Market Talk
– The US dollar was little changed on Friday, two day after being given a boost from seemingly hawkish comments by a top Federal Reserve official, as the market awaited new direction from Friday’s U.S. jobs report which could provide a guide to rate outlook.
– Investors cheer the latest jobless claims with 385,000 submitted in the previous week. Treasury yields were higher as risk sentiment improved after a healthy jobless claims report, ahead of more detailed employment data due later tonight.
– Bank of England kept its interest rate unchanged at 0.10%, with other policy settings also remaining unchanged, as it handed down its policy decision on Thursday. The BOE did, however, outline a plan towards asset tapering and interest rate hikes in the years to come.
– The euro drifted lower to 1.1825, failing in a few recent attempts to breach resistance around 1.1910. The dollar is perched at a one-week high of 109.84 Japanese yen, after bouncing solidly from a low of 108.72 that it touched on Wednesday.
– Gold eased on Friday, clinging to the key psychological $1,800 level as stronger dollar and potential for higher yields hurt gold while investors awaited a key U.S. jobs report to gauge the Federal Reserve’s future policy stance.
Chart Focus XAU/USD – Gold
Key Points
1. Sell Gold recommendation.
2. Sell Gold at $1805.40. Stop at $1811.00 and profit target at $1790.00
3. Treasury yields were higher as risk sentiment improved after a healthy jobless claims report weighing on Gold.
4. Chart pattern, 20EMA and MACD are all hinting of a bearish price trend ahead.
Fundamental Comments
1. Treasury yields were higher as risk sentiment improved, weighing on Gold prices.
2. A better than expected initial jobless claims also buoyed the US dollar and weighing on Gold.
Technical Comments
1. Price has broken below a Double Tops chart pattern neckline, hinting of a bearish price trend.
2. MACD and 20EMA are both hinting of a bearish price trend.
Key Levels
| Support | 1797.60 | 1789.90 | 1774.10 |
| Resistance | 1803.80 | 1814.80 | 1825.75 |
Technical Overview
USD/JPY – Price has likely hit a bottom on Wednesday at 108.87 and we have seen a rally bringing price to 109.88 this morning. However, MACD is starting to develop divergence and Stochastic has already reached the overbought extreme. 20EMA remains bullish and is hinting of bullish price trend. We would prefer to stay aside before the non-farm payment data.
| Support | 109.75 | 109.40 | 109.05 |
| Resistance | 110.05 | 110.35 | 110.60 |
EUR/USD – Price had declined below a strong support at 1.1850 on Wednesday and is likely to be heading lower to 1.1750 in the next few days ahead. However, there a Hammer candlestick price pattern on the 4-hourly chart. Price will need to break below 1.1820 to confirm the bearish price trend. Else we are likely to head higher to 1.1905 again. Stochastic and MACD suggest a price move to the upside but 20EMA is suggesting a move to the downside.
| Support | 1.1810 | 1.1780 | 1.1750 |
| Resistance | 1.1840 | 1.1880 | 1.1910 |
GBP/USD – We had a buy recommendation on this pair on Monday at 1.3890 and yesterday, we had recommended placing stop at cost at 1.3890 while keeping profit target at 1.3980. Unfortunately our stop was triggered and we are out without a loss. Support remains at 1.3870 and we could be in a range with MACD and 20EMA flat and neutral until the NFP result. The topside of this range is at 1.3960.
| Support | 1.3910 | 1.3865 | 1.3825 |
| Resistance | 1.3960 | 1.4005 | 1.4035 |
USD/CAD – We had a buy recommendation at 1.2505 on Tuesday which was filled when price reached a low of 1.2495. Yesterday, we recommended keeping stop at 1.2485 and profit target at 1.2600. Unfortunately, our stop was triggered when price reached a low of 1.2474. We are out with a 20 pips loss. MACD and 20EMA are bearish but Stochastic has a bullish crossover and is in conflict with the other 2 indicators.
| Support | 1.2470 | 1.2450 | 1.2420 |
| Resistance | 1.2520 | 1.2550 | 1.2585 |
NZD/USD – We had a buy recommendation on this pair yesterday at 0.7020 but price only reached a low of 0.7036. Our view remains the same for today. We see support at 0.7030 and a rally to 0.7110 in the next few days. Only a price move 0.6995 would negate our bullish view with both 20EMA and MACD hinting of a bullish price trend. However, Stochastic is declining and not supportive of both MACD and 20EMA.
| Support | 0.7030 | 0.6995 | 0.6955 |
| Resistance | 0.7060 | 0.7085 | 0.7110 |