Market Talk
– The US dollar fell on the heels of the December U.S. jobs report that missed expectations, but it was still viewed as good enough to keep the Federal Reserve on track to raise interest rates at its March meeting.
– The Labour Department said non-farm payrolls rose by 199,000 last month, well short of the 400,000 estimate. However, analysts noted underlying data in the report appeared sturdier, with the unemployment rate falling to 3.9% against expectations of 4.1% while earnings rose by 0.6%, indicating tightness in the labour market.
– The Japanese yen strengthened 0.22% versus the greenback at 115.59 per dollar. The yen has taken the brunt of the damage while the greenback has strengthened recently, with the dollar hitting a five-year high versus the yen earlier this week.
– Sterling was also marginally weaker on the dollar, rallying with bets that the Bank of England (BOE) is likely to be hiking in tandem with the Fed. The euro was up to $1.1361 as it strengthened against the greenback in the wake of the payrolls report.
– Gold prices edged up from three-week lows after data showed U.S. jobs growth was slower than expected last month even as the Federal Reserve signalled faster rate hikes. A rise in the US Treasury yield to a 2-year high capped the yellow metal rally.
Chart Focus Gold
Key Points
1. Sell Gold recommendation.
2. Sell Gold at $1798. Stop at $1807.50 and profit target at $1783.50
3. A rise in US Treasury yields and expectations of an interest rate hike are both likely to weigh on Gold.
4. Price is likely to be capped by the 20EMA and MACD is also hinting at a bearish price trend.
Fundamental Comments
1. A rise in the US Treasury yields to a 2-year high is likely to weigh on Gold.
2. Expectations that the Federal Reserve is on track to raise interest rates at its March meeting is likely to weigh on Gold.
Technical Comments
1. Price is likely to be capped by the 20EMA line which is also indicating a bearish trend.
2. MACD remains bearish and is hinting at a bearish price trend.
Key Levels
| Support | 1783.15 | 1773.55 | 1762.40 |
| Resistance | 1798.55 | 1808.40 | 1820.05 |
Technical Overview
USD/JPY – Price went into a correction after hitting a high at 116.35 on 4 January. The correction managed to stay above the Fibonacci 62% of the rally from 114.94 to the high at 116.35, keeping the bullish trend intact. Stochastic is turning up from the oversold zone while MACD is also turning up from below the zero line. Both indicators are hinting at a bullish price trend. We see price going up to test the high of 116.35 again over the next few days.
| Support | 115.50 | 115.20 | 114.90 |
| Resistance | 115.95 | 116.35 | 116.65 |
EUR/USD – Price has stayed within a range of 1.1275 to 1.1385 for the past 4 days and price is likely to stay within this range until there is a breakout. Stochastic is in the overbought zone and has a bearish crossover, hinting at a bearish price trend. MACD and 20EMA are both bullish and hinting at a bullish price trend. Watch the breakout of either range for clues. We prefer the downside.
| Support | 1.1315 | 1.1270 | 1.1230 |
| Resistance | 1.1360 | 1.1390 | 1.1430 |
GBP/USD – Price again tested the previous high at 1.3600 but was unable to move above 1.3600. Stochastic is near to the overbought zone and MACD is also hinting of a bearish price trend. If price is unable to move above 1.3605, we will stick to our bearish view. Price may also be forming a Rising Wedge chart pattern, which is also a sign of a market top in the process of forming.
| Support | 1.3555 | 1.3515 | 1.3480 |
| Resistance | 1.3605 | 1.3660 | 1.3700 |
NZD/USD – The rally off the low at 0.6732 was capped by the 20EMA at 0.6770. If price is unable to move above this level, we are likely to see another test of the low at 0.6730 in the next 48 hours. Stochastic is near to the overbought zone and MACD is turning down. Both indicators are hinting of a bearish price trend. 20EMA is also hinting of a bearish price trend. A price move above 0.6790 would negate our bearish call.
| Support | 0.6755 | 0.6730 | 0.6700 |
| Resistance | 0.6785 | 0.6820 | 0.6855 |
USD/SGD – We had a sell call last Friday at 1.3590 which was filled when price reached a high of 1.3603. Price had declined on Friday night to a low of 1.3539 which was just above our profit target at 1.3535. Our view remains the same. We would recommend moving stop lower to 1.3565 while keeping profit target at 1.3535. Stochastic is in the oversold zone but 20EMA is hinting at a bearish price trend.
| Support | 1.3540 | 1.3505 | 1.3470 |
| Resistance | 1.3570 | 1.3615 | 1.3665 |