Sample Category Title

On Thursday, the dollar opened higher in the Asian session, gaining from investors’ increasing confidence on the US economy, while its Australian counterpart fell sharply after underpaid consumers tightened their spending, driving retail sales to the lowest level in five years.

The dollar index moved from yesterday’s closing price of 93.28 to a high of 93.37 in Asia before it slipped back as upbeat US non-manufacturing data released on Thursday continued to support the dollar against its rivals and the Fed chair Janet Yellen failed to give any signals on monetary policy during her speech at the Community Banking in the 21st Century Conference in St. Louis.

Jobless claims out of the US will be in focus today ahead of the nonfarm payrolls on Friday. In addition, a number of FOMC members will give some speeches during the day.

Dollar/yen was flat around 112.65.

The euro was trading flat around $1.1757 ahead of the ECB’s September meeting minutes due later today. Investors will look for changes in the language of the minutes, especially regarding the currency which was repeatedly criticized for its strength by ECB policymakers. Moreover, they will be on the lookout for details related to the tapering of the quantitative easing program as ECB policymakers are said to announce an outline for a gradual exit from the QE policy in their next meeting. However, recent chatter from ECB officials supported an adjustment of the policy rather than a termination.

The pound was moving sideways around $1.3241, being neutral on cautious Brexit remarks made by the BOE’s deputy governor, Sam Woods on Wednesday. Woods claimed that a transitional period needed for businesses to adjust after the Britain’s exit from the EU should be agreed by Christmas before firms start considering their contingency plans.

Australian August’s retail sales posted their biggest monthly fall since September 2012 weighed mainly by a shrinking in household goods’ purchases. The figure declined by 0.6%, while analysts anticipated a growth of 0.3%. This also followed a downwardly revised contraction of 0.2% in July. On the other hand, the trade balance for the same month surprised to the upside, increasing from the upwardly revised amount of A$0.808bn to A$0.989bn and exceeding the forecast of A$0.875bn. Exports jumped by 1.0% boosted mainly by a 10% increase in iron ore overseas sales. The aussie tumbled by 0.50% on the day to $0.7825.

In New Zealand, the leader of the First Party, Winston Peters, said on social media to hold coalition talks today first with the ruling National Party and then with the opposition Labour Party. However, he added that he will not take any final decision until final election votes come out on Saturday. The kiwi was 0.17% down to $0.7152.

Dollar/loonie was slightly up at $1.2480 ahead of trade data released later in the day.

Regarding commodities, oil prices retreated from yesterday’s highs despite the EIA report showing a steep fall in US crude oil inventories as the same report also indicated that US crude exports picked by 1.98mn barrels compared to 1.5mn seen previously. Meanwhile, operations in a Libyan oilfield restarted, putting some pressure on oil prices. WTI crude dropped by 0.10% to $49.94 per barrel and Brent was slightly down to $55.78.

Gold was 0.12% up at $1,275.70 per ounce.

Key Highlights

• Gold price is under a lot of pressure and recently broke the $1290 support against the US Dollar.
• There are two bearish trend lines forming with resistance at $1278 and $1286 on the 4-hours chart.
• The US ADP Employment Change in Sep 2017 was 135K, less than the last revised 228K
• Today, the US Initial Jobless Claims figure will be released, which is forecasted to decline from 272K to 265K.

Gold Price Technical Analysis

Gold price started a major downtrend from the $1355 swing high against the US Dollar. The price is now well below $1300 and looks set to extend declines in the near term.

Looking at the 4-hours chart of XAU/USD, there is a clear downtrend visible with resistances near $1290 and $1300. Moreover, there are two bearish trend lines forming with resistance at $1278 and $1286.

An initial resistance is near the first trend line and the 23.6% Fib retracement level of the last decline from the $1313 high to $1268 low. The most important resistance is near the second trend line and the 50% Fib retracement level of the last decline from the $1313 high to $1268 low.

Only a successful close above $1290 could decrease the current bearish pressure on Gold. On the downside, a break of the $1268 low would trigger more losses. The next major support is around $1250 where buyers might take a stand.

US ADP Employment Change

Recently in the US, the Employment Change for Sep 2017 was released by the Automatic Data Processing, Inc. The forecast was lined up for a change of +125K compared with the last 237K.

The actual result was positive, as there was an increase of 135K in jobs in Sep 2017. However, the last reading was revised down from 237K to 228K. There was a 7K decline in job in small businesses and a rise of 63K jobs in medium business.

Commenting on the report, the vice president and co-head of the ADP Research Institute, Ahu Yildirmaz, stated:

In September, small businesses experienced a dip in hiring. This is in part due to Hurricane’s Harvey and Irma which significantly impacted smaller retailers. In addition, the continued slow down we have seen in small business hiring could be due to a lack of competitive compensation to attract skilled talent.

Overall, the result was better than the forecast, putting pressure on Gold price below the $1285 resistance.

A release of better than expected data on the US non-manufacturing activity initially caused a great anxiety in the markets. However, a sharp appreciation of the buck was constrained by the 55-hour and 100-day SMAs near 1,273.20. On the one hand, gold traders most probably are going use the above support, as a trampoline, to try to restore some lost positions and return the rate back to the 1,281.00 mark. On the other hand, a presence of the 61.8% Fibonacci retracement level, the 100- and 200-hour SMAs as well as the upper boundaries of two larger descending channels is likely to neutralize the potential surge. Despite the 60% average bullish sentiment, the pair is expected to continue to move in the southern direction, in accordance with the general downtrend.

In line with expectations, the currency rate reached and made a successful rebound from the bottom trend-line of a senior ascending channel. Fortunately for the buck, this technical moment matched with release of information on the US non-manufacturing activity. However, the surge did not last for long, as it was quickly stopped by a combination of the 55- and 100-hour SMAs. Such outcome suggests that today bears are going to try to restore lost positions and push the pair back to the bottom at least until the 200-hour SMA, which is located near the 112.55 level. The fact that the dominant channel already consists of five confirmation points implies that a breakout is likely to happen in the nearest future. This assumption looks even more probable amid the pair’s failure the surge above the 113.20 level.

The British Pound is continuing to trade lose value against the American Dollar in a one-month-long descending channel. Despite a bunch of important macroeconomic data releases, the pair did not make any substantial advances yesterday. One of the reasons for that was the 55-hour SMA, which traders continuously used as a support and resistance.

As a result, the pair ended previous trading session in the centre of the channel. Because of the bullish sentiment, traders are likely to try to push the rate to the upper edge of the pattern. However, the above 55-hour SMA once again might turnaround the pair and force it to slip to the weekly S1, which is located at the 1.3210.

In general, the pair continued to move between the 200-day SMA and the 100% Fibonacci retracement level, as expected. Unfortunately, none of the yesterday’s events caused any significant volatility in the markets. It seems that movement of the pair was mainly constrained by the 55- and 100-hour SMAs that helped to form a minor ascending channel, which is lying perpendicularly to larger descending channel. In the first half of the day, the rate is expected to try to break through the upper trend line of the above pattern, which is backed up by the 200-hour SMA. If a rebound from the retracement level meant the beginning of a new medium-term uptrend, then the pair should eventually bypass this resistance. Otherwise, a rebound is going to follow, in accordance with the current downtrend.

The Australian Dollar deprived Wednesday's gains against the Greenback, as the report showed an unexpected fall in Australian retail sales. The AUD/USD marked solid decline of 0.34% or 26 base points to the 0.7830 mark and continued the side move near the aforesaid level.

The Australian Bureau of Statistics release showed that the country's retail sales dropped significantly 0.6% in August, missing projections for a 0.3% increase in the reported month. The decrease could be attributed to households suffering from low pay growth, higher energy bills, as well as record debt levels and weakening property price growth. Weak retail sales are likely to weigh on Australian economic expanison in the Q3, supporting the view that RBA is unlikely to raise rates next year.

The US Dollar strengthened against the Euro in the wake of US data release on Wednesday. The EUR/USD currency pair fell 0.15% or 17 pips to continue the session below the 1.1770 level, additionally confirming the position amid the better-than-expected ISM report and a small reaction on EU and US officials' speeches.

The US companies slashed hiring to the lowest level in 11 months in September owing to the disruption of business activities caused by Hurricanes Irma and Harvey, according to the ADP Employment report. The private survey showed that the country's businesses added 135K jobs in September, suggesting the most of Hurricane's impact forced small retailers to cut hiring.

The British Pound strengthened against the Greenback on the grounds of shiny UK service industry data. Following the report, the GBP/USD currency pair jumped 22 base points to the 1.3278. However, by the end of the session the pair returned to the prior lows near the 1.3230 area, confirming that the sentiment concerning the Sterling's outlook stayed more downbeat amid lingering uncertainties over Brexit talks.

Markit report showed that the Britain's services sector grew at a stronger-than-anticipated pace in September, putting the industry's PMI to a seasonally adjusted 53.6, above forecasts for an unchanged reading. The strong data could ease concerns over the UK economy and support expectations for the Bank of England's interest rate hike.

EUR/USD

Current level - 1.1761

The upmove from 1.1700 is still underway, but I favor a break through 1.1730 support to signal a renewal of the slide towards 1.1480.

USD/JPY

Current level - 112.75

The consolidation pattern below 113.20 is over and my outlook is positive, for a rise towards 113.80, en route to 114.50.

GBP/USD

Current level - 1.3233

My outlook here is bearish, for a break through 1.3220, towards 1.3150 target mark. Initial resistance lies at 1.3290.