FX Commentary – Waning Optimism Of A U.S.-Sino Trade Deal Keeps Safe Havens Strong

Market Talk

– The dollar found broad support on Friday amidst fresh signs of a global economic slowdown. The latest evidence that the U.S.-China trade war has hurt the global economy was illustrated by sub-par growth figures on Thursday from China and Japan, followed by lackluster updates in Britain and Europe

– The number of Americans applying for unemployment benefits rose to an unexpected five-month high. Initial claims for state unemployment benefits increased 14,000 to a seasonally adjusted 225,000 for the week ended Nov. 9, the highest reading since June 22, the Labour Department said on Thursday.

– Economists polled by Reuters said the United States and China were unlikely to reach a permanent truce over the coming year, and while concerns have eased over a U.S. recession, an economic rebound is also not expected any time soon.

– Sterling touched a six-month high against the euro and gained on the dollar as expectations that Britain’s ruling Conservative Party might win a majority in a Dec. 12 election fueled optimism that the Brexit impasse will finally end.

– Gold prices rose on Thursday as investors remained concerned about the imminence of a trade deal between the United States and China, while a slip in riskier assets and the U.S. currency further supported the metal

Chart Focus Gold XAU/USD
Key Points
1. Buy Gold recommendation
2. Buy Gold at 1459.00 Stop at 1454.00 and target at 1480.80
3. Concerns over a global economic slowdown and waning optimism over a U.S-Sino trade deal are both supportive of Gold.
4. Price pullback into Fibonacci 50% correction point with MACD bullish is a hint of further price advancement.

Fundamental Comments
1. Worries over a global economic slowdown is likely to favour safe haven Gold
2. Waning optimism of a U.S-Sino trade deal is also supporting Gold.

Technical Comments
1. Price pullback into Fibonacci 50% correction point offers a buying opportunity
2. MACD is bullish and is supportive of further price advancement

Key Levels

Support 1463.401459.901445.50
Resistance 1474.501483.951492.50

Technical Overview

USD/JPY – Price declined to a low of 108.23, against our expectation of 108.10. We do not think the decline is completed. We think there could be a rally which should be capped at 108.70 to be followed by another decline to 108.10. MACD and Stochastic are into oversold zone and could be about to rise

Support 108.45108.20107.90
Resistance 108.70108.95109.20

EUR/USD – Our view remains the same as yesterday. Price reached a low of 1.0988 which is just below the critical support at 1.0990. Price has bounced off the low to breach a resistance point at 1.1025 and we think price should be heading to 1.1060. MACD has been warning with divergence and Stochastic is now rising. A break below 1.0988 would negate our bullish view.

Support 1.10151.09901.0960
Resistance 1.10401.10651.1090

GBP/USD – Price stayed within Monday’s range of 1.2785 to 1.2897.  Price managed to stay above the lower section of the range at 1.2820 and has moved higher to test the upper end of the range at 1.2890. The upward movement was quicker than our expectation. A break of 1.2900 is likely to lead to a test of 1.2960. MACD is neutral but RSI is near to its overbought zone.

Support 1.28551.28201.2770
Resistance 1.28951.29301.2970

AUD/USD – Price had declined to a low of 0.6768 and we think this could be a temporary low. We are expecting price to do a correction to 0.6810 and from this point, we are expecting another decline below 0.6730. Stochastic is in the oversold zone but MACD is strong bearish at the moment.

Support 0.67800.67450.6715
Resistance 0.68100.68400.6880

NZD/USD – Our sell recommendation was filled yesterday at 0.6395 when price rose to a high of 0.6399. A decline to 0.6358 followed but price had rallied higher this morning to 0.6390. We believe price will continue to decline to 0.6345-6350 in the next 24 hours. We would recommend bringing stop lower to 0.6405 while keeping target at 0.6345.

Support 0.63800.63550.6320
Resistance 0.64050.64300.6465

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