FX Commentary – Eyes On Trump’s Speech For Rollback Of Tariffs Clues

– The dollar slid on Monday as investors remained cautious after U.S. President Donald Trump denied he would roll back  tariffs which dashed investors optimism that Washington and Beijing would soon reach a phase one deal to end their trade war.

– Trump said on Friday he had not agreed to roll back tariffs on China. That conflicted with comments from the Chinese commerce ministry, which said both sides had agreed to cancel existing levies in phases. An US official had also said both sides agreed to roll back the tariffs in trenches.

– The NZ dollar was dragged lower after NZ data disappointed ahead of RBNZ monetary policy decision tomorrow. Inflation Expectation Q/Q was 1.8% against 1.86% previously. Data has increased the odd of a RBNZ 25bp rate cut to 76%.

– Gold fell on Monday to its lowest price in more than three months, dragged below technical support as upbeat risk sentiment kept U.S. stock indexes close to record levels, while investors awaited news on the U.S.-China trade.

– Sterling surged overnight after Brexit Party leader Nigel Farage said his party would not contest seats contested by the Conservative Party in the previous election. His comments increase the chances of the Tories winning a majority during the U.K. general election on Dec. 12. That would secure the EU withdrawal agreement made last month by Prime Minister Boris Johnson.

Chart Focus GBP/JPY
Key Points
1. Buy GBP/JPY recommendation
2. Buy GBP/JPY at 140.40. Stop at 140.10 and target at 141.40
3. Brexit Party’s decision and optimism over a Sino-US trade deal are likely to benefit Sterling.
4. An Ascending Triangle chart pattern and bullish momentum indicators are hinting of further price advancement.

Fundamental Comments
1. Nigel Farage’s Brexit Party decision not to contest against the Conservative Party could benefit Boris Johnson’s Brexit agreement with EU
2. Optimism of a US-Sino trade deal is likely to decrease demand for safe haven yen

Technical Comments
1. Price is in an Ascending Triangle chart pattern, which is a hint of another rally in the making
2. MACD is turning bullish while Stochastic continues to rise, hinting of further price upside

Key Levels

Support 140.30140.00139.65
Resistance 140.65141.00141.35

Technical Overview

USD/JPY – Price was supported at 108.90 overnight and has bounced up again to 109.20. We think the rally can continue towards 109.50. Stochastic has a bullish crossover and is rising. MACD is bullish and the faster line has moved above the zero line. 20EMA is also rising. A move below 108.920 would negate our bullish view.

Support 108.90108.65108.25
Resistance 109.20109.50109.90

EUR/USD – Price may have reached a correction low at 1.1018. MACD has given bullish divergence warning of a potential low while Stochastic is rising from the oversold extreme. 20EMA is currently providing resistance at 1.1045. A break of this resistance would open up 1.1090

Support 1.10151.09901.0965
Resistance 1.10501.10951.1130

GBP/USD – Price rallied overnight on easing worries of a hung UK parliament and increased hopes of a Brexit, rising to a high of 1.2897. Yesterday’s low of 1.2770 could be a correction bottom and price could be moving above 1.3010 in the next couple of weeks. Stochastic is rising and MACD is also rising.

Support 1.28401.28001.2750
Resistance 1.28951.29251.2970

XAU/USD – Yesterday, price reached a 3-month low at 1448.10. However, Stochastic is into oversold extreme and MACD while still bearish, has shown a bullish divergence warning, hinting of a possible low. 20EMA, on the other hand is still bearish and its gradient is steep, which is a hint of a strong bearish trend. Wait for better trading idea.

Support 1447.851439.401430.80
Resistance 1456.951465.401473.10

AUD/JPY – Our sell recommendation was filled yesterday, but price range was not large yesterday. Price, supported at 74.55 overnight was a concern. We would recommend bringing stop lower to 74.90 while keep profit target at 73.95. Stochastic and MACD are both turning around. Both momentum indicators are hinting of further price upside.

Support 74.5574.2573.90
Resistance 74.8575.2075.65

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FX Commentary – Will Sterling Moves Above 1.2500?

– Gold prices eased on Friday, heading for a third straight weekly fall, as positive U.S. retail sales data and renewed hopes for a thaw in Sino-U.S. trade tensions lifted equities and yields to multi-week highs but depressed Gold and safe haven currencies.

– The dollar rose overnight against the Japanese yen after Donald Trump said he would not rule out an interim trade pact with China and then gave back some of those gains. The offshore Yuan strengthened to a four-week high of 7.0330 on the back of Sino-U.S. trade optimism.

– Investors pounced on a media report that Northern Ireland’s largest political party had agreed to accept some European Union rules after Brexit sending the pound to a seven-week high of $1.2435 on Friday on receding fears of a no-deal Brexit and dollar weakness. This report was denied by DUP but Sterling was able to maintain its gains.

– The EUR/USD rocketed to a 17-day high on Friday as German government bond yields surged on the back of investors thinking the European Central Bank was done stimulating the ailing euro zone economy after cutting rates on Thursday and exempting euro zone banks from a penalty charge, which analysts say will reduce the currency impact of new stimulus.

– Investors are now awaiting the U.S. central bank meeting later this week, when it is expected to cut its benchmark interest rate by at least 25 basis points for the second consecutive time.

Chart Focus EUR/JPY
Key Points
1. Buy EUR/JPY recommendation
2. Buy EUR/JPY at 119.30. Stop at 118.90 and target at 120.05
3. Euro zone banks are exempted from a negative rate penalty charge, which analysts say will reduce the currency impact of new stimulus.
4. Price is supported by the 20EMA with MACD bullish and hinting of further price upside

Fundamental Comment
1. Euro may have a negative interest rate but ECB has exempted Euro banks from a penalty charge which is good for the single currency.
2. JPY has gained on attack on Saudi oil facility but this could have been priced into JPY strength and discounted into price.

Technical Comments
1. Price is supported by the 20EMA
2. MACD is bullish and could be turning up again

Key Levels

Support 119.20118.85118.55
Resistance 119.60120.05120.35

Technical Overview

USD/JPY – Price gapped lower this morning on news of attack on Saudi oil production facility. Price is moving up again but could find resistance at 107.95 to 108.05. If price is unable to move above this resistance zone, price is likely to head lower to 107.00 in the next couple of days. Stochastic is moving lower but MACD is still bullish.

Support 107.65107.45107.10
Resistance 107.95108.25108.55

EUR/USD – Price reached a high of 1.1109 on Friday but has been drifting lower this morning. Support is located at 1.1055 and if this area can hold, price is likely to move higher to test the recent high of 1.1109. Stochastic is into the overbought zone but is still strong. MACD is bullish and is rising.

Support 1.10551.10251.0985
Resistance 1.10851.11101.1160

GBP/USD – Price has been rising since 3 Sep and we could be coming to the end of the rally. Price reached a high of 1.25 this morning but we are seeing bearish divergence warnings from both Stochastic and MACD. If price is capped at 1.2500, we could see a fall back to 1.2360 in the next few days

Support 1.24601.24001.2350
Resistance 1.25051.25551.2585

XAU/USD – Gold dipped to a low of 1480 but has bounced higher as a result of attack on Saudi oil facility. Our view remains the same. We viewed 1556 as a top and we are looking for a price correction to 1463 in the next few days. However a movement above 1530 would negate our bearish view.

Support 1500.751491.651480.45
Resistance 1512.401524.401533.65

GBP/JPY – Our sell call on Thursday was stopped out for a loss of 40 pips. Price dropped to a low of 132.14 but quickly reversed to a high of 135.20. Stochastic is in overbought zone but MACD is bullish at the moment. 20EMA is also bullish and support is likely at 20EMA point of 133.70. .

Support 134.25133.70133.10
Resistance 134.65135.20135.65

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FX Commentary – Gold To Decline To $1453

– U.S. President Donald Trump tweeted on Wednesday that increased tariffs on 250 billion dollars’ worth of Chinese goods that were set to kick in on October 1 have now been delayed to October 15 “as a gesture of good will” and in consideration of the 70th anniversary celebrations of the People’s Republic of China.

– The yen was the weakest since Aug. 1 as optimism over U.S.-China trade talks boosted risk sentiment and reduced demand for safe havens. China announced its first batch of tariff exemptions for 16 types of U.S. products, days ahead of a planned meeting between the two countries to try and de-escalate their bruising tariff fight.

– Gold rose on expectations of monetary policy easing by top central banks while global growth risks continue to linger, although improved appetite for riskier assets capped bullion’s gains and kept it near a four-week low. Spot gold is still targeting $1,453, as it has breached a support at $1,497 per ounce, according to Reuters technical analyst Wang Tao.

– U.S. data on Wednesday showed that U.S. producer prices unexpectedly rose in August and underlying producer prices rebounded, but that data will not change financial market expectations that the Federal Reserve will cut interest rates again next week to support a slowing economy.

– Euro slumped as investors await the ECB’s decision on interest rates, set to be announced at 7:45 p.m.  There is a unanimous consensus for easing measures to be announced, but a great deal of uncertainty on what exactly these measures might entail.

– There will be no Daily FX Commentary on Friday 13 Sep 2019

Chart Focus GBP/JPY
Key Points
1. Sell GBP/JPY recommendation
2. Sell GBP/JPY at 133.50. Stop at 133.90 and target at 130.80
3. Worries and uncertainty over a no-deal Brexit is likely to weigh on Sterling
4. Rising Wedge chart pattern is warning of a reversal and momentum indicators are also warning of a reversal

Fundamental Comment

1. Worries over a hard Brexit will weigh on Sterling
2. Uncertainty over Brexit is likely to benefit safe haven JPY

Technical Comments

1. Worries over a hard Brexit will weigh on Sterling
2. Uncertainty over Brexit is likely to benefit safe haven JPY

Key Levels

Support 132.90132.50132.15
Resistance 133.55133.85134.15

Technical Overview

USD/JPY – Price reached a high of 108.16 this morning, filling our profit order at 107.95. We are out with a 75 pips profit. Stochastic is still rising and MACD is rising as well but price has reached the Fibonacci 161.8% projection target. There was also a Spinning Top candlestick pattern warning of a possible price high.

Support 107.90107.50107.20
Resistance 108.25108.55108.95

EUR/USD – Yesterday, we had raised our stop for our buy call on 9 Sep to cost at 1.1025. Our stop was taken out last night. The next direction for this pair will depend on the outcome of the ECB meeting at 7.45pm tonight as well as the press conference at 8.30pm. Stay aside for today.

Support 1.09851.09501.0925
Resistance 1.10251.10551.1085

GBP/USD – Price range was just 65 pips as UK parliament goes into a recess. Our view remains the same as yesterday. If price is unable to move above 1.2385, there is a danger of a price decline to 1.2230. MACD is still bullish but Stochastic is declining. 20EMA is flat at the moment. Wait for better trading signals.

Support 1.22901.22551.2205
Resistance 1.23351.23851.2420

XAU/USD – Price may have made a temporary low at 1484.37 and could be heading higher to 1499 to 1504 to test the upside. This rally is likely a correction rally in a bigger bearish trend. MACD is still bearish but Stochastic is rising. 20EMA is still pointing lower but could be turning flat soon.

Support 1484.401474.251463.95
Resistance 1500.751515.051529.20

NZD/USD – Our buy call was filled yesterday when price reached a low of 0.6405. Our view remains unchanged. We would recommend bringing stop higher to 0.6395 and keep profit target at 0.6490. MACD is bullish and is rising. Stochastic has a bullish crossover and is rising. Both momentum indicators are hinting of further price advance.

Support 0.64050.63850.6355
Resistance 0.64450.64700.6500

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FX Commentary 3 May 2019

Market Talk

– Bank of England unanimously kept interest rates unchanged at 0.75% but warned that one or more rate hike could be needed in future to keep inflation in check. BOE’s inflation report showed an upgrade of growth forecast but cut inflation forecast to negate the positive sentiment. Sterling was little changed.

– Euro gained against the US$ after German retail sales contracted by less than expected while other Euro zone members’ PMI were broadly within expectations. These data showed that Euro zone economy may not be as bad as market had initially expected.

– Australian Building approval dropped more expected with data released on Friday morning. Australian Building approvals has been weak along with housing finance and house prices. Aussie Service PMI was higher than expectation, helping to offset weakness in housing sector. Aussie was weaker today and fell below 0.70.

– Investors are wary of more partisan infighting that could hurt the chances of the White House and Congress working together on an infrastructure bill and a plan to raise the debt ceiling after House Speaker Pelosi accused U.S. Attorney General of lying to Congress to protect Trump.

– U.S. Non-Farm payroll is set to be released on Friday night at 8.30pm and US ISM Non-Manufacturing PMI is scheduled for 10pm. Both are likely to give an indication of the health of the US economy and will be closely watch.

Chart Focus GBP/JPY

Key Points

1. Buy GBP/JPY recommendation

2. Buy GBP/JPY at 145.10. Stop at 144.60 and target at 146.20

3. Optimism of a cross Brexit party deal and a shift away from safe haven have benefited Sterling

4. Price is supported at 20EMA and Fibonacci 38% points, with MACD bullish and Stochastic turning up are hints of a possible price rally.

Fundamental Comments

1. Optimism of a cross party talk that could lead to UK parliament passing of a Brexit deal has lifted Sterling off a 2-week low

2. An increase in risk appetite has shifted capital away from safe haven JPY to more risker assets.

Technical Comments

1. Price is supported at the 20EMA line as well as Fibonacci 38% correction point of the rally

2. MACD is bullish and Stochastic is turning up from the oversold low

Key Levels

Support 145.05 144.70 144.25
Resistance 145.50 145.80 146.30

Technical Overview

USD/JPY – Price did not test the 111.90 resistance yesterday but instead consolidated around the previous support area of 111.35. 20EMA line is flat at the moment. MACD is also flat and neutral. Price could be in a consolidation till tonight NFP data. The next direction is likely to be determined by the impact of NFP.

Support 111.35 111.05 110.85
Resistance 111.65 111.95 112.25

EUR/USD – Price is coming into a support area and stochastic is also into oversold zone. MACD is still bullish at the moment. A break of 1.1160 could lead to a test of 1.1105 but ability to hold above could lead to a best of the high at 1.1225 again. We are inclined towards the bearish side but NFP is likely to determine the next direction of this pair.

Support 1.1160 1.1105 1.1085
Resistance 1.1190 1.1235 1.1265

GBP/USD – Price is close to the 20EMA line which has acted as support for the past 24 hours. This is also near to the Fibonacci 38% correction point. Stochastic is near to oversold zone and MACD is bullish and could be turning higher again. If price is able to hold at support of 1.3020, it is likely to test the high of 1.3100 again. A move below is likely to see a test of 1.2945.

Support 1.3020 1.2975 1.2945
Resistance 1.3065 1.3105 1.3135

XAU/USD – Gold reached a high of 1272.90, missing out on our sell call from yesterday. Price tested the low of 1266.20 again and has since bounced higher. This could be a sign of the decline coming to an end as there are divergence warnings from the hourly chart. We would prefer to observe movement for today for better clue and confirmation of a bottom.

Support 1266.20 1260.10 1256.70
Resistance 1274.70 1280.10 1288.60

AUD/USD – Our sell call from Tuesday is still pending. Price made a new recent low of 0.6983 but managed to bounce up higher. Price has stayed below 0.7005 but with divergence warnings given by MACD, we are wary of a low being in place. There is also the possibility of a Double Bottom being formed. We recommend bringing stop lower to 0.7010 and profit target higher to 0.6980.

Support 0.6980 0.6940 0.6900
Resistance 0.7005 0.7025 0.7070

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