Market Talk
– The U.S. dollar was little changed after the euro briefly slid to a new two-decade low on Thursday, and sterling held to gains after Boris Johnson said he was quitting as British prime minister. Investors are awaiting U.S. jobs data on Friday.
– A report on Thursday showed the number of Americans filing new claims for unemployment benefits unexpectedly rose last week and demand for labour is slowing with layoffs surging to a 16-month high in June.
– Sterling rose after Boris Johnson said on Thursday he was resigning as Britain’s prime minister, bowing to calls from ministerial colleagues and lawmakers in his Conservative Party. The British pound inched lower to 1.2000 from this morning high at 1.2055.
– The euro was down 0.26% to $1.0157 after setting a fresh two-decade low of 1.0138 on Friday morning. The Australian dollar rose 0.86% to $0.6839 against the greenback after recently slipping to its lowest level since June 2020 at $0.6762.
– Gold was marginally up on Friday, as the dollar clung to its 20-year peak, setting prices on course for their biggest weekly drop in eight weeks, by driving down demand for bullion.
Chart Focus USD/CAD
Key Points
1. Buy USD/CAD recommendation.
2. Buy USD/CAD at 1.2985. Stop at 1.2950 and profit target at 1.3080.
3. Safe haven demand and interest rate differential are both in the U.S. dollar favour.
4. Price is supported by Fibonacci 50% correction point with MACD and 20EMA hinting at a bullish price trend.
Fundamental Comments
1. Safe-haven demand on renewed worries about a global recession is aiding the US dollar.
2. Interest rate differential is in the U.S. dollar favour.
Technical Comments
1. Price is supported by Fibonacci 50% correction point with 20EMA hinting at a bullish price trend.
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
| Support | 1.2980 | 1.2950 | 1.2920 |
| Resistance | 1.3015 | 1.3050 | 1.3085 |
Technical Overview
USD/JPY – Price is consolidating around this week range of 136.35 to 134.75 ahead of NFP later in the global day. Tonight NFP is likely to determine the direction of this pair movement. Stochastic is near to the overbought zone but MACD is flat and neutral at the moment. 20EMA has turning bearish and is currently hinting at a bearish price trend. Watch for a break and follow in the direction of the breakout.
| Support | 135.30 | 134.90 | 134.50 |
| Resistance | 136.85 | 136.35 | 135.70 |
EUR/USD – Soaring gas prices in Europe have fueled recession concern sending the euro to a fresh 20-year low at 1.0138. 20EMA is pointing down with a steep slope, hinting at a strong bearish price trend. MACD is also hinting at a strong bearish price trend but stochastic is in the oversold zone and hinting at a limited downside. Price will need to move above 1.0230 to negate this bearish price trend.
| Support | 1.0135 | 1.0085 | 1.0035 |
| Resistance | 1.0175 | 1.0225 | 1.0260 |
GBP/USD – We had a sell recommendation yesterday but we got our call wrong. We lost 35 pips on this trade. Price has moved above the 20EMA and if price can stay above this 20EMA line support, are are likely to see a rally to the previous high at 1.2165. However, if price were to drop below the 20EMA line, we are likely to see a decline back to the previous low at 1.1870. Indicators are mixed at the moment.
| Support | 1.1995 | 1.1955 | 1.1895 |
| Resistance | 1.2055 | 1.2095 | 1.2125 |
XAU/USD – After reaching a low of $1732.05 on Wednesday, price has been consolidating in a tight range. The upside is likely to be capped by the 20EMA line and a previous support turned resistance at $1755.45. Stochastic is in the oversold zone but both MACD and 20EMA are hinting at a strong bearish price trend. However, price direction is likely to be determined by Non-farm payroll data tonight.
| Support | 1739.30 | 1732.05 | 1721.20 |
| Resistance | 1748.90 | 1764.20 | 1772.75 |
AUD/USD – Price has come up to a declining trendline from 16 June high at 0.7068 but failed to move above this trendline. 20EMA is currently supporting price at 0.6820. Price will need to break above this trendline to move higher. Inability to break above this trend line is likely to send price lower to 0.6763 again. Stochastic is rising and hinting at a price rally. Both 20EMA and MACD are flat and neutral.
| Support | 0.6815 | 0.6790 | 0.6760 |
| Resistance | 0.6860 | 0.6895 | 0.6920 |