Market Talk
– The U.S. dollar steadied on Wednesday after it seesawed with bond market volatility as investors scrutinized U.S. economic indicators, Federal Reserve commentary and corporate earnings for clues about the path for interest rates.
– The euro rose to $1.0968 after two consecutive daily declines of more than 0.5%. The greenback gained 0.17% to 134.31 yen, recovering from a 0.29% retreat on Tuesday on the back of a rise in US 2-year Treasury yields, which reached an almost one month high of 4.231% overnight.
– Sterling was last trading at $1.2427, up 0.43% on the day. The British pound jumped despite an unexpected rise in the unemployment rate in the three months to February as pay growth stayed higher than forecast, which could prompt the Bank of England to hike its interest rate again in May.
– The Australian dollar rose against the greenback to $0.6730 after Reserve Bank of Australia minutes yesterday, showed the central bank considered an 11th consecutive rate hike in April before deciding to pause. The RBA, however, said it was ready to tighten further if inflation and demand failed to cool.
– Gold prices fell slightly in Asian trade on Wednesday but stayed above US$2000 level as markets awaited more cues on U.S. monetary policy from a string of upcoming Federal Reserve speakers and reports. But further gains were held back by growing uncertainty over the path of U.S. interest rates, with recent hawkish signals from Fed speakers having spooked markets.
Chart Focus Gold
Key Points
1. Sell Gold recommendation.
2. Sell Gold at $1999. Stop at $2013 and profit target at $1965.
3. Expectations of a other 25bp Fed hike and easing worries of a global recession are both weighing on Gold.
4. Price is capped by the 20EMA with MACD hinting at a bearish price trend.
Fundamental Comments
1. Expectations of another interest rate hike by the Fed is weighing on Gold.
2. A good China data overnight is easing worries of a global recession, which is likely to weigh on Gold.
Technical Comments
1. Price is capped by the 20EMA which is hinting at a bearish price trend
2. MACD is hinting at a bearish price trend.
Key Levels
| Support | 1980.95 | 1966.00 | 1949.65 |
| Resistance | 1998.85 | 2011.70 | 2022.65 |
Technical Overview
USD/JPY – Price reached a high of 134.70 on Tuesday morning but this high was accompanied by a divergence warning from the MACD indicator, hinting at a possible price high. A Spinning top candlestick price pattern is also hinting at a possible price high and a reversal ahead. Stochastic is hinting at a price decline but both MACD and 20EMA are hinting at a bullish price trend. We are expecting a rally to test the 134.70 in the next 24 hours before the decline kicks in.
| Support | 133.95 | 133.35 | 132.85 |
| Resistance | 134.70 | 135.10 | 135.80 |
EUR/USD – Price reached a low of 1.0908 on Monday and we have seen a rally to 1.0983. However, the rally is capped by the 20EMA and we could see a decline to 1.0865 in the next 24 hours. MACD is hinting at a price decline. 20EMA is also hinting at a price decline. However, Stochastic is hinting at a price rally. We think price is likely to be capped by the 20EMA and we see a decline to 1.0865.
| Support | 1.0940 | 1.0905 | 1.0865 |
| Resistance | 1.0985 | 1.1020 | 1.1075 |
GBP/USD – We had a sell order which was filled at 1.2435 when price reached a high of 1.2449 overnight. Our view remains unchanged from yesterday and we are looking at a price move to 1.2285 in the next 48 hours. Stochastic is rising but both MACD and 20EMA are hinting at a bearish price trend. We recommend keeping stop at 1.2475 and profit target unchanged at 1.2285.
| Support | 1.2405 | 1.2355 | 1.2305 |
| Resistance | 1.2450 | 1.2505 | 1.2545 |
USD/CAD – Price had reached a low at 1.3299 last week and we have seen a rally to 1.3419 yesterday. The rally was capped by the previous low turned resistance. If price is unable to move above this resistance, we are likely to see a decline to 1.3299. A move above 1.3420 would hints at a move to 1.3455. All 3 technical indicators, MACD, stochastic and 20EMA are all hinting at a price rally.
| Support | 1.3360 | 1.3300 | 1.3260 |
| Resistance | 1.3420 | 1.3455 | 1.3490 |
AUD/USD – The rally off the low at 0.6680 was capped by the Fibonacci 50% of the decline from 0.6805 to 0.6680. If price is unable to move above this resistance, we are likely to see a decline to 0.6615 in the next 48 hours. Stochastic is hinting at a price rally but both MACD and 20EMA are hinting at a price decline. A move above 0.6760 would negate our bearish view and hints at a rally to 0.6805.
| Support | 0.6695 | 0.6645 | 0.6615 |
| Resistance | 0.6745 | 0.6780 | 0.6810 |