Market Talk
– The U.S. dollar was down on Friday morning in Asia but losses were minimized as growing concerns about a new coronavirus variant that could resist current vaccines dampened investors’ risk appetite and sent capitals into safe havens.
– South African scientists discovered the B.1.1.529 variant spreading in the country. The variant has a cluster of mutations that may help it evade the body’s immune response and make it more transmissible. It has since been found in Botswana and in Hong Kong
– Minutes from the European Central Bank’s October meeting showed most policymakers leaning toward continued stimulus and a cautious approach to any policy changes, despite the pressure from heated inflation. By contrast, money markets are pricing for a Fed rate hike by July, with good odds it could come in June.
– The euro edged up to 1.1221, as safety rather than interest rate differentials drove trade in Asia. Germany is considering following Austria’s lead and re-imposing a COVID-19 lockdown with the continent once again the epicentre of the pandemic.
– Gold was up on Friday morning in Asia, set for its worst week in five months over increasing bets that the U.S. Federal Reserve will accelerate asset tapering and hike interest rates quicker than expected to curb rising inflation.
Chart Focus USD/CHF
Key Points
1. Sell USD/CHF recommendation.
2. Sell USD/CHF at 0.9315. Stop at 0.9345 and profit target at 0.9250.
3. Concerns of a new COVID-19 variant have dampened risk appetite and drove investors into buying bonds and safe haven Swiss Francs.
4. An Ichimoku reversal and momentum indicators are hinting of a price decline ahead.
Fundamental Comments
1. Concerns of a new COVID-19 variant have dampened risk appetite and sent capitals into safe havens.
2. Worries over the impact of the new COVID-19 variant drove investors into bond, driving yields lower and weighing on the US dollar.
Technical Comments
1. An Ichimoku reversal is hinting of a price decline and a bearish price trend.
2. Stochastic and MACD are both moving lower and hinting of a price decline ahead.
Key Levels
| Support | 0.9290 | 0.9250 | 0.9215 |
| Resistance | 0.9320 | 0.9360 | 0.9400 |
Technical Overview
USD/JPY – Price saw a sharp decline to a low of 114.45 as investors moved into safe haven yen on news of a new COVID-19 variant. Stochastic continues to move lower but MACD remains bullish. MACD is also hinting at a bullish price trend. This decline could be correction and we could see a resumption of the uptrend once the correction is over. Wait for confirmation of a low before going long.
| Support | 114.45 | 114.15 | 113.70 |
| Resistance | 114.85 | 115.25 | 115.55 |
EUR/USD – Price hit a 17-month low on Wednesday’s night at 1.1186 after German business confidence slumped for a fifth straight month. Price has moved off the low and is testing the 20EMA resistance point at 1.2230. MACD had shown divergence earlier and Stochastic is rising from the oversold zone. We may see the rally continue towards 1.1280 before the decline resumes.
| Support | 1.1185 | 1.1140 | 1.1100 |
| Resistance | 1.1230 | 1.1275 | 1.1315 |
GBP/USD – We had a short position from Wednesday and had placed stop at 1.3390 and profit order at 1.3320 yesterday. Our profit order was filled this morning and we made 85 pips on this trade. Stochastic is barely moving up from the oversold extreme. MACD remains bearish and is hinting at a strong bearish price trend. 20EMA is pointing lower with a steep sloping warning of a strong bearish price trend.
| Support | 1.3280 | 1.3245 | 1.3205 |
| Resistance | 1.3315 | 1.3355 | 1.3390 |
XAU/USD – Yesterday, we had a sell order at $1802 but price only reached a high of $1798.70 and our entry order was not filled. However, our view remains unchanged. We see the upsides limited to $1802 and another decline to $1770 in the next few days. Stochastic continues to rise. MACD remains bearish and is hinting at a strong bearish price trend. 20EMA is also hinting at a bearish price trend.
| Support | 1787.80 | 1778.15 | 1770.40 |
| Resistance | 1802.10 | 1811.85 | 1822.15 |
USD/CAD – We had a buy order on Wednesday at 1.2670 which was filled. We had left stop order at 1.2635 and profit order at 1.2745. Price has risen to 1.2715 and we would recommend bringing stop higher to cost at 1.2670 and keeping profit target at 1.2745. Stochastic continues to move higher and MACD has turned bullish. 20EMA is bullish. All three indicators are hinting at a bullish price trend.
| Support | 1.2705 | 1.2670 | 1.2645 |
| Resistance | 1.2745 | 1.2775 | 1.2815 |