FX Commentary – Gold Dropped 1% On Trade Deal Optimism

Market Talk

– Bank of England left its key rate unchanged at 0.75% on Thursday, but two BoE policy makers unexpectedly voted to cut rates, while the majority said a rate cut could become necessary if Brexit uncertainty and a global economic slowdown did not ease. Sterling reached a low of 1.2790 but found this support hard to crack.

– RBA released it monetary policy statement this morning. The reason RBA held rate steady in November was to allow for “time to assess effects”. RBA is prepared to ease if needed. Going forward, inflation and December 2020 GDP (1.75%) is expected to remain unchanged.

 – Gao Feng, a ministry spokesperson for China’s Commerce Ministry, said Thursday that Beijing and Washington had agreed to simultaneously cancel some existing tariffs on one another’s goods but without specifying a timetable, according to the country’s state broadcaster.

The Japanese Yen, widely viewed as a safe-haven currency in times of market uncertainty, traded at 109.33 against the dollar after weakening from levels below 109 yesterday.

Gold slid more than 1% on Thursday to its lowest level in over a month at 1467.71 as U.S. Treasury yields jumped and global equities markets cheered China and United States’ agreement to cancel some tariffs in phases hurting bullion safe haven appeal.

Chart Focus EUR/USD
Key Points
1. Sell EUR/USD recommendation
2. Sell EUR/USD at 1.1060. Stop at 1.1095 and target at 1.0995
3. Recent better than expected US data and interest rate differential are both in the US dollar favour
4. A Double Top chart pattern with bearish MACD is a hint of more price declines.

Fundamental Comments
1. Recent better than expected US data is pointing to a weakened but still rosy US economy
2. Interest rate differential is in the US dollar favour

Technical Comments
1. A Double Top chart pattern is point to more downside
2. MACD is bearish and hinting that any rally is likely to be a correction

Key Levels

Support 1.10351.09901.0965
Resistance 1.10701.10951.1130

Technical Overview

USD/JPY – Price was supported by the 20EMA and from there, we have seen a rally to 109.48. The rally may not be over as yet. As long as price is supported at 109.05, price is likely to test the topside target of 109.65. However, there is divergence warning of a potential high from MACD. Stay aside for the moment.

Support 109.20108.95108.65
Resistance 109.50109.90110.30

USD/CHF – We had a buy recommendation at 0.9910 but price fell to a low of 0.9911, missing out on our buy order. Overnight price has moved to our profit target at 0.9970. We think the price advance is likely over and we could see a price decline back to 0.9880. MACD has shown a bearish divergence, which is a warning of a possible price high. Stochastic is turning down.

Support 0.99400.99050.9880
Resistance 0.99700.99951.0025

GBP/USD – Price broke support at 1.2805 but only managed to decline to 1.2790 and had managed to bounce up higher to 1.2835. Price is like to stay within this range of 1.2790 to 1.2840 until there is breakout of this range. Stochastic is rising but MACD is bearish at the moment. We prefer a downside breakout

Support 1.27901.27451.2705
Resistance 1.28351.28751.2915

XAU/USD – Price broke the support at 1478 and fell to a low of 1460.70 which was close to a previous low point of 1458.85. Stochastic is rising at the moment but MACD is strongly bearish. We would prefer to go with MACD and we see another test of the low at 1458.85. Watch the reaction at 1458.85 as we also think the downside could be limited to this low.

Support 1458.851447.401439.40
Resistance 1470.901481.951494.15

NZD/JPY – Yesterday, we had lower stop order to 0.6945 while keeping profit order at 0.6875. Our stop loss order was filled yesterday. We are out with a 10 pips loss. While Stochastic is rising, MACD is still bullish. As long as price stays above 69.20, the trend is bullish.

Support 69.1568.9568.65
Resistance 69.5569.9570.10

Related Posts

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.