– The British pound jumped to six-month high above
the key 1.30 psychological mark. A poll by Kantar has shown a widening lead for
Conservatives over Labour to win December’s election, which would secure a
Brexit deal. UK PMI came in at 45.3 in November; up from 44.2 recorded in
October and beating the consensus estimates reading of 44.5, helped Sterling on
the way higher.
– Safe-havens were in demand on Tuesday as trade jitters started to creep in after Trump warned a trade deal with China may come after next year’s 2020 US presidential election, which is a contrast to his earlier statements. Gold jumped more than 1% on Tuesday on fading optimism surrounding a U.S.-China trade deal touching $1,481.80, its highest since Nov. 7.
– Further dampening risk sentiment, Washington also threatened duties on French goods because of a digital services tax that could harm U.S. tech companies, to which France and the European Union said they are ready to retaliate, if those threats were to materialize.
– Aussie was doing well against a weak US dollar, after RBA stays on hold and kept interest rate unchanged at its monetary policy meeting, climbing to a high of 0.6860 until trade jitters pull the Aussie lower. US-China tensions together with a weak GDP after Australian GDP grew 0.4% against a forecast of 0.5% dragged the Aussie lower.
– Tonight, there two important data to monitor. Bank of Canada will issue its rate statement at 11pm. No change in interest rate is expected. US ISM Non-manufacturing PMI is also scheduled at this time slot.
Chart Focus EUR/JPY
1. Sell EUR/JPY recommendation
2. Sell EUR/JPY at 120.35. Stop at 120.65 and target at 119.30
3. Fading hopes of a U.S-China trade deal and new tariffs threat on French goods have increased demand for safe haven yen
4. Price was capped by the Fibonacci 127% projection point and MACD is bearish and hinting of more price declines.
1. Washington’s threat to impose tariffs on French goods and EU counter threat to response could lead to a trade war and weigh on the Euro
2. Fading optimism of a U.S.-China trade deal has increased market risk and demand for safe haven yen
1. Price was capped by the Fibonacci 127% projection point and has declined, hinting of more price declines
2. MACD has turned bearish and is hinting of a price decline.
USD/JPY – The decline has exceeded the Ichimoku 3E price projection of 108.75 to reach a low of 108.47. Stochastic is into the oversold extreme and is turning around. MACD is also at its extreme and is turning around. Both indicators are hinting of a possible price low. If the low at 108.47 holds, we think price can recover to 108.90 to 109.05.
EUR/USD – Our buy call for yesterday was not filled as price only reached a low of 1.1065. Price reached a high of 1.1093 overnight and that may have ended the rally. There was a Evening Star candlestick price pattern at the price high. MACD and Stochastic both showed bearish divergence warning. A price decline below 1.1065 would confirm the high and signal a price decline to 1.1025.
GBP/USD – Price broke above a Triangle chart pattern yesterday to reach a high of 1.3011. 20EMA is rising and looking strong. MACD is also bullish and rising but Stochastic is turning down from overbought extreme. We think there may be a price correction to 1.2955 before another attempt to test the high at 1.3011.
XAU/USD – Price broke out of its Inside Day pattern overnight and reached a price high of 1481.70 20EMA is rising and its gradient is steep, which is a hint of a strong bullish trend. MACD is still bullish and rising but Stochastic is in its extreme. We remain bullish for 1495, if price can stay above 1474
AUD/USD – Price reached a high of 0.6862 and has declined lower to 0.6820. Price is currently above the Fibonacci 50% correction point. Stochastic has already reached its oversold extreme and MACD has turned bearish. However we think this decline could be a corrective decline and could be halted at 0.6800.