Tag: USD/CAD

Market Talk
– The U.S. dollar jumped on Friday after upbeat economic data from the United States lessened the risk of recession, but also suggested the Federal Reserve would have to hike interest rate further and keep rates up for longer.

– The Labour Department’s closely watched employment report showed that nonfarm payrolls surged by 517,000 in the previous month. The department revised December data higher to show 260,000 jobs added instead of the previously reported 223,000. Average hourly earnings also rose for the second consecutive month, boosting the U.S. dollar.

– The greenback extended its rally on the yen to a three-week top of 132.60 on Monday amid reports the Japanese government had offered the job of central bank governor to the current deputy, Masayoshi Amamiya, who is considered by markets to be more dovish than some other contenders.

– The euro was huddled at $1.0791 after shedding 1.1% on Friday. Sterling fell 1.39% to $1.2055, the lowest since Jan. 6 and its worst day since Dec. 15. The Aussie was struggling at $0.6923, after slumping 2.2% on Friday while the kiwi dollar was hovering at $0.6320.

– Gold prices were muted on Monday, after plummeting 2.5% on Friday. A stronger-than-expected U.S. employment data ramped up fears that the Federal Reserve could keep hiking interest rates sending gold prices lower to $1860.45.

Chart Focus USD/CAD

Key Points

1. Buy USD/CAD recommendation.

2. Buy USD/CAD at 1.3370. Stop at 1.3340 and profit target at 1.3470.

3. A strong US labour data and a decline in crude oil prices are both likely to keep the U.S. dollar strong.

4. Price is likely to be supported by the 20EMA line, with both trend indicators hinting at a bullish price trend.

Fundamental Comments

1. A strong US labour data is hinting that the Fed is likely to hike rates further, keeping the dollar strong.

2. A decline in crude oil price is likely to keep the Canadian dollar weak.

Technical Comments

1. Price is likely to be supported by the 20EMA line, which is also hinting at a bullish price trend.

2. MACD is also hinting at a bullish price trend.

Key Levels

Technical Overview

USD/JPY – We had a sell recommendation from last Thursday at $128.95 and on Friday, we had shifted stop to cost at 128.95 and kept profit order at 127.80. Price went up above our stop last Friday and we are out of this position without a loss. Price will need to move above 132.86. If price is unable to move above this resistance, we see price going lower to 130.00 in the next 24 hours. We are in favour of the bearish price trend.

EUR/USD – Price has declined below last week low of 1.0801, triggering a bearish price trend. We are likely to see a continuation of this bearish price trend to 1.0710 in the next 48 hours. Trend indicators, MACD and 20EMA confirm this bearish price trend but Stochastic is hinting at a limited downside. We favour the bearish price and only a move above 1.0930 would negate our bearish view.

GBP/USD – Price reached a low of 1.2030 this morning but looks like it may have reached a low. Both stochastic and MACD are hinting that price has reached a low. However, 20EMA is hinting at a strong bearish price trend. We tend to favour the stochastic and MACD. We think price is likely to move up today to 1.2145 or to 1.2185. From this location, we see the start of another decline.

XAU/USD – Price has declined below last week low of $1900.55, triggering a bearish price trend. We are likely to see a continuation of this bearish price trend to $1843 in the next few days. However, Stochastic is hinting at a price rally to $1900 to go short. Trend indicators are hinting at a bearish price trend. We have the same view as the stochastic indicator and would prefer to get into a short position on a rally towards the 20EMA line at $1900.

EUR/JPY – Last Friday, we had a sell call on this pair but our call was wrong. Price has moved up higher to the previous high at 142.85. If price cannot move above this resistance, we are likely to see a decline back to 141.20 in the next 48 hours. However, if price moves above the previous high at 142.85, we are likely to see a move to 143.90. We favour the bearish side and see a decline to 141.20 for the next 24 hours.

Market Talk
– The U.S. dollar distanced itself from an eight-month low on Monday ahead of a slew of central bank meetings later in the week, though gains were capped by dovish re-pricing of the U.S. Federal Reserve’s rate-hike expectations as compared to more hawkish counterparts.

– The euro rose to $1.0874, drawing support from continued hawkish rhetoric by ECB policymakers and ebbing fears of a deep recession, ahead of policy meetings from the Fed and the European Central Bank (ECB). Sterling was at $1.2405 ahead of a Bank of England (BoE) later this week.

– The Australian dollar fell 0.3% to $0.7088 but was on track for a monthly gain of nearly 4%, after the shock that Australia’s inflation rate shot up to a 33-year high in the previous quarter, caused traders to ramp up bets that the RBA will have to tighten interest rates further.

– The Japanese yen jumped close to 0.2% to 129.62 per dollar. Core consumer prices in Japan’s capital for the month of January marked the fastest annual gain in nearly 42 years, data on Friday showed, keeping the Bank of Japan under pressure to phase out its economic stimulus.

– Spot gold was steady at $1931.25 per ounce on Monday ahead of the U.S. Federal Reserve’s rate decision later in the week, where Fed policymakers are expected to hike US interest rate by 25 basis points.

Chart Focus EUR/USD

Key Points

1. Buy EUR/USD recommendation.

2. Buy EUR/USD at 1.0840. Stop at 1.0810 and profit target at 1.0925

3. A divergent monetary policy between the ECB and the Fed is likely to aid the Euro dollar.

4. Price is likely to be supported by the previous week’s low with stochastic hinting at a price rally.

Fundamental Comments

1. The ECB is expected to hike rate by 50 basis points while the Fed is expected to hike rate by 25 basis points

2. This narrowing of interest rate differential is likely to aid the Euro.

Technical Comments

1. Price is likely to be supported by the previous week’s low.

2. Stochastic is near to the oversold zone and is hinting at a price rally ahead.

Key Levels

Technical Overview

USD/JPY – Price is consolidating in the range between 129.10 and 131.10. Stochastic is in the middle of its range and is neutral at the moment. MACD is also neutral but looks weak at the moment. Price has moved below the 20EMA, hinting at a possible bearish price trend. Unless price can move above 131.10 or go below 129.10, we are expecting price to stay within this range in the next 24 hours.

USD/CAD – We had a buy recommendation at 1.3330 last Friday was filled when the price reached a low of 1.3298. Stochastic is in the oversold zone and is hinting at a limited downside. 20EMA is bearish and is hinting at a bearish price trend. However, MACD showing a divergence warning of a possible price low. We would recommend keeping stop at 1.3295 and profit order at 1.3410.

GBP/USD – Price moved to a low at $1.2339 last Friday but was supported by 20EMA. Stochastic is moving lower and hinting at a price decline. Price has moved up above the 20EMA and MACD has remained above the zero line. Both trend indicators are hinting at a possible bullish price trend. Currently, the price is in a sideway trend, ranging from 1.2260 to 1.2446. Unless price can move above this range, we are expecting price to trade sideways within the range in the next 24 hours.

XAU/USD – Price reached a low of $1916.59 last Friday and moved to a high at $1934.09 this morning. Stochastic is rising and hinting at a price rally. MACD is pointing up and hinting at a bullish price trend. Price has moved above the 20EMA, hinting at a change in trend. As long as the price stays above the 20EMA at $1930, we are likely to see a rally back to $1949.15 again in the next couple of days. A break below $1909.65 is likely to negate our bullish view.

EUR/JPY – We had a buy recommendation at 141.10 last Thursday which was filled. Last Friday, we had recommended lifting stop higher to 140.85 while keeping our profit order at 142.70. Price moved to a low of 140.54 this morning and triggered our stop. Stochastic is moving lower and hinting at a price decline. Price has moved below the 20EMA and MACD has remained below the zero line which both hinting at a possible bearish price trend.

Market Talk
– The U.S. dollar edged higher against the euro on Thursday after data showed the U.S. economy maintained a strong pace of growth in the fourth quarter, backing the case for the U.S. Federal Reserve to maintain its hawkish stance for longer.

– US Q4 GDP data came in better than expected, expanding by an annualized 2.9%, down from the year-on-year expansion of 3.2% in the third quarter, but still higher than Wall Street economists’ forecasts for a 2.6% growth. This is a double-edged sword for investors, as it could embolden the Fed to keep key interest rates at restrictive levels for longer.

– The Australian dollar held hefty weekly gains on Friday as markets priced in higher interest rates by the RBA. The Aussie stood at $0.7125, having gained 2.2% on the week so far to reach highs not seen since June at $0.7142. The next bull target is $0.7282, with support at $0.7063.

– The euro was 0.23% lower at $1.08895, but not far from the nine-month high of $1.09295 touched on Monday. Sterling was about flat on Friday morning against the U.S. dollar at 1.2378. Against the yen, the dollar was up 0.54% at 130.275 yen.

– Gold prices came within a hair’s breadth of $1,950 an ounce, reaching an overnight high of $1949.15, before retreating on Thursday, as bulls in the game appeared to be conserving energy for another crack at the key resistance if U.S. inflation data due in the next 24 hours turns out to be tamer than thought.

Chart Focus USD/CAD

Key Points

1. Buy USD/CAD recommendation.

2. Buy USD/CAD at 1.3330. Stop at 1.3295 and profit target at 1.3410

3. A strong set of US data and interest rate differential are both in the US dollar favour.

4. A reversal candlestick pattern and MACD are both showing signs of a potential price reversal in the making.

Fundamental Comments

1. A strong set of US data could embolden the Fed to keep key interest rates at restrictive levels for longer, aiding the US dollar.

2. Interest rate differential is in the US dollar favour.

Technical Comments

1. Price made a low on the 4-hourly chart with a Long Legged Doji, hinting at a possible price bottom.

2. MACD is showing divergence and hinting that price may have made a potential low.

Key Levels

Technical Overview

USD/JPY – Price reached a low of 129.10 and has bounced back up to 130.60. Stochastic is also moving higher and is hinting at a price rally. However, both MACD and 20EMA are hinting at a neutral price trend. This is supporting our view that price is likely to continue in a sideways consolidation in the next 48 hours. Unless price can move above 131.10 or go below 129.10, we are expecting price to stay within this range.

EUR/USD – Price continues its rally and made a new overnight high at 1.0929. However, this high was accompanied by a divergence warning from the MACD indicator, warning about a potential high in the making. Price has since declined below the 20EMA. Stochastic is declining and is hinting at a price decline ahead. MACD is neutral. We think price may have reached a high and a corrective decline to 1.0780 is likely in the next few days.

GBP/USD – Price reached a high of 1.2447 on Monday but this high was accompanied by a divergence warning from both the MACD and the stochastic indicator. After a decline to 1.2262, price has climbed up higher to 1.2430. Stochastic is near to the overbought zone and is hinting at a limited upside. Both MACD and 20EMA are neutral. We think price could be moving lower to 1.2260 again in the next few days.

XAU/USD – After reaching a high of $1949.15 overnight, price has been declining. The price decline has also broken below a rising trend channel starting from 29 Dec. Price has also moved below the 20EMA. If price fails to move above the trend channel and the 20EMA at $1932, price could be heading lower to $1900 in the next few days. A move above $1932 would negate our bearish view and hints at a price rally to $1950.

EUR/JPY – We had a buy recommendation yesterday at 141.10, which was filled when price declined to a low of 141.07 this morning. Stochastic has reached a low and has turned up, hinting that price may have reached a low and is moving higher. However, both MACD and 20EMA are weak. Price can go in either direction. We would recommend lifting stop higher to 140.85 while keeping profit target at 142.70.