Market Talk
– The dollar was firm on Wednesday as stronger-than-expected U.S. economic data and hawkish Federal Reserve comments pointed to higher interest rates, while rate-hike bets in Europe also have the common currency clinging on above parity.
– U.S. job openings increased 199,000 to 11.239 million in July, data released overnight showed, pointing to persistently strong demand for labour and possibly foreshadowing a strong showing for broader labour data due on Friday.
– Data on Tuesday showed German inflation rose to its highest in almost 50 years in August, strengthening the case for the European Central Bank to also go for a super-sized rate hike next month, helping to keep the Euro near to parity against the greenback.
– Sterling inched higher to $1.1666 in early Asian trade, after hitting a fresh 2-1/2-year low of $1.1622 overnight. The yen steadied at 138.56 per dollar. The Australian and New Zealand dollars were nursing losses, but both steadied in early trade to put the Aussie at $0.6861 and the kiwi at $0.6139
– Gold prices fell on Wednesday but were hovering near a one-month low of $1,719.56, set Monday. Gold price is set for a fifth straight month of losses amid fears of aggressive policy tightening by the Federal Reserve,
Chart Focus NZD/USD
Key Points
1. Buy NZD/USD recommendation.
2. Buy NZD/USD at 0.6135. Stop at 0.6100 and profit target at 0.6220.
3. A positional adjustment ahead of NFP and a better than expected China PMI are both likely to aid the NZ dollar.
4. Price has managed to hold above the previous day’s low and MACD has a divergence warning of a possible price low.
Fundamental Comments
1. A likely positional adjustment ahead of NFP is likely to aid the NZ dollar.
2. A better than expected China PMI is likely to aid the NZ dollar.
Technical Comments
1. Price has managed to hold above the previous day’s low and is hinting at a reversal.
2. MACD has a divergence warning of a possible price low.
Key Levels
| Support | 0.6120 | 0.6095 | 0.6060 |
| Resistance | 0.6160 | 0.6195 | 0.6230 |
Technical Overview
USD/JPY -Price has a breakout from the Flag pattern but has no strong momentum to reach its pattern target price, touching the $139.06 and declined to a low at $138.41 this morning. There is a bearish divergence warning from the MACD indicator, hinting at a possible price high. Stochastic is in oversold condition and is hinting at a price decline. However, 20EMA is still bullish but we think price may have reached a high.
| Support | 138.20 | 137.70 | 137.20 |
| Resistance | 138.65 | 139.05 | 139.40 |
EUR/USD – Price has broken above the sideways range after being capped at the resistance 1.0045 level. Stochastic is moving higher and hinting at a price rally. 20EMA is pointing upwards which indicates bullish price trend. MACD remains above the zero line and hints at a bullish price trend. We may see the price continue its rally to test the previous high at $1.0075.
| Support | 0.9985 | 0.9945 | 0.9900 |
| Resistance | 1.0045 | 1.0075 | 1.0125 |
GBP/USD – Price broke below the bearish pennant pattern and made a new lower low at $1.1620. Stochastic is in the oversold zone and is hinting at a limited downside. The price is still below 20EMA which indicates bearish price trend. MACD has a divergence warning of a possible price low in the marking. If the support at $1.1645 is violated, it will negate our price bottoming view and calls for a decline to 1.1595
| Support | 1.1645 | 1.1595 | 1.1555 |
| Resistance | 1.1695 | 1.1740 | 1.1795 |
XAU/USD – Price has broken below our support at $1730.70 and retesting the previous low at $1720.10. If the price is unable to sustain above this level, the price may have a further downside towards the next support at $1711.15. Both 20EMA and MACD indicators are bearish and are hinting at a bearish price trend. Stochastic has a bearish crossover but is near to the oversold zone, hinting at a limited downside.
| Support | 1719.80 | 1711.15 | 1696.75 |
| Resistance | 1730.70 | 1740.50 | 1755.80 |
USD/CAD – We had a buy call at $1.3000 on Tuesday which was filled overnight. Price reached a high at $1.3107 last night and our profit order was filled. We are out of this position with a 75 pips profit. Stochastic is entering into the overbought zone. There are potential divergences forming by the stochastic and MACD indicators. We think price has reached a high but 20EMA is hinting at bullish price trend.
| Support | 1.3055 | 1.3025 | 1.2990 |
| Resistance | 1.3110 | 1.3140 | 1.3180 |