Market Talk
– The U.S. dollar held near an almost one-month high on Friday, after U.S. labour data highlighted a still-tight labour market that could keep the Federal Reserve on its aggressive rate hike path. Tonight NFP will be closely watched for confirmation clues.
– U.S. ADP private payrolls report showed employers added 235,000 jobs in December labour despite the Fed’s attempt to tame inflation and suggesting there is room for higher rates. Another report showed weekly jobless claims fell last week.
– Sterling was last 0.1% higher at $1.1920, having fallen to a six-week low of $1.1873 on Thursday. The euro rose 0.02% to $1.0522, after tumbling 0.8% to touch a three-week trough of $1.0515 also in the previous session.
– Against the Japanese yen, the dollar climbed 0.36% to 133.88 yen, not far from its one-week top of 134.04 yen hit on Thursday. The Aussie slumped 1.3% in the previous session while the kiwi slipped 1% overnight to 0.6238.
– Gold prices slipped to $1836.60 per ounce on Friday but were on track for a third straight weekly gain, with investors keenly awaiting key U.S. jobs report to gauge the Federal Reserve’s rate-hike stance.
Chart Focus EUR/AUD
Key Points
1. Sell EUR/AUD recommendation.
2. Sell EUR/AUD at 1.5585. Stop at 1.5620 and profit target at 1.5415.
3. A softer Eurozone inflation data and the lifting of a coal ban are both aiding the Aussie.
4. Price is capped by the 20EMA line and MACD is also hinting at a bearish price trend.
Fundamental Comments
1. A softer European zone inflation data is hinting at a slower pace of ECB rate hike, weighing of the Euro.
2. The lifting of a coal ban from China is aiding the Aussie.
Technical Comments
1. Price is capped by the 20EMA which is also hinting at a bearish price trend.
2. MACD remains bearish and is hinting at a bearish price trend.
Key Levels
| Support | 1.5535 | 1.5495 | 1.5415 |
| Resistance | 1.5575 | 1.5615 | 1.5695 |
Technical Overview
USD/JPY – Price reached a low of 129.50 on Tuesday but this low was accompanied by a MACD divergence warning. Price has since rallied to a high of 134.36 this morning. Price is also near to a previous high at 134.50. Price will need to move above this resistance to continue its bullish trend for 137.50. However, stochastic is in the overbought zone. 20EMA and MACD remain bullish and are hinting at a bullish price trend.
| Support | 133.80 | 133.35 | 132.70 |
| Resistance | 134.50 | 135.05 | 135.75 |
EUR/USD – Price has reached our objective at 1.0515. The low this morning at 1.0510 was also accompanied by a divergence warning from the MACD indicator, hinting at a possible price low. Stochastic is also in the oversold zone and is hinting at a limited downside but 20EMA is hinting at a strong bearish price trend. We think price may have reached a temporary low but the next direction is likely to be decided by the NFP data tonight.
| Support | 1.0510 | 1.0445 | 1.0405 |
| Resistance | 1.0540 | 1.0595 | 1.0635 |
GBP/USD – The rally off the low of 1.1899 was capped by a previous resistance point at 1.2085 and we saw a decline to a fresh low at 1.1872. Stochastic is in the oversold zone but both MACD and 20EMA are hinting at a strong bearish price trend. We think there is likely to be another decline below 1.1872 to 1.1820 in the next 24 hours. NFP data tonight could alter our chart view.
| Support | 1.1870 | 1.1820 | 1.1780 |
| Resistance | 1.1935 | 1.1995 | 1.2030 |
XAU/USD – Price reached a low of $1825 overnight and this is also the Fibonacci 50% correction point of the rally from $1784.75 to the high at $1865.10. The rally is currently facing resistance from the declining 20EMA line at $1840. MACD remains bullish and is hinting at a bullish price trend. 20EMA is neutral at the moment. Stochastic is near to the oversold zone and is hinting at a limited downside. We are neutral on this pair and will look to NFP for the next direction of this pair.
| Support | 1831.40 | 1815.15 | 1802.20 |
| Resistance | 1843.70 | 1855.05 | 1865.10 |
AUD/USD – We had a buy call yesterday at 0.6800 but our call was wrong and our stop loss was hit. Price has moved below the 20EMA and MACD has also turned bearish. Both trend indicators are hinting at a bearish price trend. However, stochastic is near to the oversold zone and is hinting at a limited downside ahead. The next direction is likely to be decided by Non-farm payroll tonight.
| Support | 0.6735 | 0.6690 | 0.6650 |
| Resistance | 0.6785 | 0.6825 | 0.6885 |