Market Talk
– The U.S. dollar held firm on Friday but was pinned down near 16-week lows against a basket of major currencies as data showing increased U.S. consumer spending in October emboldened investor hopes that the peak in interest rates was on the horizon.
– Data on Thursday showed that U.S. consumer spending in October increased at its greatest pace since January and the labour market remained resilient, with the number of Americans filing new claims for unemployment benefits declining last week.
– The greenback was 0.05% lower at 135.25 yen, having slipped as low as 135.045 yen earlier – the lowest since Aug. 18. The Japanese yen was the best performing Asian currency this week as it gained nearly 3% to recover from a 30-year low.
– The euro down 0.1% to $1.0512, after gaining 1% overnight to a fresh 5-month high at $1.0539, while sterling was last trading at $1.2237, down 0.13% on the day. The pound advanced 1.7% overnight and touched a 5-month high of $1.2311.
– Gold prices steadied around multi-month highs on Friday as markets hunkered down ahead of key U.S. payrolls data that could factor into the path of monetary policy, while copper stuck to a two-week high on hopes of a Chinese reopening.
Chart Focus AUD/JPY
Key Points
1. Buy AUD/JPY recommendation.
2. Buy AUD/JPY at 92.10. Stop at 91.80 and profit target at 92.60
3. Easing of COVID-19 restrictions in China and interest rate differential are both aiding the Aussie dollar.
4. Price may have reached a bottom as MACD is warning that price has reached a bottom.
Fundamental Comments
1. Easing of COVID-19 restrictions in China is aiding the Aussie and weighing on the safe haven yen.
2. Interest rate differential is in the Aussie dollar favour.
Technical Comments
1. Price may have reached a bottom and could be moving higher.
2. MACD may be forming a divergence which is a warning price has reached a bottom.
Key Levels
| Support | 91.85 | 91.45 | 90.80 |
| Resistance | 92.25 | 92.65 | 93.15 |
Technical Overview
USD/JPY – We had a sell call on yesterday at 137.40 but price only reached a high of 139.99 and our entry order was not filled. Price has reached a low at 135.00 this morning and we could be near to a low. Stochastic is inside the oversold zone and is hinting at limited downside. MACD remains bearish but could be forming a divergence warning of a possible price low. However, 20EMA is hinting at a strong bearish price trend.
| Support | 135.00 | 134.60 | 133.90 |
| Resistance | 135.55 | 136.15 | 136.80 |
EUR/USD – The rally continues and price is currently near to the resistance at 1.0540. Stochastic is in the overnight zone but looks like it will stay in the overbought zone for some more time. MACD remains bullish and is hinting at a bullish price trend. 20EMA is pointing up with a steep slope hinting at a strong bullish price trend. We could see price moving up to 1.0615 in the next 24 hours.
| Support | 1.0505 | 1.0465 | 1.0420 |
| Resistance | 1.0550 | 1.0615 | 1.0685 |
GBP/USD – Price reached a high 1.2309 overnight and has been declining. We think the price decline is likely to be halted by the previous resistance turned support line at 1.2152. From there we are likely to see a rally to test the previous high of 1.2152 again. Stochastic is in the overbought zone but both MACD and 20EMA are both hinting at a strong bullish price trend ahead.
| Support | 1.2210 | 1.2150 | 1.2100 |
| Resistance | 1.2260 | 1.2305 | 1.2395 |
XAU/USD – Price reached a high of $1804.45 overnight but the rally looks like it will continue to move higher to $1825 in the next few days. Stochastic is rising and is hinting at a bullish price trend. 20EMA is also rising with a steep slope hinting at a strong bullish price trend. MACD remains bullish but a divergence warning could be developing, hinting that price could be close to a high.
| Support | 1795.30 | 1786.40 | 1767.65 |
| Resistance | 1807.35 | 1816.80 | 1829.50 |
USD/CAD – Price is currently capped by the 20EMA at 1.3455. Stochastic is in the oversold zone and is hinting at a limited downside. MACD is near to the zero line and could move in either direction. MACD is neutral at the moment. 20EMA is hinting at a bearish price trend. If price can move above the 20EMA, it could be heading higher to 1.3575. However, if price is capped by the 20EMA, it could be heading lower to 1.3315. We prefer the downside.
| Support | 1.3390 | 1.3345 | 1.3295 |
| Resistance | 1.3455 | 1.3490 | 1.3530 |