Market Talk
– The U.S. dollar was steady on Monday morning after hitting its highest level in more than a year after NFP data showed more jobs were created in the United States than expected in October, providing the U.S. Federal Reserve more proof that the economic recovery has regained momentum.
– Employment data from last Friday showed job growth surged more than expected in October, which could force Federal Reserve to hike rate earlier than expected. Friday’s robust U.S. payrolls report included upward revisions to the previous couple of months and another strong reading on wages.
– After briefly touching a 15-month top of 1.1512 on the euro in the wake of strong U.S. labour data on Friday, the greenback steadied at 1.1566 per euro. The dollar was marginally higher against the yen and crept from a one-week low to 113.49 yen.
– Sterling fell to a five-week low of 1.3425 on Friday before bouncing to hold at 1.3487 on Monday. The Bank of England’s surprise decision to keep rate steady triggered a sharp reversal late last week in what had become quite aggressive bets on imminent rate hikes in Britain and globally.
– Gold was up on Monday morning in Asia, hitting a two-month high on hopes of low interest rate in the near future. Gold rose as major central banks’ dovish tone on interest rates lifted the demand for the safe-haven yellow metal.
Chart Focus NZD/USD
Key Points
1. Trading Buy NZD/USD recommendation.
2. Buy NZD/USD at 0.7105. Stop at 0.7075 and profit target at 0.7160.
3. A likely correction after a strong rally and interest rate differential are both in the NZ dollar favour.
4. A bullish Flag chart pattern and bullish MACD are a hint of a likely price rally ahead.
Fundamental Comments
1. Friday’s strong rally after NFP which sent the US dollar to its highest in a year is in need to a price correction.
2. Interest rate differential remains in the NZ dollar’s favour.
Technical Comments
1. A bullish Flag chart pattern is hinting of a price rally.
2. MACD remains bullish and is hinting of a bullish price trend.
Key Levels
| Support | 0.7115 | 0.7070 | 0.7045 |
| Resistance | 0.7140 | 0.7180 | 0.7205 |
Technical Overview
USD/JPY – Price broke the support at 113.50 on Friday night and declined to a low of 113.29. We think the decline has likely completed its course. While Stochastic is still declining, is it near to the oversold zone. MACD remains bullish and has come close its zero line and could be turning around. However, 20EMA remains bearish. We think the downside could be limited and favour a move higher in the next few days to 114.70.
| Support | 113.25 | 112.95 | 112.60 |
| Resistance | 113.70 | 114.00 | 114.35 |
EUR/USD – Price reached a low of 1.1512 on Friday which is just 7 pips above our target. There are divergence warnings from both MACD and Stochastic, hinting of a possible price low. 20EMA is no longer bearish. We think price may have bottomed. If price can stay above 1.1512, we are likely to test 1.1615 again. A break of this resistance will lead to a test of 1.1690 in the next few days.
| Support | 1.1545 | 1.1510 | 1.1455 |
| Resistance | 1.1575 | 1.1615 | 1.1655 |
GBP/USD – Price continues it decline, breaking below Thursday’s low at 1.3470 after BoE did not hike rate. Price declined to a low of 1.3423 on Friday but has bounced up to 1.3490 on Monday’s morning. The bearish trend is still strong. Price will have to break above 1.3550 to negate the bearish trend. MACD and 20EMA remain bearish. However, Stochastic is in the oversold zone, warning of a limited downside.
| Support | 1.3470 | 1.3425 | 1.3355 |
| Resistance | 1.3510 | 1.3550 | 1.3605 |
XAU/USD – Price broke above the $1813 high and looks likely to continue its rally towards $1834 in the next few days ahead.20EMA is hinting of a strong bullish price trend but Stochastic is deep into the overbought zone. MACD remains bullish. As long as price stays above $1810, we remain bullish. A move below $1803 would negate our bullish view for the next few days.
| Support | 1813.65 | 1799.05 | 1789.80 |
| Resistance | 1821.40 | 1833.95 | 1845.60 |
EUR/AUD – Last Friday, we had a buy recommendation at 1.5605 which was filled when price went to a low of 1.5576. However on early Monday’s morning, price had a sharp decline to 1.5564 and our stop at 1.5565 was triggered. We are out of this trade with a loss of 40 pips. Both Stochastic and MACD are hinting of a possible price high at 1.5665. However, 20EMA remains bullish.
| Support | 1.5600 | 1.5565 | 1.5525 |
| Resistance | 1.5640 | 1.5665 | 1.5715 |