Market Talk
– The euro fell back below parity against the greenback after the European Central Bank raised interest rates, and U.S. Advance GDP data showed that the world’s biggest economy rebounded more than expected in the third quarter.
– The euro was lower at $0.9960 on Friday morning, following a more than 1% slide overnight, after the ECB raised rates by 75 basis points, as expected, but took a more dovish tone on its rate outlook. Sterling fell to $1.1550, on optimism that new British PM Rishi Sunak would offer an antidote to the mess left by his predecessor Liz Truss.
– The Bank of Japan maintained its ultra-low interest rates and dovish policy guidance on Friday, cementing its status as an outlier among global central banks tightening monetary policy, as recession fears dampen prospects for a solid recovery. The yen was little change at 146.26.
– The Aussie was down 0.09% at $0.6448 while the kiwi edged 0.11% lower to $0.5823, though both looked set to extend a second straight week of gains against the U.S. dollar.
– Gold prices fell slightly on Friday as the dollar recovered on stronger-than-expected third-quarter U.S. GDP data. However, U.S. consumer and business spending slowed in the third quarter, pointing to a possible peak in inflation that could allow the Federal Reserve to ease its aggressive hiking of interest rates.
Chart Focus GBP/USD
Key Points
1. Buy GBP/USD recommendation.
2. Buy GBP/USD at 1.1520. Stop at 1490 and profit order at 1.1640.
3. Optimism from new British PM Rishi Sunak and expectations the Fed would ease its aggressive hiking of interest rates are both aiding the pound.
4. Price is supported by the 20EMA with MACD and 20EMA both hinting at a bullish price trend
Fundamental Comments
1. Optimism that new British PM Rishi Sunak would offer an antidote to the mess left by his predecessor Liz Truss is aiding the British pound.
2. Data pointing to a possible peak in inflation that could allow the Federal Reserve to ease its aggressive hiking of interest rates is weighing on the U.S. dollar.
Technical Comments
1. Price is likely to be supported by the 20EMA which is also hinting at a bullish price trend.
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
| Support | 1.1515 | 1.1470 | 1.1430 |
| Resistance | 1.1590 | 1.1645 | 1.1695 |
Technical Overview
USD/JPY – Price has reached a low of 145.10 yesterday and there was a rally to 146.85. However, the rally was capped by the 20EMA line, keeping the trend bearish. If price fails to move above the 20EMA line, we are likely to see another test of the low at 145.10 again in the next 24 hours. Both MACD and 20EMA remains bearish. Stochastic is near to the oversold zone and is hinting at a limited downside.
| Support | 146.05 | 145.65 | 145.10 |
| Resistance | 146.60 | 146.95 | 147.35 |
EUR/USD – Price is currently being supported by the 20EMA. MACD is bullish and is hinting at a bullish price trend. Stochastic is declining and is hinting at a price decline. If price can stay above the 20EMA, we are likely to see another test of the previous high at 1.0095 again in the next 48 hours. However, a price move below the 20EMA is likely to hint at a price top and a reversal back to 0.9850.
| Support | 0.9960 | 0.9895 | 0.9850 |
| Resistance | 1.0000 | 1.0045 | 1.0095 |
AUD/USD – After reaching a high of 0.6521 overnight, we have seen a price decline to 0.6425. This is also the 20EMA support and if price can stay above this support, we are likely to see another test to the overnight high at 0.6521 in the next 24 hours. However a decline below the 20EMA support is likely to send price lower to 0.6270 in the next few days. We prefer the upside as MACD and 20EMA are bullish.
| Support | 0.6425 | 0.6365 | 0.6310 |
| Resistance | 0.6470 | 0.6520 | 0.6575 |
XAU/USD – We had a buy recommendation at $1645 from Tuesday and yesterday we had left stop to $1648 and profit order to $1675. Overnight price moved within our stop and profit order and we would recommend keeping stop and profit orders unchanged for today. MACD is forming a divergence while stochastic is hinting at a price decline. However, 20EMA remains bullish and is hinting at a price rally.
| Support | 1653.60 | 1637.55 | 1626.80 |
| Resistance | 1666.70 | 1674.80 | 1685.35 |
USD/CAD – We had a sell call which was filled when price reached a high of 1.3626 overnight. Price declined to a low of 1.3495 after the high and our profit order was filled at 1.3505. We made 105 pips on this trade overnight. MACD has formed a divergence warning with price, hinting at a possible price low. Stochastic is also in the oversold zone and is hinting at a limited downside. However, 20EMA remains bearish.
| Support | 1.3525 | 1.3495 | 1.3460 |
| Resistance | 1.3560 | 1.3605 | 1.3650 |