Market Talk
– The U.S. dollar was little changed on Wednesday morning as investors’ awaited guidance on the Federal Reserve’s interest rate hiking path, with hopes that U.S. interest rate hikes are likely to slow in the coming months.
– Data on Tuesday showed that U.S. consumer confidence slipped to a four-month low in November, with households less keen to spend on big-ticket items over the next six months amid high inflation and rising borrowing costs, heightening the risks of a recession next year
– The Australian dollar bounced back on Tuesday to 0.6684 as investors hoped China would ease COVID restrictions after Chinese health officials discussed speeding up COVID vaccinations for elderly people.
– The euro fell 0.15% against the U.S. currency to $1.0324, while sterling was last trading at $1.1951, down 0.06% on the day. The yen strengthened against the dollar to 138.63 per dollar.
– Gold prices were little changed on Wednesday, with investors largely focusing on Federal Reserve Chair Jerome Powell’s speech for insights into the U.S. central bank’s monetary policy path. But the outlook for gold still remains muted, given that the Fed is likely tighten monetary policy further amid at a slower pace.
Chart Focus USD/CAD
Key Points
1. Buy USD/CAD recommendation.
2. Buy USD/CAD at 1.3535. Stop at 1.3495 and profit target at 1.3640
3. Hawkish remarks from a Fed official and a slowdown in China due to COVID-19 are likely to weigh on the Canadian dollar.
4. Price is likely to be supported by the 20EMA line as well as a previous support zone with MACD hinting at a bullish price trend.
Fundamental Comments
1. Hawkish remarks from James Bullard is likely to aid the U.S. dollar.
2. Current COVID-19 cases and restriction in China are likely to weigh on crude oil and the Canadian dollar
Technical Comments
1. Price is likely to be supported by the 20EMA line as well as a previous support zone.
2. MACD remains bullish and is hinting at a bullish price trend.
Key Levels
| Support | 1.3555 | 1.3505 | 1.3460 |
| Resistance | 1.3595 | 1.3645 | 1.3680 |
Technical Overview
USD/JPY – Price declined to a low of 137.85 overnight, missing our entry order at 137.80. Price is currently capped by the 20EMA at 138.75 and will need to move above this resistance in order to move up to our target at 139.75. Stochastic is rising and is hinting at a bullish price trend. However, both MACD and 20EMA remain bearish and are hinting at a bearish price trend. We favour the upside to 139.75.
| Support | 138.05 | 137.65 | 137.10 |
| Resistance | 138.75 | 139.60 | 139.95 |
EUR/USD – Price has decline from a high of 1.0496 on Monday to a low of 1.0318 last night. We are likely to see price moving lower to 1.0220 in the next couple of days as MACD had given a divergence warning of a possible price high. 20EMA is also hinting at a price decline ahead. However, stochastic is inside the oversold zone and is hinting at a limited downside. Tonight Powell’s speech could decide the next price direction.
| Support | 1.0315 | 1.0280 | 1.0220 |
| Resistance | 1.0360 | 1.0395 | 1.0430 |
GBP/USD – Price was capped by the 20EMA overnight and if it stays below the 20EMA, we could see a price decline to 1.1760 in the next few days. A move above the 20EMA is likely to send price higher to 1.2165. Stochastic is in the oversold zone but is still moving lower. Stochastic is hinting at a limited downside but 20EMA remains bearish. MACD is also bearish. We prefer the downside to 1.1770.
| Support | 1.1935 | 1.1870 | 1.1825 |
| Resistance | 1.1980 | 1.2025 | 1.2075 |
XAU/USD – Price has been caught in a range from $1738 to $1763 for the past 5 trading days. We are likely to see price continues inside the range for the next 24 hours. Stochastic rising and is hinting at a bullish price trend but MACD remains bearish and is hinting at a sideways range. 20EMA is neutral and is also hinting at a sideways range. Watch the range boundaries for clues to the next price direction.
| Support | 1747.45 | 1731.35 | 1721.35 |
| Resistance | 1763.35 | 1773.25 | 1786.25 |
XAG/USD – Last Friday, we had a buy call at $21.15 which was filled. Yesterday, we left orders for stop at $20.80 and profit order at $22.10. Price declined to a low of 20.85 overnight and has bounced up to $21.25. Stochastic is rising but MACD is bearish. 20EMA is neutral at the moment. The chart outlook is currently mixed. We would recommend keeping stop at $20.80 while lowering profit order to $21.75.
| Support | 21.15 | 20.80 | 20.55 |
| Resistance | 21.40 | 21.75 | 22.00 |