Market Talk
- The Japanese yen held onto gains against the dollar on Friday as renewed worries about the coronavirus outbreak supported demand for safe-haven currencies and weighed on prices of riskier assets.
- China Yuan nursed losses in offshore trade as the flu-like virus, which emerged late last year in China’s Hubei province, slammed the brakes on consumer spending and manufacturing. The Yuan was quoted at 6.9910, following a 0.2% decline on Thursday.
- The euro languished at multi-year lows versus the dollar and the Swiss franc as investors grow more pessimistic about the outlook in the euro zone before the release of gross domestic product data later on Friday.
- The British pound rode a wave of optimism into Asia on Friday due to hopes that British Prime Minister Boris Johnson’s appointment of a new finance minister will lead to more fiscal spending to help Britain weather its transition away from the European Union.
- Uncertainty about the scale of epidemic is likely to discourage investors from taking on excessive risk until there is sufficient evidence that its spread has slowed. We see US dollar strength and steady safe havens demand for today.
Chart Focus USD/CAD
Key Points
1. Sell USD/CAD recommendation
2. Sell USD/CAD at 1.3270. Stop at 1.3305 and profit target at 1.3185
3. An increase in crude oil price due to OPEC led supply cut is likely to benefit the Canadian dollar.
4. Price is capped at 2 strong resistance points and MACD is bearish are hints of more price declines.
Fundamental Comments
1. An increase in crude oil price above $50 is good for the Canadian dollar.
2. OPEC and Russia to cut production are likely to support crude oil price despite the reduction in demand from Covid-19 outbreak
Technical Comments
1. Price is capped by the 20EMA and a previous support turned resistance
2. MACD is bearish and is turning down from close to zero line.
Key Levels
| Support | 1.3235 | 1.3210 | 1.3180 |
| Resistance | 1.3270 | 1.3305 | 1.3330 |
Technical Overview
USD/JPY – Price movement was small during yesterday trading. It could be a hint of a consolidation before a decline. Stochastic is turning down from overbought extreme and MACD has a bearish crossover. We prefer to stay neutral at the moment pending a bearish signal. Watch the support at 109.50.
| Support | 109.60 | 109.20 | 108.90 |
| Resistance | 109.90 | 110.15 | 110.30 |
EUR/USD – Price continues its decline to a low of 1.0926 this morning. There is a possibility of price going lower to 1.0810, which we think could provoke a correction after 10 days of decline. Stochastic is in oversold extreme. MACD is bearish but is turning up from the low.
| Support | 1.0810 | 1.0790 | 1.0765 |
| Resistance | 1.0840 | 1.0870 | 1.0905 |
GBP/USD – Price broke above 1.300 on Javid’s resignation. Price moved to a high of 1.3069, which was also a previous high resistance in the past. Stochastic is into the overbought extreme but MACD is bullish and rising. We have changed our Sterling’s view to bullish and will look to buy on dip for a test to 1.3200 at the 20EMA support of 1.2990.
| Support | 1.3035 | 1.2980 | 1.2935 |
| Resistance | 1.3070 | 1.3145 | 1.3185 |
XAU/USD – We view price as consolidating within the range of 1593 to 1547. Yesterday, price moved to a high of 1578, below our expectation of 1582. Stochastic is near to the overbought extreme but could still move higher. MACD is bullish but may its strength is not strong. We continue to see consolidation for Gold.
| Support | 1567.50 | 1554.90 | 1547.50 |
| Resistance | 1582.75 | 1593.05 | 1611.00 |
USD/CNH – Our buy call yesterday was not filled as price only reached a low of 6.9775, missing out on our order at 6.9735. Stochastic is still moving lower and MACD is neutral and near to the zero line. 20EMA is likely to provide support. We may see another day of pullback for today.
| Support | 6.9775 | 6.9685 | 6.9570 |
| Resistance | 6.9895 | 6.9960 | 7.0080 |
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