FX Commentary – Gold Moved Within Sight Of 8-Year High

Market Talk

  • Gold gave up gains on Friday morning in Asia after the yellow metal rose to a one-week high and within striking distance of the 8-year intraday high set earlier this month at $1747, after PMI data in Europe and UK as well as the US revealed, the full effects of the coronavirus pandemic, with business activity across manufacturing and services falling at unprecedented rates.
  • The euro fell to a one-month low of $1.0756 on Thursday, and was drifting back to test that level on Friday after the European Union agreed to build a trillion euro emergency fund, but weren’t going to come up with any solid fresh stimulus and it fell further on talk that they won’t have anything ready until 2021.
  • The Canadian dollar liked the rally in oil but only front month crude contract climbed while the rest of the strip was more-or-less flat as many investors believe a coronavirus-led slowdown in global demand is likely to persist for months and dampened demand for crude oil.
  • Aussie dollar reached the highest since 14 April 2020 when it rallied from the 0.5505 low as a boost in oil prices increased investors’ risk appetite
  • Preliminary goods-orders data in the United States and a German business sentiment survey due later on Friday are unlikely to improve investors’ mood – especially as the global recovery begins to look increasingly rocky.

Chart Focus USD/SGD
Key Points

  1. Buy USD/SGD recommendation
  2. Buy USD/SGD at 1.4250. Stop at 1.4205 and profit target at 1.4390
  3. Depressing PMI data and Singapore longer lockdown is aiding the safe haven US dollar
  4. Price has stayed above an important support level and momentum indicators are about to turn bullish

Fundamental Comments

  1. Depressing PMI data from Europe, UK and USA as a result of coronavirus is keeping demand high for safe haven US dollar
  2. Singapore high number of coronavirus cases and longer lockdown period are both weighing on the Singapore dollar

Technical Comments

  1. Price has stayed above an import support and a rising trend line hinting that a correction could be over
  2. Stochastic is turning up from oversold zone and MACD could be about to turn bullish.

Key Levels

Support 1.42451.42051.4180
Resistance 1.42851.43251.4285

Technical Overview

USD/JPY – Price has been in a range of 107.20 to 107.90 for the past 5 days. Yesterday, price moved above the range high but only for a brief moment. We are expecting another day of range as there is no fresh catalyst to move price outside of its range. MACD is flat and neutral and Stochastic is in the middle of its range at the moment. 20EMA on the 4-hourly chart is also flat and neutral. Stay aside and wait for better trading direction

Support 107.55107.25106.90
Resistance 107.90108.35108.60

EUR/USD – Price tried to rally but was capped at 1.0833 and had declined to 1.0775. Another attempt to rally was capped at 1.0846 and price is back to 1.0770. As long as price stays below 1.0815, the decline is likely to continue. The next support lies at 1.0710. MACD is bearish and moving lower, hinting of more price declines. Stochastic is close to the oversold zone but has just had a bearish crossover and could be moving lower.

Support 1.07551.07101.0670
Resistance 1.09751.08451.0890

GBP/USD – Price spiked higher to 1.2415 but quickly dropped to 1.2360 overnight. As long as price stays below 1.2415, we are likely to see another test of 1.2245 within the next 2 days. MACD is bearish and is turning down from near the zero line for the fast line. Stochastic could be about to see a bearish crossover and 20EMA is pointing lower.

Support 1.23351.22951.2245
Resistance 1.23851.24151.2445

XAU/USD – Our buy order was not filled yesterday. Price rose to $1738.58 overnight. This is near to the 8-year high at $1747.13. We think price may attempt to test the 8-year high again within the next one to two days. There is no divergence warning of a high as yet from MACD. Stochastic is in the overbought zone but the trend is still strong. A price move below $1658 would negate our bullish view and call for a deeper correction.

Support 1719.801704.401691.10
Resistance 1738.551747.101754.10

USD/CAD – From a low of 1.3855, we saw a rally to 1.4180, followed by a decline to 1.3985. This was followed by another rally to 1.4264. We think the 3-waves correction is completed and price is likely to decline back to 1.4010. Price reached a low of 1.3993 overnight. If this is the end of the correction, we should see a movement to test 1.4265 again within the next few days. A move below 1.3993 would mean a deeper correction.

Support 1.40451.39901.3960
Resistance 1.40951.41501.4195

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