Market Talk
– The U.S. dollar climbed to a fresh 24-year peak versus the yen, holding above levels that prompted intervention by Japanese officials last month, while sterling decline slightly after a sharp rise in the previous session as investors pondered the Bank of England’s next steps.
– The Japanese yen floundered near a fresh 24-year low on Thursday at 146.95, prompting a top government spokesman to say, Japan stands ready to take appropriate steps against excess volatility in the foreign exchange market while watching currency movements with a great sense of urgency.
– Sterling eased 0.03% to $1.1095, stabilising after a sharp rebound in the previous session. It rallied 1.25% on Wednesday after the Financial Times reported that the BoE has signalled privately to lenders that it was prepared to extend its emergency bond-buying programme beyond Friday’s deadline if market conditions demanded it, though the central bank reiterated on Wednesday that its programme of temporary gilt purchases will end on Oct. 14.
– The euro gained 0.01% to $0.9702, while the Aussie was up 0.14% at $0.6287, after sliding to a 2-1/2-year low of $0.6235 in the previous session. The kiwi inched up 0.06% to $0.5611, not far from its trough of $0.5536 hit on Tuesday, the lowest level since March 2020.
– Gold prices were steady on Thursday after rising slightly in the prior session. Bullion prices had sunk this week amid more hawkish signals from the Federal Reserve, as well as growing safe haven demand for the dollar. Markets are now awaiting key U.S. later today for more cues on the path of U.S. monetary policy.
Chart Focus XAU/USD – Gold
Key Points
1. Sell Gold recommendation.
2. Sell Gold at $1674.90. Stop at $1683.05 and profit target at $1658.30
3. Hawkish signals from Fed officials and higher holding cost are both weighing on bullion.
4. Price is capped by the 20EMA with MACD and 20EMA both hinting at a bearish price trend
Fundamental Comments
1. More hawkish signals from the Federal Reserve are weighing on bullion.
2. Higher holding cost is weighing on bullion.
Technical Comments
1. Price is capped by the 20EMA which is hinting at a bearish price trend
2. MACD remains bearish and is hinting at a bearish price trend
Key Levels
| Support | 1658.30 | 1641.25 | 1629.40 |
| Resistance | 1673.05 | 1682.70 | 1693.65 |
Technical Overview
USD/JPY – Price continued its rally higher moved to a fresh 24-year high at 146.95 overnight prompting a top government spokesman to warn of appropriate steps against excess volatility. Stochastic continues to stay inside the overbought zone as 20EMA is hinting at a strong bullish price trend. MACD is also hinting at a bullish price trend. Price is likely to continue its move to 147.65 unless the BOJ comes in to intervene.
| Support | 146.35 | 145.90 | 145.35 |
| Resistance | 146.95 | 147.65 | 148.00 |
EUR/USD – Price continues to be capped by the 20EMA below 0.9720 despite a divergence warning from the MACD indicator. If price stays below 0.9730 are likely to see a continuation of the decline to the low at 0.9630 before the final test of 0.9535 in the next few days. Stochastic is rising but appears weak. MACD remains bearish despite a divergence warning. 20EMA is hinting at a bearish price trend.
| Support | 0.9685 | 0.9630 | 0.9590 |
| Resistance | 0.9730 | 0.9790 | 0.9830 |
GBP/USD – We had a sell call yesterday at 1.1060 but our call was wrong. Price rose to a high of 1.1137 overnight and our stop at 1.1095 was triggered. Stochastic is rising and is hinting at a bullish price trend but MACD remains bearish. 20EMA is neutral at the moment. We remain bearish on this pair and we are looking for a price decline to 1.0930 in the next few days. However a move above 1.1265 would negate our bearish view.
| Support | 1.1065 | 1.1015 | 1.0965 |
| Resistance | 1.1115 | 1.1180 | 1.1225 |
AUD/USD – Price continues to be capped by the 20EMA below 0.6300 despite a divergence warning from the MACD and stochastic indicator. Stochastic is rising from the oversold zone but appears weak at the moment. MACD remains bearish at the moment. 20EMA is capping price and is hinting at a bearish price trend. Price will need to move above 0.6350 to negate our bearish view for the next few days.
| Support | 0.6235 | 0.6185 | 0.6135 |
| Resistance | 0.6290 | 0.6330 | 0.6365 |
NZD/USD – Price is capped by the 20EMA at 0.5615 and we are likely to see another test of this week’s low at 0.5535 in the next 1-2 days. Stochastic is in the middle of its range and appear weak. MACD remains bearish and is hinting at a bearish price trend. 20EMA is also hinting at a bearish price trend. A move above 0.5660 would negate our bearish view for the next couple of days.
| Support | 0.5590 | 0.5560 | 0.5535 |
| Resistance | 0.5620 | 0.5660 | 0.5705 |