FX Commentary – US Dollar Higher On Risk Aversion

Market Talk
– The dollar was down on Friday morning in Asia, continuing a downward trend despite investors turning to safe-haven assets over ever surging number of global COVID-19 cases and the U.S. Congress’ continuous stall on passing the latest stimulus measures ahead of the Nov. 3 presidential election.

– Europe and the U.K. implemented fresh curbs to curb the spread of the virus, and the number of cases in the U.S. also rose, with Midwestern states battling a surge of new cases as temperatures drop. The surge across both sides of the Atlantic triggered fears of fresh lockdowns and worries over the detrimental impact on economic recovery.

– The number of Americans filing new claims for jobless benefits rose to a two-month high of 825,000 last week, stoking fears the COVID-19 pandemic was inflicting lasting damage to the labour market. A separate report showed manufacturing activity in New York State fell more than expected in October.

– China’s National People’s Congress Standing Committee is set to adopt a new law restricting sensitive exports vital to national security on Saturday. Once adopted, the law will apply to all companies in China, including foreign-invested ones, and threatens to increase U.S.-China tensions

– Gold headed for a weekly decline, snapping two straight weeks of gains, as investors weighed the outlook for fresh U.S. stimulus amid uncertainty surrounding the prospects of a stimulus deal being passed before the Nov. 3 presidential election.

Chart Focus USD/SGD
Key Points
1. Buy USD/SGD recommendation.
2. Buy USD/SGD at 1.3600. Stop at 1.3555 and profit target at 1.3670
3. Impasse over US stimulus and rising COVID-19 cases are keeping the US dollar in demand.
4. An Inverse Head and Shoulder chart pattern and bullish MACD are both hinting of a bullish trend ahead.

Fundamental Comments
1. Impasse over US stimulus is raising uncertainty and keeping the US dollar in demand.
2. Rising COVID-19 cases and lockdown in Europe and US is keeping the safe haven US dollar in demand.

Technical Comments
1. An Inverse Head and Shoulder chart pattern is hinting of a price low and a reversal.
2. MACD is in the bullish zone and is rising, hinting of a bullish trend ahead.

Key Levels

Support1.35951.35501.3510
Resistance1.36251.36701.3710

Technical Overview

USD/JPY – We seen a low of 105.02 on Wednesday and we had warned yesterday of a possible low as both momentum indicators are showing divergence warnings of a possible low. We have seen a rally to 105.49 last night. Our view remains the same as yesterday. As long as $105.02 price support holds, we are looking at a rally to test the previous high of 105.80 over the next couple of days. A move below 104.90 would negate our bullish view over the next few days.

Support 105.20104.90104.40
Resistance 105.60106.10106.55

GBP/USD – Price had reached a low of 1.2860 and had rallied on news of further Brexit talks to a high of 1.3063 on Wednesday but is now back to the low of 1.2885. If price were to break below 1.2860, we are likely to see a price move either 1.2800 or 1.2760. 20EMA is pointing lower with a steep slope, which is hinting of a strong bearish trend ahead. However MACD and Stochastic are near to their extreme low and we view a move to 1.2800 as more likely. A move above 1.3070 would negate our bearish view

Support 1.28601.28201.2760
Resistance 1.29051.29601.3015

EUR/USD – We were looking at 1.1695 but price had moved below this support last night. We are lowering our target to 1.1610 over the next few days as long as price does not moved above 1.1760. However Stochastic is near to the oversold zone and MACD has a bullish crossover in the bearish zone but 20EMA has a steep slope which is hinting of a strong bearish trend ahead.

Support 1.16901.16451.1610
Resistance 1.17201.17701.1810

XAU/USD – We were looking at $1868 yesterday but yesterday’s inside range had us reviewing our call. Price is likely in a consolidation and may not start the down move as yet. For today, we are looking at price staying within the range of $1912 to $1882. Stochastic is rising but MACD is still bearish. 20EMA is flat which is indicating a lack of trend ahead. Watch the range boundaries for direction.

Support 1902.101892.601882.20
Resistance 1912.651923.951933.10

USD/CAD – Our order was filled when price dropped to a low of 1.3146. Later in the night, price went to a high of 1.3259 and we are out with a 90 pips profit. While MACD is still bullish and rising, Stochastic has a bearish crossover in the overbought zone. As such, we may see a pullback and consolidation today. 20EMA is bullish with a steep slope which is hinting of a strong bullish trend ahead.

Support 1.32101.31651.3130
Resistance 1.32601.32951.3340

Related Posts


Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.