Market Talk
– The dollar held firm on Monday after strengthening on US NFP data on Friday’s night as well as a stronger University of Michigan sentiment index for December which rose to 99.2 from 96.8 last month and against an estimate of 97.0.
– November employment report came out much stronger than expectations when Non-farm payroll rose by 266K, well above the 183K estimate while prior month was revised up by 41K. It was the biggest gain in 10 months. The rest of the report was not bad either with average hourly earnings year on year rising by 3.1%. Unemployment rate fell to 3.5%.
– Gold slid 1% on Friday as strong U.S. jobs data renewed bets the Federal Reserve would hold pat on interest rates. The EURUSD was another big mover falling from a pre-data high near 1.1100 to a one-week low of $1.10395 on Friday night.
– In a positive gesture, China said it will waive import tariffs for some soybeans and pork shipments from the United States. But the Chinese currency was restrained from moving higher by worries about an escalation in the U.S.-China trade war.
– Data over the weekend showed China’s exports shrank for the fourth consecutive month in November, underscoring persistent pressures on manufacturers from the Sino-U.S. war. But growth in imports may be a sign that Beijing’s stimulus efforts are helping to stoke demand.
Chart Focus NZD/USD
Key Points
1. Sell NZD/USD recommendation
2. Sell NZD/USD at 0.6560. Stop at 0.6585 and target at 0.6480
3. Strong US data and China’s concession on agriculture imports are both likely to keep the US dollar strong
4. Price has reached its target and MACD is warning of a possible price high. Both are hinting of a possible reversal.
Fundamental Comments
1. Strong US data on Friday is likely to keep the US dollar strong
2. Optimism of a Sino-U.S. trade deal after China made concession over the weekend is likely to favour the US dollar
Technical Comments
1. Price has reached its target from a previous price rally
2. MACD is showing bearish divergence and warning of a possible top in place
Key Levels
| Support | 0.6540 | 0.6495 | 0.6460 |
| Resistance | 0.6850 | 0.6620 | 0.6660 |
Technical Overview
USD/JPY – Price was capped on Friday at 108.90, which was a previous support turned resistance. If price is unable to move above this resistance, price is likely to test the low of 108.40 low again and maybe lower to 108.25. 20EMA is bearish at the moment. MACD is still bearish and Stochastic is moving lower from its mid-range.
| Support | 108.50 | 108.20 | 107.90 |
| Resistance | 108.75 | 109.05 | 109.40 |
EUR/USD – Price has rebounded from the low of 1.1035 to 1.1060. This is a previous resistance point and the 20EMA is currently at 1.1070. We expect this price level to cap the rally and we see another decline to 1.1015 to complete the decline. A move above 1.1085 would negate our bearish view for the next couple of days
| Support | 1.1035 | 1.0990 | 1.0960 |
| Resistance | 1.1070 | 1.1095 | 1.1115 |
GBP/USD -Price and its momentum are both looking strong at the moment. Price is above its 20EMA, which has a steep gradient. This is a hint of a strong trend. MACD is hinting the strong trend may not be about to end at the moment as MACD has turned already and is moving higher. We expect price to test the next resistance point at 1.3195.
| Support | 1.3155 | 1.3105 | 1.3065 |
| Resistance | 1.3195 | 1.3225 | 1.3265 |
XAU/USD – Price dropped to a low of 1453.15 on Friday’s NFP night. MACD is bearish but Stochastic is turning around just above the oversold extreme. Price has stabilized around 1458 and if price can stay above 1458, we think price could push higher to 1468 to test the 20EMA resistance. If 1458 fails, price is likely to test the low of 1453 and later 1445 bottoms.
| Support | 1458.50 | 1449.65 | 1438.20 |
| Resistance | 1468.90 | 1479.40 | 1484.10 |
USD/CAD – Price had declined on Thursday after BOC held rates unchanged but Friday’s NFP has sent price back to where the decline started on Thursday. Stochastic has reached the overbought extreme but MACD is still bearish. If price is unable to move above 1.3270, there is strong chance of price declining back to 1.3195 again
| Support | 1.3235 | 1.3200 | 1.3160 |
| Resistance | 1.3270 | 1.3305 | 1.3330 |
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