Market Talk
– The US dollar was down on Friday morning in Asia, with markets sorting a raft of central bank policy statements for clues to coming differences in interest rates and support for their economies.
– The British pound rose 0.45% on Thursday after the Bank of England surprised markets by becoming the first major global central bank to raise interest rates. The BoE hike interest rate by 0.15 percentage points to 0.25%.
– The euro firmed overnight, rising as high as 1.1360 after the European Central Bank took another small step to roll back crisis-era stimulus and adopted a more hawkish stance but kept interest unchanged at 0% for the moment.
– Data showed the number of Americans filing new claims for unemployment benefits increased moderately last week, remaining at levels consistent with tightening labour market conditions. A survey showed production at U.S. factories increased to the highest level in nearly three years in November.
– Gold was up above $1800 on Friday morning in Asia despite key central banks tightening monetary policies to calm high inflation while also keeping an eye on the impact of the omicron COVID-19 variant.
– Daily FX Commentary will take a break after today and will resume again on 3 Jan 2022
Chart Focus AUD/USD
Key Points
1. Buy AUD/USD recommendation.
2. Buy AUD/USD at 0.7150. Stop at 0.7120 and profit target at 0.7235.
3. Strong Aussie job data and interest rate differential are both keeping the Aussie stronger against the US dollar.
4. Price is likely to be supported by the 20EMA with both MACD and 20EMA hinting at a bullish price trend.
Fundamental Comments
1. Strong Aussie job data yesterday has raised expectations of an Aussie rate hike, in line with global peers.
2. Interest rate differential is currently in favour of the Aussie dollar.
Technical Comments
1. Price is likely to be supported by the 20EMA which is hinting at a bullish price trend.
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
| Support | 0.7150 | 0.7120 | 0.7085 |
| Resistance | 0.7185 | 0.7225 | 0.7255 |
Technical Overview
USD/JPY – Price reached a high of 114.27 on Wednesday but has declined to a low of 113.43 this morning. We are expecting the decline to continue towards 112.55 over the next few days. Stochastic has a bearish crossover and is heading lower. MACD remains bullish but there is a divergence warning of a possible price high. 20EMA has turned bearish and is hinting at a bearish price trend.
| Support | 113.45 | 113.05 | 112.55 |
| Resistance | 113.85 | 114.30 | 114.65 |
EUR/USD – Price had rallied on a more hawkish ECB and has reached an overnight high at 1.1360. We are expecting this rally to continue higher to 1.1465 in the next few days. Stochastic is rising but is near to the overbought zone. MACD remains bullish. 20EMA is pointing higher with a steep slope which is a hint of a strong bullish price trend. 20EMA line lies at 1.1300 and this could be a good location to get into a long position for another test to 1.1465.
| Support | 1.1315 | 1.1280 | 1.1255 |
| Resistance | 1.1360 | 1.1385 | 1.1430 |
GBP/USD – Price had rallied on a surprise rate hike by the BoE to a high of 1.3374. Stochastic is in the overbought zone but MACD remains bullish and is hinting at a bullish price trend. 20EMA is also hinting at a strong bullish price trend. We may see a correction to the 20EMA but this would offer a good buying opportunity for another test of the high at 1.3374 or to the Double Bottom chart pattern’s price target at 1.3410.
| Support | 1.3300 | 1.3260 | 1.3220 |
| Resistance | 1.3335 | 1.3375 | 1.3410 |
XAU/USD – Price reached a low of $1749.95 on Wednesday and has turned around, reaching a high of $1806 at the point of this writing. We are expecting the rally to continue towards the previous high at $1815.45. Stochastic is in the overbought zone but MACD remains bullish. 20EMA is pointing up with a steep slope, hinting at a strong bullish price trend.
| Support | 1798.50 | 1786.20 | 1775.60 |
| Resistance | 1808.65 | 1815.45 | 1828.50 |
USD/CAD – We had a sell call on this pair yesterday at 1.2850 but price did not reached our entry point and our order was not filled. Price has declined overnight and has reached a low of 1.2763. Stochastic is in the oversold zone and could be turning up, hinting at a reversal. MACD remains bullish but 20EMA is bearish. We think price may have reached a low and we could see a rally to 1.2850 again in the next couple of days.
| Support | 1.2785 | 1.2750 | 1.2715 |
| Resistance | 1.2810 | 1.2855 | 1.2900 |