Market Talk
– The dollar was down on Friday morning in Asia, tumbling to its lowest level in almost a month as the week draws to a close. Investors now await the latest U.S. jobs report that could prod the Federal Reserve to begin asset tapering earlier than expected.
– U.S. initial jobless claims fell and layoffs dropped to their lowest level in more than 24 years, hinting the US labour market was continuing its recovery. Still, rising COVID-19 cases in recent weeks have threatened the economic recovery, keeping the Federal Reserve from pulling back on its massive stimulus
– The euro edged up to 1.1880, its highest since Aug. 4. The greenback was little changed at 109.91 yen, holding near the center of its trading range since early July. Sterling broke above its strong resistance barrier at 1.3800 to reach a high of 1.3849.
– The Australian dollar was little changed at 0.7400 from Thursday, when it reached the highest since Aug. 5 at 0.7409. The New Zealand dollar was about flat at 0.7114 after rising to the highest since June 16 at 0.7120 in the previous session.
– Gold was up on Friday morning in Asia, eking out small gains against a subdued US dollar. Investors now await the latest U.S. jobs report to gauge the Federal Reserve’s timeline on asset purchases and interest rate hikes.
Chart Focus USD/CAD
Key Points
1. Sell USD/CAD recommendation.
2. Sell USD/CAD at 1.2565. Stop at 1.2595 and profit target at 1.2490
3. A subdued US dollar and rising crude oil prices are both aiding the Canadian dollar.
4. Price had broken below a strong support level and MACD and 20EMA are both hinting of a bearish price trend.
Fundamental Comments
1. A subdued US dollar is giving strength to the Canadian dollar.
2. A rising crude oil price is aiding the Canadian dollar.
Technical Comments
1. Price has broken below a strong support point and 20EMA is hinting of a bearish price trend.
2. MACD is bearish and is hinting of a bearish price trend.
Key Levels
| Support | 1.2535 | 1.2490 | 1.2450 |
| Resistance | 1.2575 | 1.2610 | 1.2655 |
Technical Overview
USD/JPY – Price reached a low of 109.77 and has started to move up again. We think the correction could be over and price could be heading higher again 110.45. Stochastic is still declining and hinting of a price decline but MACD is hinting of a bullish price trend ahead. However, 20EMA is neutral at the moment. We prefer the topside and only a move below 109.65 would negate our bullish view.
| Support | 109.65 | 109.35 | 109.10 |
| Resistance | 110.00 | 110.40 | 110.80 |
EUR/USD – Price has reached a high of 1.1880 but there is still a possibility of price moving higher. Stochastic is in the overbought zone but looks strong. MACD is bullish and is hinting of a bullish price trend. 20EMA is also bullish and hinting of a bullish price trend. All three indicators are hinting of a price rally. The next resistance lies at 1.1910.
| Support | 1.1850 | 1.1815 | 1.1780 |
| Resistance | 1.1885 | 1.1910 | 1.1940 |
GBP/USD – We had a buy call at 1.3700 last Friday and yesterday we had recommended bringing stop to 1.3745 and profit order to 1.3795. Our profit order was filled and we are out with a 95 pips profit. MACD and 20EMA are both hinting of a bullish price trend. Stochastic is close to the overbought zone but still looks strong. The next resistance lies at 1.3880.
| Support | 1.3805 | 1.3760 | 1.3730 |
| Resistance | 1.3845 | 1.3890 | 1.3925 |
XAU/USD – Since last Friday, we have been stating our case for $1831.70. The chance of hitting $1831 is lower by today. Stochastic has started to turn down while 20EMA has turned flat. MACD remains bullish but looks weak. These 3 indicators are hinting of a possible reversal in price. While we retain a hope for $1831, we are open to the possibility of a reversal in view of NFP tonight.
| Support | 1804.75 | 1794.40 | 1782.65 |
| Resistance | 1819.95 | 1831.20 | 1844.50 |
USD/CNH – We had a buy call at 6.4540 which was filled when price declined to a low of 6.4465. Our view remains unchanged and we would recommend keeping stop at 6.4440 and profit target at 6.4790. MACD continues to rise and show warnings of a potential low with divergence. Stochastic is in the oversold zone and is hinting of a possible price bottom. 20EMA remains bearish.
| Support | 6.4465 | 6.4335 | 6.4215 |
| Resistance | 6.4590 | 6.4720 | 6.4860 |