Market Talk
– The U.S. dollar rose on Thursday after hawkish remarks from Federal Reserve officials reminded investors a less aggressive monetary policy is unlikely with U.S. employment data still showing a tight labour market.
– US Jobless Claims report showed claims fell last week, indicating the labour market is still tight despite the Fed’s aggressive interest rate hikes to cool demand in the economy.
– Sterling slid to $1.1866, on the day after the new British government delivered a new and more austere-looking budget as investors were left unimpressed by the UK government’s latest budget. The euro fell to $1.0365, after dropping as much as 0.86% earlier in the session. Earlier this week it had briefly touched $1.048, its highest level since July.
– The yen weakened 0.45% versus the dollar to 140.19, after falling earlier in the session. At its peak on Thursday it had risen 0.83% to 137.66. The Aussie dollar was down 0.82% at $0.6682, while the Kiwi was down to $0.6121.
– Spot gold fell 0.8% to $1,760.43 per ounce, retreating by 1% on Thursday as the dollar bounced, while recent comments from U.S. Federal Reserve officials signalled continuing policy tightening to tame inflation.
Chart Focus USD/CHF
Key Points
1. Buy USD/CHF recommendation.
2. Buy USD/CHF at 0.9500. Stop at 0.9470 and profit target at 0.9615
3. Hawkish remarks from Fed officials and a strong jobless claims are indicating Fed is likely to adopt an aggressive interest rate hikes path are both aiding the U.S dollar.
4. Price is likely to be supported by the 20EMA line as well as a previous resistance turned support line with MACD hinting at a bullish price trend.
Fundamental Comments
1. Hawkish remarks from Federal Reserve officials are aiding the U.S. dollar.
2. A strong U.S. jobless claims report showed claims fell last week, indicating Fed is likely to adopt an aggressive interest rate hikes path, aiding the U.S dollar.
Technical Comments
1. Price is likely to be supported by the 20EMA line as well as a previous resistance turned support line.
2. MACD and 20EMA remain bullish and hinting at a bullish price trend.
Key Levels
| Support | 0.9485 | 0.9430 | 0.9395 |
| Resistance | 0.9525 | 0.9555 | 0.9610 |
Technical Overview
USD/JPY – Price managed to move above the 20EMA line overnight but failed to trigger a rally. Price has since declined below 20EMA and we think price is likely to test the previous low at 137.77 again in the next 24 hours. Stochastic in the overbought zone and is hinting at a price decline. MACD and 20EMA are both weak and are both hinting at a possible price decline. Only a move above 140.80 would negate our bearish view.
| Support | 139.55 | 139.15 | 138.40 |
| Resistance | 140.05 | 140.30 | 140.75 |
EUR/USD – Price managed to stay above the 20EMA line overnight and this could be a hint of a possible rally to 1.0480 in the next 48 hours. Stochastic has a bullish crossover and is hinting at a price rally. MACD remains bullish and is also hinting at a price rally. As long as price stays above the 20EMA at 1.0335, we prefer a rally to 1.0480. Below the 20EMA would hint at a decline to 1.0920 in the next 1-2 days.
| Support | 1.0340 | 1.0280 | 1.0220 |
| Resistance | 1.0385 | 1.0430 | 1.0480 |
GBP/USD – Price reached a high and we saw a decline to 1.1762 overnight. We do not think this is the end of the correction. If price stays below the 1.1957 resistance, we are likely to see another decline to 1.1690 in the next 1-2 days. Stochastic is turning up, hinting the price decline is over. MACD is above the zero line and hinting the correction could be over while 20EMA is hinting at a bullish price trend.
| Support | 1.1880 | 1.1835 | 1.1760 |
| Resistance | 1.1925 | 1.1965 | 1.2025 |
XAU/USD – Our view remains the same as yesterday. Price reached a high of $1786.15 and had declined to a low of $1752.95. We think this is only the first part of the correction. We see price going lower to $1721.35 in the next few days. Stochastic is turning up from the oversold zone, hinting at a price rally. However, both MACD and 20EMA remains bearish. Only a price move above $1774 would negate our bearish view.
| Support | 1755.30 | 1743.40 | 1737.20 |
| Resistance | 1769.95 | 1786.15 | 1800.00 |
USD/CAD – We had a buy call yesterday at 1.3330 which was filled as price declined to a low of 1.3303. Price reached a high of 1.3400 but has declined to 1.3299 this morning. Our view remains unchanged and we would recommend keeping stop at 1.3295 while keeping profit target at 1.3470. Stochastic is hinting at a price decline but MACD and 20EMA remains bullish at the moment.
| Support | 1.3295 | 1.3265 | 1.3225 |
| Resistance | 1.3335 | 1.3400 | 1.3425 |