Market Talk
– The British pound stabilized on Thursday as EU’s leaders consider Britain’s requested for a 3 month Brexit delay to 31 Jan 2020. Media reports in the U.K. suggest that Prime Minister Boris Johnson will push for an election if the Brexit deadline is delayed until the end of January next year.
– UK’s parliament backed a withdrawal deal, but rejected the government’s tight timetable, while European Union members delayed deciding whether to grant a three-month extension to the Oct. 31 leaving date, leading to the current deadlock.
– Traders took a breather from Sino-U.S. trade headlines but concerns about the health of the U.S. and global economies returned to the fore. European PMI around 3pm could add gloom to the global economic outlook with forecast below the previous month’s numbers.
– The dollar was steady in Asian trade, gaining marginally against the Australian and New Zealand dollars, slipping marginally against the euro and Japanese yen. Positive comments from U.S. and Chinese leaders earlier in the week about progress negotiating a truce in their trade dispute had rallied trade-exposed currencies.
– Investors will also await the European Central Bank’s (ECB) meeting scheduled for this evening. The ECB is all but certain to leave policy unchanged, six weeks after the central bank unveiled a massive stimulus package.
Chart Focus USD/CAD
Key Points
1. Buy USD/CAD recommendation
2. Buy USD/CAD at 1.3075. Stop at 1.3040 and target at 1.3170
3. A poor Canadian retail sales data and interest rate differential are both against the Canadian dollar
4. Price has reached its Fibonacci target and MACD has given a divergence warning of a possible price low.
Fundamental Comments
1. Canadian Retail Sales were poor on Tuesday.
2. Interest rate differential is in the US dollar favour.
Technical Comments
1. Pace of Canadian gain against the US$ had slowed and MACD has given a divergence warning of a possible price low
2. Price has reached Fibonacci 161.8% price projection of the decline from 1.3345 to low of 1.3170
Key Levels
| Support | 1.3060 | 1.3020 | 1.2995 |
| Resistance | 1.3095 | 1.3135 | 1.3170 |
Technical Overview
USD/JPY – Yesterday, we had called for a test of 108.75. Last night price reached a high of 108.70. Price is currently supported at 108.60 which is where the 20EMA support lies. We see price supported at this point and a higher test later to 108.95 and 109.15. MACD is bullish and rising. Stochastic is into the overbought extreme. Only a move below 108.40 would negate our bullish view.
| Support | 108.50 | 108.25 | 107.95 |
| Resistance | 108.75 | 108.95 | 109.20 |
EUR/USD – Price was supported above 1.1100 last night and our view remains the same as yesterday. We see price going higher to 1.1180 and later 1.1210. Stochastic is rising from the oversold zone. MACD has a bullish crossover and could be rising up again. However a move below 1.1085 would negate our bullish view
| Support | 1.1105 | 1.1080 | 1.1045 |
| Resistance | 1.1145 | 1.1180 | 1.1215 |
GBP/USD – Yesterday, we had call for a low at 1.2840 and a price move higher to 1.2970. Price reached a high of 1.2928 this morning and we are expecting the price rally to continue higher to 1.2970. Stochastic is declining from the overbought extreme but we think the decline could be limited as MACD is still bullish. A move below 1.2880 would negate our bullish view
| Support | 1.2905 | 1.2880 | 1.2840 |
| Resistance | 1.2940 | 1.2975 | 1.3010 |
XAU/USD – Yesterday we had called for a break of 1492 and a move to 1504. However, while price broke above 1492, price was capped at 1496. If price is able to stay supported at 1490, there is still a chance of another test to 1504. However, Stochastic is declining after a bearish crossover. MACD is flat and neutral at the moment. We could see range of 1480 to 1496 again
| Support | 1485.75 | 1474.10 | 1462.30 |
| Resistance | 1496.20 | 1504.10 | 1516.85 |
EUR/AUD – Our buy call was filled yesterday at 1.6245 when price dropped to a low of 1.6231. Our view remains the same as yesterday. Price has moved above the previous day’s high of 1.6268. We would suggest bringing stop loss higher to cost while keeping profit target at 1.6315. Stochastic and MACD are both rising. 20EMA is also rising.
| Support | 1.6250 | 1.6225 | 1.6200 |
| Resistance | 1.6290 | 1.6320 | 1.6365 |
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