Market Talk
– The safe-haven US dollar hovered below a one-year high to major peers on Friday morning in Asia, amid improved risk sentiment, while traders awaited clues to the timing of the Federal Reserve’s next move as it looks to normalize policy.
– Uncertainty over the US debt-ceiling negotiations eased after U.S. Senate leaders moved to avert a U.S. debt default, while a global easing in energy prices tempered simmering stagflation fears. Investors are also keeping an eye on U.S. employment data for September due later on Friday.
– Sterling held gains from overnight to trade at $1.3617. Comments from new Bank of England Chief Economist Huw Pill that inflation pressures were proving stickier than initially thought reinforced expectations for a rate hike by February, and perhaps even this year.
– The dollar edged up to 111.69 yen, drifting toward the upper end of the trading range of the past week and a half. The euro consolidated around $1.1555, after dipping on Wednesday to a 14-month low of $1.1529.
– Gold fell as a drop in U.S. weekly initial jobless claims, ahead of the monthly jobs data later this week, boosted Treasury yields and stoked bets that the U.S. Federal Reserve may soon start winding down its economic support.
Chart Focus NZD/USD
Key Points
1. Sell NZD/USD recommendation.
2. Sell NZD/USD at 0.6930. Stop at 0.6960 and profit target at 0.6860
3. Rising Treasury yields and expectations of a US interest rate hike are both aiding the US dollar.
4. Price is capped by a strong Fibonacci resistance zone with both MACD and 20EMA hinting of a bearish price trend ahead.
Fundamental Comments
1. Rising US Treasury yield is aiding the US dollar.
2. Expectation of a US interest rate hike is aiding the US dollar.
Technical Comments
1. Price is capped by the Fibonacci 38% & 50% correction points.
2. MACD and 20EMA are both hinting of a bearish price trend ahead.
Key Levels
| Support | 0.6905 | 0.6860 | 0.6805 |
| Resistance | 0.6940 | 0.6990 | 0.7030 |
Technical Overview
USD/JPY – We had a buy call at 111.10 which was filled on Tuesday. Yesterday we had left stop at 111.10 and profit order at 112.00. For today, we would recommend bringing stop higher to 111.40 while keeping profit target unchanged at 112.00. Stochastic continues to rise and MACD remains bullish and is hinting of a bullish price trend ahead. 20EMA is also bullish.
| Support | 111.70 | 111.20 | 110.80 |
| Resistance | 112.10 | 112.40 | 112.90 |
EUR/USD – Price broke the 1.1560 support level and reached a low of 1.1528 on Wednesday. However, this low was accompanied by divergence warnings from both Stochastic and MACD indicator, hinting of a possible price low in the making. Stochastic is weak and MACD and 20EMA are bearish and hinting of a bearish price trend. Tonight NFP is likely to determine the next direction for this pair.
| Support | 1.1525 | 1.1490 | 1.1450 |
| Resistance | 1.1570 | 1.1615 | 1.1645 |
GBP/USD – We had a sell recommendation on this pair yesterday but our call was wrong. We lost 35 pips on this trade. Price has remained below the key resistance of 1.3660 and we remain bearish on this pair unless price can move above the key resistance. Stochastic is rising but MACD and 20EMA are both neutral and hinting of a consolidation. We are likely to see a directional clue after tonight NFP report.
| Support | 1.3590 | 1.3540 | 1.3485 |
| Resistance | 1.3660 | 1.3690 | 1.3745 |
XAU/USD – Price has been trading in a sideways rectangle pattern since the beginning of this week. The boundaries lie at $1770.35 and $1745.70. Price is likely to remain in these boundaries until there is a breakout. Tonight NFP could be the catalyst. Stochastic is in the middle of its range while both MACD and 20EMA are flat. MACD and 20EMA are hinting of a sideways consolidation ahead.
| Support | 1755.95 | 1745.70 | 1734.80 |
| Resistance | 1770.35 | 1787.10 | 1796.20 |
XAG/USD – Silver on the 4-hourly chart has been trying to break out of an Inverse Head and Shoulder chart pattern in the past few days. We saw a breakout above the neckline yesterday at $22.70 but it turned out to be a false breakout. Price reached a high of $22.80 and turned back below the neckline. MACD and 20EMA are both flat and neutral. Tonight NFP could provide the directional clue.
| Support | 22.40 | 22.05 | 21.70 |
| Resistance | 22.80 | 23.15 | 23.45 |