Market Talk
– The dollar traded near a three-week low versus the yen on Friday before a U.S. employment report expected to show a slowdown in job creation, highlighting concerns about the health of the world’s largest economy. The greenback also nursed losses against the euro and the pound after Bloomberg reported that Chinese officials have doubts about reaching a comprehensive long-term solution to the U.S.-Sino trade war.
– Caixin factory activity in China beat expectations and contrasted with the dour results of an official PMI survey on Thursday. Activity in October expanded at its fastest pace in more than two years as export orders and production increased, helping to array fears of a Chinese economic slowdown.
– U.S. President Donald Trump said on Thursday the United States and China would soon announce a new site where he and Chinese President Xi Jinping will sign a “Phase One” trade deal after Chile canceled a planned summit set for mid-November.
– Sterling has found support due to the receding risk of Britain crashing out of the European Union without a deal on trade and borders but is capped by uncertain outcome from UK election to be held in December 2019, just ahead of Brexit deadline on 31 Jan 2020.
– US Non-farm payroll is scheduled for release at 8.30pm tonight. The U.S. economy is forecast to have created 89,000 new jobs in October, slower than 136,000 new jobs created in the previous month, according to a Reuters poll.
Chart Focus AUD/USD
Key Points
1. Buy AUD/USD recommendation
2. Buy AUD/USD at 0.6880. Stop at 0.6845 and target at 0.6980
3. FOMC rate cut and doubt on a Sino-US trade deal are both weighing on the US dollar
4. Price is at a strong support and MACD is bullish, both are hinting of a possible price rally.
Fundamental Comments
1. FOMC rate cut is weighing on the US$
2. Doubt on a Sino-US trade deal is weighing on the US$
Technical Comments
1. Price is supported by a previous high as well as the 20EMA support
2. MACD is bullish with both its lines above the zero line
Key Levels
| Support | 0.6875 | 0.6845 | 0.6810 |
| Resistance | 0.6910 | 0.6940 | 0.6980 |
Technical Overview
USD/JPY – Yesterday we can a sell recommendation but price reached only a high of 108.71. Price is now close to the Fibonacci 50% correction point of the rally from 106.47 to the high of 109.06. Stochastic is about to turn up from oversold extreme but MACD is still bearish. If price does not go below 107.50, we are bullish for 110.45.
| Support | 107.90 | 107.50 | 107.05 |
| Resistance | 108.35 | 108.65 | 109.05 |
EUR/USD – Price could be testing the high of 1.1180 again within the next 24 hours as MACD is bullish and 20EMA is rising and bullish as well. Stochastic is turning up despite being in the overbought extreme. These are signs of a bullish trend ahead of NFP tonight. A move below 1.1100 would negate our bullish view.
| Support | 1.1150 | 1.1105 | 1.1075 |
| Resistance | 1.1180 | 1.1215 | 1.1250 |
GBP/USD – Price has breached 1.2950 to reach a high of 1.2975. 20EMA is rising and bullish. MACD is bullish and Stochastic is rising despite being in the overbought extreme. We think price still has upside potential. There could one final push to test 1.3010 before the correction. A move below 1.2890 would negate our bullish view.
| Support | 1.2925 | 1.2890 | 1.2840 |
| Resistance | 1.2975 | 1.3010 | 1.3045 |
XAU/USD – Price moved to a high of 1514 last night but we think the rally is not completed as yet. We think price will test the high of 1518 or 1519.50 within the next 24 hours. 20EMA is rising and MACD is still bullish. MACD could be about to turn up in the hourly chart as well. A move below 1495 would mean 1514.05 is the top and a deeper correction can be expected.
| Support | 1506.70 | 1494.70 | 1486.35 |
| Resistance | 1514.05 | 1519.50 | 1524.30 |
USD/CAD – Price has been consolidating since reaching a high of 1.3208 on Wednesday. We view the decline as a correction and we think there should be one more push above 1.3208 to complete the rally. 1.3120-1.3130 would be a good location to buy dip for the test above 1.3208. MACD is bullish and 20EMA is also bullish
| Support | 1.3130 | 1.3095 | 1.3045 |
| Resistance | 1.3170 | 1.3210 | 1.3240 |
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