FX Commentary – New Optimism Of A Trade Deal

Market Talk

– The yen eased to a one-week low versus the dollar, while the Swiss franc traded near a six-week low against the greenback as the optimistic tone sapped demand for safe-haven currencies. Traders pointed to China’s decision to increase punishments for intellectual property rights violations as a fresh concession to the United States in the drawn-out and volatile negotiations.

– A tabloid run by the ruling Communist Party’s official People’s Daily, Global Times reported that  China and US were very close to “Phase One” trade deal and China remains committed to continuing talks for a phase two or even a phase three deal with the US, on equal footing, experts close to the Chinese government told GT.

– Gold fell to a two-week low on Tuesday as talks between US and China edged closer to an interim phase 1 deal that could be reached soon, denting demand for safe haven Gold.

– German Ifo data showed German business confidence rose this month, after the euro zone’s largest economy avoided falling into a recession. The Ifo business climate index rose to 95.0, up from 94.7 in October, but the Munich based institute warned that Germany’s manufacturing sector was still stuck in recession.

– Sterling was higher on Monday, amid hopes that the Conservative Party will win the upcoming election and the U.K. will leave the European Union as planned. British Prime Minister Boris Johnson promised to bring a Brexit deal to parliament before Christmas. His Conservative Party leads in opinion polls ahead of the Dec. 12 election.

Chart Focus USD/SGD
Key Points
1. Buy USD/SGD recommendation
2. Buy USD/SGD at 1.3635. Stop at 1.3590 and target at 1.3710
3. Interest rate difference and economic performance are both in the US dollar favour
4. An Inverse Head and Shoulder chart pattern with bullish MACD is hinting of more price upsides

Fundamental Comments
1. US economy is outperforming the Singapore economy
2. Interest rate differential is in the US dollar favour

Technical Comments
1. A possible Inverse Head and Shoulder chart pattern is hinting of more upside price movement
2. MACD has turned bullish and is rising, which is a hint of more price upsides

Key Levels

Support 1.36301.35901.3555
Resistance 1.36601.36901.3730

Technical Overview

USD/JPY – For 6 consecutive days, price had stayed within the 100 pips range. Last Thursday price tested the lower end of the range but bounced higher and now price is likely to continue its rally to test the high at 109.30. Our view remains unchanged. Unless the range boundary is breached, price is likely to continue within the range from 108.20 to 109.30.

Support 108.85108.45108.20
Resistance 109.30109.75110.10

EUR/AUD – Yesterday we had lowered the stop loss from 1.6310 to 1.6255. Unfortunately, price reached a high of 1.6264 and we are out but we still make a profit of 20 pips. Our view is still bearish and we are looking for another price decline to 1.6180. MACD has turned bearish and Stochastic is weak at the moment.

Support 1.62201.61801.6145
Resistance 1.62651.62901.6320

GBP/USD – Our sell order was filled but price is now near to our stop price. MACD is bearish and the faster line could be turning down, hinting of a possibility of a price change in direction but Stochastic is still rising. Our view remains unchanged. Keep stop at 1.2915 and profit order at 1.2800

Support 1.28851.28351.2800
Resistance 1.29201.29451.2985

XAU/USD – Price reached a low of 1451 after breaking below 1456. There is still a possible of price going lower to 1445 but if price moved above 1456, the chances of seeing 1445 will be slim. While MACD is still bearish, Stochastic is rising from the oversold extreme.

Support 1455.101445.501438.20
Resistance 1463.801478.701486.15

EUR/USD – Price reached a low of 1.1003 missing our profit order at 1.0990. We think the 20EMA resistance 1.1015 is likely to limit the price rally. Lower stop to 1.1035 and profit remains at 1.0990.  MACD is bearish but Stochastic is rising from oversold extreme.

Support 1.09901.09651.0930
Resistance 1.10301.10501.1090

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