Top Trade Setups in Forex – Eyes on Philly Fed Manufacturing Index
|The U.S. stocks advanced, buoyed by China's stance in supporting local businesses amid the impact of the coronavirus outbreak. At the same time, minutes of the Federal Reserve's last monetary policy meeting showed that officials were optimistic about the U.S. economy.
Both the S&P 500 (+15 points or 0.5% to 3386) and the Nasdaq 100 (+88 points or 0.9% to 9718) made record-high closes, and the Dow Jones Industrial Average was up 115 points (+0.4%) to 29348. The U.S. government bond prices eased, as the benchmark 10-year Treasury yield edged up to 1.569% from 1.555%. Right now, the traders will keep an eye on the Philly Fed Manufacturing Index.
XAU/USD - Risk-off Drive Dramatic Surge
The yellow-metal prices are looking flat because China announced the rate cut to support the economy. The gold is changing sharply, bullish at $1,616.15. The People's Bank of China (PBOC) declared a 0.10% cut to its benchmark interest rates. Details imply a 1-year mortgage prime rate is at 4.05% compared with the 4.15% a month earlier, while a 5-year loan prime rate at 4.75% versus 4.80% a month earlier.
The reason behind this decision is the new coronavirus outbreak, which has caused over 2,000 deaths in the country and almost 75,000 infections, caused widespread disruption to businesses and factory activity in China.
Gold has increased more than 6% so far this year due to concerns about the economic impact, which is caused by the virus. After this week's gains, the yellow metal is now near its high level since February 2013. It is worth to mention that the minutes from the latest U.S. Federal Reserve meeting indicated that they could leave rates unchanged for many months ahead. The U.S. dollar index that follows the greenback against a basket of other currencies was little changed at 99.642.
XAU/USD - Daily Technical Levels
|
Support |
Pivot Point |
Resistance |
|
1604.59 |
1608.81
|
1615.98 |
|
1597.42 |
1620.2 |
|
|
1586.03 |
1631.59 |
XAU/USD - Daily Trade Sentiment
The precious metal gold is trading sharply bullish since it has violated the upward channel at the 1,600 level. So far, it's been trading in line with our previous forecast to hit the target level of 1,611. As of now, it's been trading at 1,616, and the odds of bullish breakout remain pretty solid, which may lead the gold prices towards 1,622 and 1,627.
The RSI and Stochastic values are still holding below 50, which may add bearish pressure on the precious metal. Consider taking buy trades over 1,608 to target 1,622 and 1,628 today.
USD/CAD - CPI Supports Lonnie
The USD/CAD lost 0.3% to 1.3220. Government data showed that Canada's CPI grew 2.4% on year in January (+2.3% expected, +2.2% in December). Other commodity-linked currencies remained subdued against the greenback. AUD/USD slipped 0.1% to 0.6682 while NZD/USD was flat at 0.6388.
Despite rising anxieties about the economic impact of the coronavirus outbreak in China, a slowdown in the number of new cases infected by the deadly virus started to a recovery in the market risk-sentiment, and this was shown after a positive mood around equity markets, which eventually weakened the Japanese yen's safe-haven demand.
At the USD front, the already stronger tone surrounding the greenback got a fresh boost on Wednesday after the release of better-than-expected US economic releases, Producer Price Index (PPI), and housing market data. The Managing Director Kristalina Georgieva gave warning that the on-going spread of the coronavirus outbreak to other countries could derail a highly fragile projected recovery in the global economy in 2020.
Looking forward, the market traders keep their eyes on the US economic docket, highlighting the release of the usual weekly unemployment claims and the Philly Fed Manufacturing Index. The data will likely affect the USD price dynamics.
USD/CAD- Daily Technical Levels
|
Support |
Pivot Point |
Resistance |
|
1.3206 |
1.323
|
1.3245 |
|
1.3192 |
1.3268 |
|
|
1.3153 |
1.3307 |
USD/CAD- Daily Trade Sentiment
On the 4 hour timeframe, the USD/CAD pair is edging higher with a bullish bias around 1.32600, testing the downward channel's trendline, which is extending resistance around 1.3260. Most of the bullish trend has been driven due to increased uncertainty in China regarding Caronovirus, which is driving the bearish trend in the Canadian dollar.
A bullish breakout of the 1.3260 resistance area is likely to lead the USD/CAD prices towards 1.3275 initially and then 1.3330 later on. Conversely, the pair can trade bearish below 1.3260 area until the next support level of 1.3215. Let's see if the pair manages to break the above downward channel or not. Let's take a sell trade below 1.3276 today with a stop somewhere around 1.3300.
AUD/USD – Descending Triangle Pattern
The AUD/USD currency pair went in the red and dropped to 0.6649; the air hit the fresh ow sine February 2009, mainly due to the People's Bank of China (PBOC) announced rate cut during early Thursday. The AUD/USD currently is trading at 0.6643 and consolidates in the range between the 0.6630 - 0.6696.
The People's Bank of China (PBOC) announced a 0.10% easing to its benchmark interest rates. The press release indicates the 1-year loan prime rate went to 4.05% versus 4.15% a month earlier. Also, a 5-year loan prime rate moved to 4.75% against 4.80% a month earlier. It is worth to mention that the central bank announced a reduction in its medium-term lending facility (MLF) earlier this week and had already indicated that the rate cut is coming.
On the other hand, the Aussie unemployment rate disappointed earlier, risk-tone remains moderately positive considering Chinese diplomats' efforts. Before that, Australia's 4th-quarter (Q4) Wage Price Index remained unchanged, around 0.5% QoQ the previous day.
China's coronavirus news pieces continue to present mixed signals with the latest figures from Hubei after a re-revised pattern and mark a sharp decline in the infected counts. However, the market's approve the Chinese policymakers' efforts to appease traders with all the efforts they can. The World Health Organization (WHO) also supports the dragon nation and helps the risk-tone.
AUD/USD - Technical Levels
|
Support |
Pivot Point |
Resistance |
|
0.6674 |
0.6687
|
0.6699 |
|
0.6661 |
0.6712 |
|
|
0.6636 |
0.6737 |
AUD/USD - Daily Trade Sentiment
The AUD/USD fell dramatically after disrupting the descending triangle pattern, which supported the pair around 0.6665. As we can see on the 4-hour timeframe, the AUD/USD has formed three black crows pattern, which is suggesting odds of more selling in the AUD/USD pair.
Since the pair has already met our initial target level of 0.6620, the next target is likely to be 0.6585. Above this level, we can expect a bullish reversal in the AUD/USD pair. The RSI and Stochastics are holding below 20, suggesting odds of bullish correction before we see more selling in the AUD/USD pair. Let's stay bearish below 0.6645 and bullish above 0.6585 today. All the best for the New York session!
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