Market Talk
– The dollar loitered around multi-week lows on Thursday, pressured overnight by softer-than-expected U.S. labour data which missed expectations by a wide margin. Traders also awaited a fuller jobs report on Friday night, which is expected to guide the timing of the Federal Reserve’s pullback in bond buying.
– ADP National Employment report showed private payrolls rose by 374,000 in August, up from 326,000 in July but well short of the 613,000 forecast by analysts. However the data still indicates a continuous and steady job market recovery.
– The Euro climbed to a one-month high of 1.1857 on Wednesday after a survey showed strong European manufacturing growth coupled with inflationary pressure from supply-chain snarls. Hawkish comments from European Central Bank policymakers about their tapering plans also helped the Euro.
– Sterling edged higher against the softer dollar, but found the going heavy into resistance around 1.38. The Aussie dollar showed little reaction to a record trade surplus and held steady at 0.7366, shy of its overnight top at 0.7384. The kiwi was supported above 0.70, as traders’ firmed bets on rate hikes in New Zealand in October and November.
– Gold was down on Thursday morning in Asia as investors largely looked past a slew of U.S. economic readings to focus on key labour data that could influence the Federal Reserve’s tapering plans.
Chart Focus USD/CNH
Key Points
1. Buy USD/CNH recommendation.
2. Buy USD/CNH at 6.4540. Stop at 6.4440 and profit target at 6.4790
3. Poor Chinese data is hinting of an economic slowdown while US labour data is showing continuous growth, which is likely to weigh the Chinese yuan.
4. Price may have made a Double Bottom and MACD is also hinting of a possible price low.
Fundamental Comments
1. Chinese manufacturing and non-manufacturing data shows the economy growth slowing down due to restrictions to curb the spread of COVID-19 outbreak.
2. US labour data may have slowed down but still shows that the labour market is enjoying a continuous and steady recovery.
Technical Comments
1. Price may have bottomed out as indicated by a possible Double Bottom chart pattern.
2. MACD is showing a bullish divergence warning which is a hint of a possible price bottom.
Key Levels
| Support | 6.4465 | 6.4355 | 6.4215 |
| Resistance | 6.4590 | 6.4720 | 6.4860 |
Technical Overview
USD/JPY – Price reached a high of 110.41 overnight but fell to a low of 109.87. As long as price does not moved above 110.25, are bearish on this pair. We are looking at a price decline to 109.75. Stochastic is declining after a bearish crossover. MACD remains bearish and 20EMA has also turned bearish. Both 20EMA and MACD are hinting of a bearish price movement.
| Support | 109.65 | 109.35 | 109.10 |
| Resistance | 110.00 | 110.40 | 110.80 |
EUR/USD – We had a buy call at 1.1790 yesterday but price only reached a low of 1.1793. Our order was not filled but our view remains unchanged. We are looking for price to proceed higher to 1.1870 in the next couple of days ahead. Stochastic continues to rise and MACD remains bullish. 20EMA is also bullish. All three indicators are hinting of a rally in price in the next 48 hours.
| Support | 1.1815 | 1.1780 | 1.1745 |
| Resistance | 1.1855 | 1.1885 | 1.1910 |
GBP/USD – We had a buy call at 1.3700 on Friday which was filled and yesterday we had recommended bringing stop to 1.3720 and profit order to 1.3810. The rally found the 1.38 resistance hard to crack. Stochastic is rising while MACD and 20EMA are both bullish. We would recommend shifting stop higher to 1.3745 and lowering profit order to 1.3795 for today.
| Support | 1.3760 | 1.3730 | 1.3680 |
| Resistance | 1.3810 | 1.3845 | 1.3895 |
XAU/USD – Last Friday, we had stated our case for $1831.70 and our view remains unchanged. Price has moved up to $1823.05 on Monday morning and we are expecting the rally to continue to $1831. On Tuesday, price declined to $1801.45 which we viewed as a correction. Price should start its rally toward $1831 in the next few days. MACD and 20EMA remain bullish. Stochastic is neutral. A price move below $1797 would negate our bullish view.
| Support | 1808.50 | 1794.40 | 1782.65 |
| Resistance | 1819.95 | 1831.20 | 1844.50 |
NZD/USD – Price formed a bullish Flag pattern on the 4-hourly chart yesterday. Price was able to hold above the 0.7030 support level as well. A price rally has seen price moved to 0.7080 and we are looking for a price move to 0.7120 in the next 24 hours. Stochastic has reached the overbought zone but MACD and 20EMA remains bullish. Both MACD and 20EMA are hinting price will go higher.
| Support | 0.7055 | 0.7020 | 0.6985 |
| Resistance | 0.7090 | 0.7120 | 0.7160 |