FX Commentary -Waiting For FOMC Decision

Market Talk

– The dollar traded narrowly on Wednesday morning as markets braced for a rate cut by the Federal Reserve while sterling steadied as Britain heads for an early general election that UK Prime Minister Boris Johnson hopes will break the deadlock over Brexit.

– The Federal Reserve is largely expected to slash interest rates by 25 basis points at its meeting this week with result expected on Thursday morning at 2am Singapore time. That would mark its third rate cut for 2019, undoing the four rate hikes of 2018.

– Optimism that Washington and Beijing would finalize the first-stage of a trade deal next month had boosted risk assets in recent days, but Reuters reported that phase one trade deal may not be signed at a November summit in Chile turned market wary on the prospect that a trade deal could be delayed.

– The pound climbed as high as $1.2903 overnight on news that an election date was likely to be agreed but pared gains after the House of Commons approved Johnson’s bill calling for a Dec. 12 election by 438 to 20.

– Data from the Australian Bureau of Statistics showed Wednesday that the consumer price index for the September quarter rose 0.5%, as compared to a 0.6% increase in the previous quarter. However, Aussie barely changed against other currencies.

Chart Focus NZD/CHF
Key Points
1. Sell NZD/CHF recommendation
2. Sell NZD/CHF at 0.6305. Stop at 0.6340 and target at 0.6260
3. Delay in a Sino-US trade deal and Brexit uncertainty are sending capital into safe haven Swiss Francs
4. Bearish price pattern coupled with bearish momentum are sign of a bearish trend

Fundamental Comments
1. Prospect of a trade deal delay is moving capital into safe haven CHF
2. Brexit uncertainty is also sending capital into safe haven CHF

Technical Comments
1. Bearish Engulfing candlestick pattern with price capped by Fibonacci 62% correction are signs of a bearish price trend
2. MACD is bearish and turning lower. Stochastic is also turning down.

Key Levels

Support 0.62900.62600.6220
Resistance 0.63150.63400.6365

Technical Overview

USD/JPY – Price made a marginal new high at 109.05 overnight but the trend is still bullish. Price is currently supported by the 20 EMA, which could push price higher to 109.30. MACD is still bullish and could be turning up. Stochastic is declining but is still above the mid-range. We are expecting price to move higher to 109.30.

Support 108.65108.20107.95
Resistance 109.05109.35109.60

EUR/USD – Our sell call yesterday was filled when price moved to high of 1.1117. Price could be moving higher again later today if it can break above 1.1125. MACD is still bullish with both its lines above the zero line. Stochastic is into the overbought zone and declining. Current support lies at the 20EMA point of 1.1105. Keep stop at 1.1125 and profit target at 1.1030.

Support 1.10751.10301.0995
Resistance 1.11201.11601.1180

GBP/USD – Our view remains the same as yesterday. We think price is likely to test 1.2950 in the next 24 hours. However, 20EMA has gone flat and MACD is getting flat and neutral as well. Stochastic is also getting weak ahead of its overbought zone. We think price could be consolidating ahead of the FOMC meeting tonight. Stay aside for now.

Support 1.28401.28101.2785
Resistance 1.28751.29051.2950

XAU/USD – Price reached a high of 1496.70 overnight and from there declined lower to 1483.40. We think the low could be in instead of our original target of 1480. However, the price bounce from the low is not very impulsive. We could see a sideway consolidation ahead of the FOMC meeting before the breakout. Stay aside for now.

Support 1486.351474.101462.30
Resistance 1494.701508.151517.90

USD/CAD – Price reached a low of 1.3041 and we survived to fight another day. Our view remained unchanged and we would keep our orders at 1.3040 for stop and profit target at 1.3170. Stochastic is rising and MACD has turned bullish. 20EMA has also turned bullish. The next resistance is at 1.3120 and a break above will target 1.3170.

Support 1.30601.30201.2995
Resistance 1.30951.31251.3160

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