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Daily Pivots: (S1) 1.1431; (P) 1.1457; (R1) 1.1490; More...

No change in EUR/CHF's outlook. With 1.1487 minor resistance intact, deeper decline is expected. Fall from 1.1622 is a correction and break of 1.1387 would target 1.1257 cluster support (38.2% retracement of 1.0652 to 1.1622 at 1.1251). Strong support is expected there to contain downside and bring rebound. Meanwhile, break of 1.1487 minor resistance will suggest that the pull back is completed and bring retest of 1.1622.

In the bigger picture, long term rise from SNB spike low back in 2015 is still in progress. EUR/CHF should now be heading back to prior SNB imposed floor at 1.2000. For now, this will be the favored case as long as 1.1198 resistance turned support holds.

The Aussie dollar fell in Asia on Thursday, following weaker than expected data. Australian retail sales fell 0.6% in August, undershooting forecast for 0.3% raise and posting biggest fall since March 2013.

Better than expected Australian Trade Balance data (trade surplus widened to A$0.98B, well above forecasted A$0.87B and surplus of A$ 0.80 in July) did not have stronger impact in offsetting negative signal from downbeat retail sales.

The AUDUSD pair remains in red at the beginning of European session, with near-term focus turning lower after recovery rally from Tuesday’s low at 0.7785 stalled at 0.7874 on Wednesday, capped by falling 10SMA.

Fresh near-term bears have so far retraced 61.8% of 0.7785/0.7874 recovery and look for retest of daily cloud base (0.7800) which marks key near-term support, reinforced by rising 100SMA (0.7780). Break here would generate fresh bearish signal for resumption of the downtrend from 0.8124 (08 Sep peak) towards targets at 0.7726 (weekly Kijun-sen).

Bears are expected to stay in play while falling 10SMA caps and only sustained break here would ease persisting downside pressure.

US jobs data on Friday are eyed for fresh signals.

Res: 0.7840, 0.7874, 0.7930, 0.7933
Sup: 0.7800, 0.7785, 0.7745, 0.7726

The pair is narrowing range ahead of Friday's US jobs data which are eyed for fresh signals.

Overall bullish structure remains intact despite repeated upside rejections above 113.00, as the price holds above initial supports at 112.46/36, provided by 10SMA/daily Tenkan- sen. Strong downside rejection on Wednesday which left long-tailed daily candle, confirms the strength of supports.

In addition, 200 SMA marks next strong support at 111.93 and also underpins near-term action.

Stronger direction signal will be generated on sustained break of each side, depending on the outcome of US jobs data.

Lift above recent peaks at 113.25 zone would signal fresh acceleration towards barriers at 114.00/49.

Conversely, loss of 200SMA support would generate initial signal of reversal and expose strong support at 111.37 (daily Ichimoku cloud top).

Res: 112.93, 113.25, 113.57, 114.00
Sup: 112.36, 112.21, 111.93, 111.56

Cable fell to fresh three-week low at 1.3173 after eventual break below near-term base at 1.3220, reinforced by rising 30SMA, where the price action was contained in past two days.

Fresh acceleration lower signals resumption of bear-leg from 1.3655 (20 Sep peak) which eyes next strong supports at 1.3128/10 (rising 55SMA / Fibo 61.8% of 1.2773/1.3655 rally) and could expose psychological 1.30 support, reinforced by 100SMA.

Bearishly aligned techs (10/20 SMA bear cross was formed today and increases downside pressure) support further weakness, along with political concerns over possible exit of PM May which would increase risk of early election in 2018/19, also heavily weighing on pound.

With no significant releases from the UK today, politics and speeches from BoE MPC members are seen as main internal driver for the pound. Series of US data and speakers will be the key external factors that could affect the pound on Thursday.

Res: 1.3220, 1.3250, 1.3291, 1.3353
Sup: 1.3173, 1.3148, 1.3128, 1.3110

The Euro stays in green for the third day but recovery is seen limited for now. Falling 10SMA offers immediate resistance at 1.1793, along with the base of thickening 4-hr cloud (1.1794/1.1875) which heavily weighs on near-term action.

Recovery needs sustained break above 1.1800 to generate firmer bullish signal for extended correction towards 1.1832 (29 Sep lower top) and key barrier at 1.1865 (daily cloud top).

Only sustained break here would neutralize near-term bears.

Meanwhile, limited upside attempts will keep the downside vulnerable for retest of key support at 1.1720 (cracked Fibo 38.2% of 1.1118/1.2092) with sustained break here to bring bears fully in play for extension of the bear-leg from 1.2092 peak towards strong support at 1.1604 (daily cloud top).

Res: 1.1793, 1.1816, 1.1832, 1.1865
Sup: 1.1747, 1.1720, 1.1696, 1.1662

USDJPY continues to trade within a broad range between 108 and 114 since April. The short-term bias is to the upside and daily momentum signals remain bullish. MACD is above zero and rising and RSI is above 50, although the indicator has flattened out, suggesting that upside momentum has weakened. USDJPY may be entering a consolidation phase in the near term.

Daily Ichimoku cloud analysis shows that risk is skewed to the upside and bullish signals were given when USDJPY rose above the cloud and over the Tenkan-sen line. This line is now acting as support at 112.34. Should this level hold, then prices may progress towards the upper end of the broader range at the key 114 level. A break of the 114.49 high will confirm the bullish case and open the way towards 115.55 and 118.66. Another extension higher would see a resumption of the longer-term uptrend that started from a year ago when prices rose off the 100 area.

A drop below current support at the Tenkan-sen line would target the top of the cloud at 111.52. Entering the cloud would shift the short-term bias to bearish to target the bottom of the range at 108 and then 107.31 (September 8 low). A drop out of the range would bring more weakness in the market and turn the focus to the downside. The first target would be the October 2016 high at 105.52 and then from here, the odds increase for a move towards the psychological 100-level.

The short-term bias is bullish but turning neutral as there are diminished odds for further USDJPY strength due to the flat RSI. The medium-term neutral market structure remains intact.

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.