FX Commentary – Market Is Waiting For Jobless Claims

Market Talk

  • The dollar fell against the yen on Thursday morning ahead of data tonight at 8.30pm which is expected to show a surge in U.S. claims for unemployment benefits as companies lay off workers due to the rapid spread of the coronavirus.
  • The U.S. Senate finally agreed on the terms of a $2 trillion package of measures to support the economy through the Covid-19 crisis but there are already indications that some U.S. states will need more money for medical supplies as the health care system struggles to cope with the coronavirus pandemic.
  • The real intrigue on Wednesday was Sterling. It rose to 1.1974 from 1.1830 near the opening hours but over the next 5 hours, it was slammed back down to 1.1640 and then shot back up to 1.1881.
  • The Canadian dollar was a big winner on the day the Canadian government wrote itself a blank cheque to deal with the fallout and will pay $2000/month to people who lose their jobs. A second reason was a hint at help for oil companies, which have been rocked in the crisis.
  • The Australian and New Zealand dollars, both of which are closely linked to the global commodity trade, fell against their U.S. counterpart as traders avoided taking on excessive risk. The overall better risk tone was also not helpful to both currencies

Chart Focus Gold
Key Points
1. Buy Gold recommendation
2. Buy Gold at 1580.75. Stop at 1574.80 and target at 1636.20
3. Funding pressure has eased and QE program are both likely to weigh on the US dollar
4. Price is pulling back towards a support area and MACD is indicating more price upsides.

Fundamental Comments
1. US dollar funding pressure has eased which is likely to weigh on the US dollar
2. Fed QE program is likely to weigh on US dollar and lead to demand for Gold

Technical Comments
1. Price is pulling back towards the moving average and Fibonacci 38% correction point
2. MACD is bullish and could be turning up, indicating further price movement higher

Key Levels

Support 1589.201576.051561.90
Resistance 1605.401616.451635.95

Technical Overview

USD/JPY -Price has moved higher over the past 2 weeks from a low of 101.17 to last Friday’s high at 111.49 in a rising trend channel. This morning price has moved below the channel. This could be the start of a decline to 108.70. MACD is starting to turn bearish and Stochastic is turning down as well. 20EMA on the 4-hourly chart is also starting to turn lower.

Support 110.40109.85109.30
Resistance 110.95111.50112.20

EUR/USD – Price continues to climb, climbing to a high of 1.0933 this morning. MACD is still bullish but Stochastic is already in the overbought extreme. Support is at 1.0885 to 1.0875. Resistance is at 1.0960. We continue to favour a rally higher to 1.0960 or 1.1060 in the next few days.

Support 1.08801.08251.0785
Resistance 1.09301.09801.1030

GBP/USD – Price formed another Wide Range Day price pattern yesterday just after breaking out of an Outside Range Day. We think price is likely to stay within yesterday’s range for the moment until we have another break of yesterday range. MACD is turning flat and neutral and Stochastic is starting to turn down near to the overbought zone.

Support 1.18151.17701.1705
Resistance 1.18801.19351.1970

AUD/USD – The rally off the low of 0.5503 to the overnight high of 0.6071 via 0.5975 looks more corrective than impulsive. If the overnight high is a result of a corrective rally and with MACD turning down, we are likely to see another price decline. We are looking at a continuation of this decline to 0.5705 in the next few days.

Support 0.58900.58500.5800
Resistance 0.59500.60100.6070

USD/CNH – Price reached a low of 7.0750, missing our buy order. Price has moved higher and above our target at 7.1325 to a high of 7.1423. Both MACD and Stochastic indicators are continuing to move higher, which are signs of further price upsides. We think price will continue to move higher to 7.1650 in the next couple of days.

Support 7.11007.08757.0710
Resistance 7.13507.15207.1650

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