 1516.85 |
EUR/GBP – We had a buy call yesterday at 0.8670 but our stop was triggered at 0.8635 on news of a Brexit agreement. We are out with a loss of 35 pips. Our view remains unchanged. We see yesterday’s low of 0.8570 as a possible low with price likely to move higher to 0.8660. MACD is still bearish but rising. Stochastic is also rising
| Support | 0.8625 | 0.8595 | 0.8570 |
| Resistance | 0.8675 | 0.8715 | 0.8765 |
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