FX Commentary – Aussie Dollar Gained On Lifting Of Coal Ban By China

Market Talk
– The greenback struggled to advance on Wednesday even though Federal Reserve policymakers reiterated their commitment last month to fighting inflation. The Aussie dollar rallied after China eased its restrictions on imports of Australian coal.

– Minutes of the Federal Reserve’s December meeting released last night showed that policymakers unanimously supported raising interest rates at a slower pace, offering some relief to markets battered by rising borrowing costs.

– The euro rose 0.54% to $1.0605 overnight after Euro zone business activity contracted less than initially thought at the end of last year, according to a survey, suggesting the bloc’s recession may not be as deep as expected. Sterling was last trading at $1.2057.

– The Australian dollar rallied 1.7% overnight on news that China’s state planner has allowed three central government-backed utilities and its top steel maker to resume coal imports from Australia, marking the first such move since Beijing imposed an unofficial ban on coal trade with Canberra in 2020.

– Gold prices held steady at $1854.90 per ounce on Thursday, hovering close to a near seven-month high scaled in the previous session, while market participants prepared for U.S. jobs data that could influence the Federal Reserve’s policy trajectory.


Chart Focus AUD/USD

Key Points

1. Buy AUD/USD recommendation.

2. Buy AUD/USD at 0.6800. Stop at 0.6765 and profit target at 0.6885

3. A slower pace of US interest rate hikes and the lifting of a coal ban are both aiding the Aussie dollar.

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

Fundamental Comments

1. A slower pace of U.S. interest rate hikes is weighing on the U.S. dollar.

2. The lifting of a coal ban by China is aiding the Aussie dollar.

Technical Comments

1. Price is likely to be supported by the 20EMA and a previous resistance turned support line.

2. MACD remains bullish and is hinting at a bullish price trend.



Key Levels

Support0.68000.67650.6720
Resistance0.68400.68850.6915









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 132.71 last night. Stochastic is in the overbought zone but 20EMA is hinting at a bullish price trend. MACD is also turning bullish. We think price can continue to move higher despite the overbought condition. We think price can move up to 133.40 in the next 48 hours.

Support131.95131.45130.70
Resistance132.70133.35133.90

EUR/USD – The price rally off the low at 1.0518 was capped by the declining 20EMA line. Stochastic is in the middle of its range but is about to turn lower, hinting at a price decline. MACD remains bearish and is hinting at a bearish price trend. 20EMA is also hinting at a bearish price trend. We see price going lower to 1.0515 again in the next 24 hours. However, a move above 1.0635 would hint at a rally to 1.0715. We prefer the bearish price move for today.

Support1.05951.05601.0515
Resistance1.06351.06801.0715

GBP/USD – The rally off the low of 1.1899 was capped by a previous resistance point at 1.2085. Stochastic is also in the overbought zone and is about to have a bearish crossover, hinting at a price decline. MACD remains bullish. 20EMA is neutral. If price fails to move above 1.2085 today, we are likely to see 1.1900 tested again in the next 24 hours. Above 1.2085, price is likely to test the previous high of 1.2125.

Support1.20201.19551.1920
Resistance1.20851.21251.2190

XAU/USD – Price continued its rally from the previous week and reached a high of $1865.15 yesterday. Stochastic is the overbought zone and is hinting at a limited upside but 20EMA is hinting at a strong bullish price trend. MACD is also hinting at a bullish price trend. Our view remains the same as yesterday. We see price going up to $1878.45 in the next 24 hours. We may see a corrective decline but this decline should be supported by the 20EMA line at $1842.40.

Support1849.851838.401827.30
Resistance1858.901865.101878.45

USD/CHF – We had a buy recommendation yesterday at 0.9305. However, our call was wrong and we got stop out at 0.9270. Price reached a low of 0.9252 but MACD remains bullish and is hinting at a bullish price trend. Stochastic is near to the oversold zone and is about to have a bullish crossover. Stochastic is hinting at a price rally. 20EMA is flat and neutral. Our view remains the same as yesterday. We see a rally to 0.9400 in the next 48 hours.

Support0.92700.92250.9175
Resistance0.93150.93550.9400

FX Commentary – Euro Slump 1% On Soft German Inflation Data

Market Talk
– The US dollar made a strong start to 2023, after a surprise slowdown in German inflation in early European trading in the previous day, rallied bunds and sent the common currency sliding. Investors are also waiting for the release of the previous month FOMC meeting minutes for clues to the pace of US interest rate hikes.

– The euro also fell almost 1% to $1.0567 after German state inflation data showed that German inflation eased for a second month in a row in December due to falling energy prices and the government’s one-off payment of household energy bills.

– British manufacturers are starting 2023 on the back foot, after they reported one of their sharpest falls in activity since the 2008-09 recession last month, reflecting a sharp fall in new orders and ongoing job cuts and sending the British pound to a low of 1.1899 overnight.

– The Australian and New Zealand dollars were licking their wounds on Wednesday after a sharp rally in the U.S. dollar wrong footed the market. However, both currencies managed to move off their low with the Aussie dollar hovering at 0.6800 and the Kiwi at 0.6273.

– Gold prices were listless around $1,838.69 per ounce, during early Asian hours on Wednesday after hitting a six-month peak in the previous session, as investors awaited minutes from the Federal Reserve’s December policy meeting that could offer hints on the U.S. central bank’s tightening path.


Chart Focus USD/CHF

Key Points

1. Buy USD/CHF recommendation.

2. Buy USD/CHF at 0.9305. Stop at 0.9270 and profit target at 0.9395

3. A robust US labour market and interest rate differential are both aiding the U.S. dollar.

4. Price is likely to be supported at the Fibonacci and 20EMA support point with MACD hinting at a bullish price trend.

Fundamental Comments

1. A robust employment picture is viewed as giving the Fed more room to raise interest rates, aiding the U.S. dollar.

2. Interest rate differential is in the U.S. dollar favour.

Technical Comments

1. Price is likely to find support at the 20EMA line which is also near to the Fibonacci 50% correction point of the previous price rally.

2. MACD remains bullish and is hinting at a bullish price trend.



Key Levels

Support0.93150.92700.9225
Resistance0.93550.94000.9455









Technical Overview

USD/JPY – Price reached a low of 129.50 yesterday but this low was accompanied by a MACD divergence warning. This is a hint that price could have reached a low. Stochastic is rising from the oversold zone and is hinting at a price rally. However, 20EMA is likely to cap this corrective rally and induced a decline back to the overnight low at 129.50. Both 20EMA and MACD are hinting at a bearish price trend.

Support130.60130.05129.50
Resistance131.05131.45131.85

EUR/USD – We had a buy recommendation yesterday at 1.0650 but we were wrong on this call. A softer German inflation data sent the single currency to a low of 1.0518. Stochastic is near to the oversold zone but both MACD and 20EMA are hinting at a bearish price trend. We think price may do a corrective rally but this rally is likely to be capped by the 20EMA at 1.0600 and from this point; we could see another decline below the previous day’s low.

Support1.05601.05151.0480
Resistance1.05951.06501.0690

GBP/USD – Price fell to a low of 1.1899 overnight on the back of a poor UK manufacturing data. The rally off the low is likely to be capped by the falling 20EMA line at 1.2020 which is also near to the previous low support. Stochastic is near to the oversold zone, hinting at a limited downside but both MACD and 20EMA are hinting at a bearish price trend. We see price testing the overnight low again in the next 24 hours.

Support1.19551.19201.1895
Resistance1.20251.20851.2125

XAU/USD – Price continued its rally from the previous week and reached a high of $1849.85 yesterday. Price is currently near to the high and is likely to test the high again. There is no divergence warning from the MACD indicator, which means price is likely to continue higher in the next 24 hours. Stochastic is in the overbought zone but 20EMA and MACD are both hinting at a strong bullish price trend. We think price can test the resistance at $1878.45 in the next 24 hours.

Support1838.501827.301818.45
Resistance1849.851863.901878.45

AUD/USD – Price slipped from Tuesday’s high of 0.6833 to a low of 0.6687 but has recovered and is close to the week’s high at the point of this writing. Stochastic has a bullish crossover and is hinting at a price rally. MACD has turned bullish and 20EMA is also bullish and hinting at a bullish price trend. We think price can move above 0.6833 to the next resistance point at 0.6880 in the next 24 hours.

Support0.67900.67400.6690
Resistance0.68350.68650.6895

FX Commentary – US Dollar Stays Firm Ahead of U.S. Inflation Data.

Market Talk
– The U.S. dollar was firm on Tuesday ahead of the release of U.S. inflation data later in the global day and the final Federal Reserve meeting of the year later in the week, with investors waiting to update interest rate outlooks.

– US inflation data will shed light on whether the Fed may shift to smaller increase in borrowing cost after a small surprise to the downside last month, unleashed a wave of bond-buying and dollar selling on the expectation that inflation had peaked.

– The greenback edged up 0.8% on the yen overnight and was steady at 137.60 yen on Tuesday. The Australian and New Zealand dollars recovered some overnight losses on Tuesday, though both appeared to lack firm direction ahead of U.S. data.

– The euro was steady at $1.0541, as was sterling at $1.2269. The Swiss franc was at 0.9360 per dollar as traders eyed Thursday meetings of the European Central Bank, Bank of England and Swiss National Bank.

– Gold prices edged up to $1785.70 on Tuesday, helped by a softer U.S. dollar, as market maintained caution ahead of U.S. inflation data and the Federal Reserve’s policy decision

Chart Focus AUD/JPY

Key Points

1. Buy AUD/JPY recommendation.

2. Buy AUD/JPY at 92.70. Stop at 92.35 and profit target at 93.80

3. An improvement in risk appetite and interest rate differential are both in the Aussie favour.

4. Price is above the 20EMA and is moving higher, with MACD confirming the bullish price trend.

Fundamental Comments

1. An improvement in risk appetite is weighing on the safe haven yen

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

Technical Comments

1. Price is above the 20EMA and is moving higher, hinting at a bullish price trend.

2. MACD remains bullish and is hinting at a bullish price trend.



Key Levels

Support93.0092.6092.05
Resistance93.4593.8594.15

Technical Overview

USD/JPY – Price broke above the resistance at 137.85 to reach a high of 137.97 this morning. Stochastic is in the overbought zone and is hinting at a limited upside. Stochastic is also hinting that price may not be able to break above the resistance at 138.00. However both 20EMA and MACD are hinting at a bullish price trend ahead. However, the next direction is likely to be decided by US data tonight.

Support137.30136.90136.60
Resistance138.00138.35138.85

EUR/USD – Price continues to move within the range from 1.0445 to 1.0560. This range has persisted for the last 7 days and looks likely to continue, at least until U.S. inflation data later tonight. Stochastic is in the middle of its range and is pointing lower, hinting at a price decline. Both MACD and 20EMA are hinting at a bullish price trend ahead. We continue to view price moving with the current range.

Support1.05251.04901.0445
Resistance1.05551.05951.0640

GBP/USD – Price continues to stay above the 20EMA line support at 1.2245. Despite staying above the 20EMA line, price has not been able to test the previous high of 1.2345. Stochastic is moving down, hinting at a price decline. MACD remains bullish and 20EMA is also hinting at a bullish price trend. We think price may be near to a peak and could be heading lower in the next few days.

Support1.22601.22001.2155
Resistance1.23001.23501.2405

XAU/USD – Price moved below the 20EMA line yesterday but there was no big price decline to test the previous support at $1765.75. Price only decline to a low of $1777.43 and is heading back up to test the 20EMA line again. Stochastic is near to the oversold zone and is hinting at a price rally to $1795. 20EMA remains bearish. 20EMA is also hinting at a bearish price trend.

Support1777.401765.751757.20
Resistance1787.301795.401809.80

USD/CHF – We had a buy order at 0.9350 yesterday but price went to a low of 0.9351 and our entry order was not filled. Price had little movement overnight and we think there is also likely to be little movement ahead of tonight U.S. inflation data. The next direction is likely to be decided by the US data. Stochastic is rising and hinting at a price rally. However, both MACD and 20EMA are hinting at a price decline.

Support0.93350.92850.9255
Resistance0.93700.94250.9455

FX Commentary – U.S. Dollar Gained On a Stronger Than Expected U.S. PPI

Market Talk

– The U.S. dollar continues its climb on Monday after data on Friday showed U.S. producer prices had risen more than expected last month, pointing to persistent inflationary pressures and a chance the Federal Reserve would keep interest rates higher for longer.

– U.S. producer prices (PPI) rose 0.3% last month, above the 0.2% forecast, slightly higher and bolstering the case for continued interest rate hikes by the Federal Reserve even if at a slower pace.

– The greenback rose 0.35% against the Japanese yen to 137.05. The yen has also benefited in recent weeks from speculation that high inflation will for the Bank of Japan into eventually changing its ultra-loose stance on monetary policy.

– The euro was lower at $1.0509. Sterling fell 0.31% to $1.2229 in Asia trade on Monday. The ECB and BoE are also expected to hike rate this coming Thursday. The Aussie edged 0.34% lower to $0.6773 while the kiwi slipped 0.34% to $0.6393.

– Gold slipped 0.5% to $1786.95 on Monday, dragged down by a firmer U.S. dollar, while investors readied for key U.S. inflation data and the Federal Reserve’s rate-hike verdict due this week.


Chart Focus USD/CHF

Key Points

1. Buy USD/CHF recommendation.

2. Buy USD /CHF at 0.9350. Stop at 0.9315 and profit target at 0.9425.

3. Expectation of a 50 basis points hike and interest rate differential are both aiding the US dollar.

4. Price may be forming a Double Bottom chart formation with MACD also hinting at a possible price low.

Fundamental Comments

1. Expectation of a 50 basis points hike is aiding the US dollar.

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

Technical Comments

1. Price may be forming a Double Bottom chart formation which is a sign of a price rally ahead.

2. MACD has a divergence warning hinting of a possible price low.



Key Levels

Support0.93450.93100.9285
Resistance0.93800.94250.9455









Technical Overview

USD/JPY – Price had failed at the 137.70 resistance in the previous week and had fallen to a low of 135.60. Price has climbed above the 20EMA this morning and we are likely to see a test of the previous resistance at 137.85 again in the next 24 hours. Stochastic is rising and hinting at a price rally. Both MACD and 20EMA are bullish and hinting at a price rally. A price move below the support at 135.60 would negate our view for a test of 137.85.

Support136.60136.05135.60
Resistance137.25137.85138.15

EUR/USD – Price was close to the top end of its range at 1.0600 on Friday but was unable to move above it. We have seen price decline to the 20EMA support at 1.0515. Stochastic is declining and hinting at a price decline. MACD remains bullish and is hinting at a bullish price trend. 20EMA is flat and neutral at the moment. We think price is likely to stay within the range.

Support1.05051.04651.0425
Resistance1.05451.05951.0640

GBP/USD – Price is currently sitting on the 20EMA line. Stochastic is pointing to a price decline but MACD remains bullish. 20EMA is currently flat and neutral. If price falls below the 20EMA line, it is likely to continue lower to the previous low at 1.2105. Ability to stay above the 20EMA is likely to send price higher to the previous high at 1.2335 in the next 48 hours. We favour the downside.

Support1.22001.21551.2105
Resistance1.22551.22851.2325

XAU/USD – Our view remains the same as last Friday. We think price is en-route to the test the previous high at $1809.80 in the next 1-2 days. Stochastic is declining and hinting at a price correction but MACD remains bullish and is hinting at a bullish price trend. 20EMA is flat and neutral at the moment.  A price movement below $1780 would negate our bullish price view.

Support1780.401765.751752.90
Resistance1794.451809.801816.80

USD/CAD – We had a sell call last Friday but our call was wrong. We got stop out when price rallied to a high of 1.3690. Stochastic is rising and is hinting that the rally can continue higher. MACD has turned bullish, hinting at a bullish price trend. 20EMA is also hinting at a bullish price trend. We think price is likely to test the previous high of 1.3798 again in the next 24 hours.

Support1.36251.35901.3560
Resistance1.36751.37001.3740

FX Trading Idea – USD/CHF

Strategy

Buy 0.9500 for 0.9750 with a stop below 0.9340. Time duration 1-2 months

Technical View

Price recently test the previous low at 0.93700 and was able to bounce up after the test. This is a sign of a strong support at this price location. We are likely to see the rally continues toward the Fibonacci 50% of the decline from the high at 1.0146 to the recent low at 0.9355.


Fundamental View

The Swiss National Bank recently hikes rate by 50 basis points from its previous rate of zero percent. However, when compared to the U.S. interest rate of 4%, the gulf in interest rate between these two countries is big. Interest rate differential is in the U.S. dollar favour and this is likely to aid the U.S. dollar against the Swiss Francs. Beside the current big different in interest rate differential, this gulf could also widen. The Fed is likely to hike interest rate in the coming months even if the pace of interest rate hikes slows down while the Swiss National Bank is unlikely to hike rate continuously in the coming months. The different path of rate hike is likely to keep the U.S. dollar stronger against the Swiss Francs.

Geopolitical risk is also likely to favour the U.S. dollar more than the Swiss francs. War in Europe between Russia and Ukraine is likely to drive more demand into the U.S. dollar compared to the Swiss francs. This war could even lead to a recession in Europe. This could aid the U.S. dollar. North Korea is another risk which will benefit the U.S. dollar. With North Korea firing more missiles, landing near to Japan and South Korea, the U.S. dollar is likely to be in demand due to its status as a safe haven currency.

An increase in COVID-19 cases in China has prompted Beijing to tightening restrictions. A tightening of restrictions is likely to affect the country GDP in the coming months. The rising cases have cast doubt on the hopes of an early easing in strict pandemic restrictions in China, which could lead to an economic slowdown in China. This is also likely to aid the safe haven U.S. dollar.