FX Commentary – Trump Revived Hopes For Some U.S. Spending Led To US Dollar Selling.

Market Talk

  • The safe haven US dollar nursed losses on Thursday morning in Asia, after Trump revived hopes for some U.S. spending which improved sentiment and whetted investor appetite for riskier currencies.
  • Investor sentiment also improved with hints of even more spending from the U.S. Federal Reserve in its minutes from its September meeting. The notes matched expectations that the Fed would unleash more fiscal spending.
  • The NZD/USD pair was down to 0.6546, with a Reserve Bank of New Zealand official telling a media briefing that the central bank is “actively working” on negative interest rates and a funding-for-lending program.
  • The British pound inched up 0.05% to 1.2925 despite being dogged by concerns over the latest informal Brexit talks between the U.K. and the European Union, helped by a weaker US dollar.
  • Gold prices were mixed on Wednesday, after the Federal Reserve’s strong support for a new Covid-19 stimulus failed to excite haven buyers. The yellow-metal crowd also didn’t show much enthusiasm for President Donald Trump’s second about-face in as many days on the stimulus.

Chart Focus Gold
Key Points
1. Sell Gold recommendation
2. Sell Gold at $1896.50. Stop at $1902.90 and profit target at $1859.50
3. Trump reviving hopes of some US stimulus spending and talk of a COVID-19 vaccine has improved sentiment and weighed on safe haven gold
4. Price rally is likely to run into strong resistance overhead and momentum indicators are hinting of more price declines ahead.

Fundamental Comments
1. Trump revived hopes for some U.S. spending which will improved investors’ sentiment and weigh on the yellow metal.
2. Trump’s talk of a COVID-19 vaccine right after November US election has also improved investors’ sentiment

Technical Comments
1. Price rally is likely to be capped by the 20EMA as well as the Fibonacci 50% correction point of the decline from $1921 to $1872.
2. MACD is still bearish and Stochastic is weak. Both momentum indicators are hinting of more price declines ahead.

Key Levels


Technical Overview

USD/JPY – Price broke above the range’s high of 105.80 overnight but only rose to a high of 106.10. The breakout has likely triggered a price movement to 106.40. We are expecting price to continue to move towards this target over the next couple of days. MACD is bullish but Stochastic has reached the overbought zone. 20EMA is pointing higher with a steep slope, which is a hint of a strong trend.

Support 105.80105.45104.95
Resistance 106.15106.55106.90

GBP/USD – We had a sell call yesterday that would filled at 1.2910 but price only fell to a low of 1.2844, missing out on our profit target at 1.2840. Price has moved higher this morning to a high of 1.2950, taking out our stop loss order. We are out of this position with a loss of 35 pips. MACD is still rising and Stochastic is also rising. We may see the rally continues to 1.2970. 20EMA is also bullish and rising.

Support 1.29151.28801.2845
Resistance 1.29551.30051.3050

EUR/USD – After declining to 1.1723 overnight, price has recovered to 1.1775 this morning. MACD is bullish and rising. Stochastic has a bullish crossover and is rising as well. Both momentum indicators are hinting of more price upsides ahead. We think price should continue its rally to the previous high at 1.1805. 20EMA is currently providing support but a move below 1.1755 would negate our bullish view.

Support 1.17351.16951.1645
Resistance 1.17801.18151.1845

NZD/USD – Price declined to a low of 0.6546 on news of negative rates being considered by the RBNZ. However, price has recovered to 0.6585 and looks likely to continue towards 0.6600. MACD is still bearish but has a higher low than previously, which is a show of strength. Stochastic is in the oversold zone and is likely to be rising. We see price rising beyond 0.6600 to as high as 0.6650 in the next few days ahead once price moved above the 20EMA at 0.6600

Support 0.65750.65450.6510
Resistance 0.66000.66350.6660

USD/CNH – Price had reached a low of 6.7074 in holiday thin trading but has recovered to 6.7541 on Trump’s action on Wednesday. Another price rally was capped at 6.7476. Stochastic has a bearish crossover and is moving lower. MACD is still bearish and 20EMA is also bearish and pointing lower. We are expecting price to test the previous low of 6.7075 again in the next couple of days.

Support 6.72406.70706.6900
Resistance 6.73556.75656.7790

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