Market Talk
– The U.S. dollar extended declines for the third straight day, retreating on the Japanese yen, euro and sterling on hopes that China’s economy would pick up pace as COVID-19 curbs ease, although caution ahead of a week full of risk events, including the Federal Reserve’s policy meeting, could cap sentiment.
– Data on Thursday showed that U.S. jobless claims rose moderately last week, pointing to a still-tight and strong labour market despite growing fears of a recession. Focus is now squarely on U.S. producer price index inflation data for November, due later in the day.
– The U.S. dollar slid against the Japanese yen to 136.04 yen after benchmark U.S. 10-year Treasury notes eased 3 basis points to 3.4597%, compared with its U.S. close of 3.493%. The euro also rose to $1.0576, within a whisker of the five month high of $1.0594.
– The Aussie hit a four day high of $0.6801 after advancing 0.6% overnight. However it failed to sustain above 68 cents, giving back earlier gains to stabilizing around $0.6781. The kiwi rose 0.2% at $0.6393 but faces resistance around Tuesday’s top of $0.6441.
– Gold prices moved little on Friday as investors hunkered down ahead of key U.S. inflation data due later in the day, while fears of a recession invited some safe haven plays back into the yellow metal.
Chart Focus USD/CAD
Key Points
1. Sell USD/CAD recommendation.
2. Sell USD/CAD at 1.3595. Stop at 1.3630 and profit target at 1.3480.
3. A loosening of China’s COVID restrictions and anticipation of a slower pace of rate hike are both likely to weigh on the U.S. dollar.
4. Price is capped by the 20EMA with MACD hinting at a bearish price trend.
Fundamental Comments
1. A loosening of China’s COVID restrictions is boosting risk sentiment and weighing on the safe haven U.S. dollar.
2. Anticipation of a slower pace of rate hikes from the U.S. Federal Reserve is likely to weigh on the U.S. dollar.
Technical Comments
1. Price is capped by the 20EMA line which is also hinting at a bearish price trend.
2. MACD is turning bearish and is hinting at a bearish price trend.
Key Levels
| Support | 1.3560 | 1.3520 | 1.3475 |
| Resistance | 1.3605 | 1.3645 | 1.3695 |
Technical Overview
USD/JPY – Price has moved outside and below the uptrend channel and this is a hint of a bearish price trend. Stochastic is near to the oversold zone and is hinting at a limited downside. 20EMA has turned bearish and is hinting at bearish price trend. MACD is flat and neutral at the moment. We think price is likely to move lower to the next support level at 134.05. A move above 137.85 would negate our bearish price view.
| Support | 135.75 | 135.05 | 134.50 |
| Resistance | 136.30 | 136.85 | 137.25 |
EUR/USD – Price is close to the top end of its range at 1.0600. Stochastic is also in the overbought zone and is hinting at a limited upside. However, both MACD and 20EMA are hinting at a bullish price trend. We think price is likely to stay within the range. If price moved above the top end of the range, it is likely to head higher to the next resistance point at 1.0785.
| Support | 1.0565 | 1.0515 | 1.0485 |
| Resistance | 1.0595 | 1.0640 | 1.0700 |
GBP/USD – Our view remains the same as yesterday. We think price is likely to move higher to the next price resistance at 1.2345 in the next few days. Stochastic is rising and is hinting at a price rally. MACD is turning bullish and is hinting at a bullish price trend. 20EMA is pointing up and is hinting at a bullish price trend. However, a price move below 1.2190 would negate our bullish view.
| Support | 1.2220 | 1.2190 | 1.2150 |
| Resistance | 1.2275 | 1.2315 | 1.2345 |
XAU/USD – Our view remains the same as yesterday. We think price is en-route to the test the previous high at $1809.80 in the next few days. However, stochastic is moving into the overbought zone and is hinting at a limited upside. Both MACD and 20EMA are hinting at a bullish price trend. Only a price move below the support at $1780 would negate our bullish view for the next few days.
| Support | 1790.40 | 1780.40 | 1765.75 |
| Resistance | 1801.75 | 1809.80 | 1816.80 |
AUD/USD – Yesterday, we had a buy call at 0.6715 but price only declined to a low of 0.6716, missing our entry order. Price has moved higher overnight and has moved past our profit target at 0.6790. We think the rally can only higher to the next resistance point, which is also the Fibonacci 200% price projection at 0.6815 in the next 24 hours. Both MACD and 20EMA are bullish but stochastic is already in the overbought zone.
| Support | 0.6760 | 0.6715 | 0.6680 |
| Resistance | 0.6800 | 0.6850 | 0.6885 |