Top Trade Setups in Forex - Retail Sales Eyed
|A day before, the U.S. stocks advanced further after President Donald Trump tweeted: "Getting VERY close to a BIG DEAL with China. They want it, and so do we!" The DJIA (Dow Jones Industrial Average) advanced 220 points (+0.8%) to 28132, the S&P 500 gained 26 points (+0.9%) to 3168, and the Nasdaq Composite was up 63 points (+0.7%) to 8717.
U.S. official data showed that producer prices were flat on month in November (below the +0.2% expected). Initial jobless claims amounted to 252,000 for the week ending December 7 (above the 214,000 expected), marking the highest level since late-2017.
Later today, November retail sales will be reported (+0.5% on month expected). Germany's DAX climbed 0.6%, France's CAC added 0.4%, and the U.K.'s FTSE 100 was up 0.8%.
XAU/USD - Gold Dives Lower Amid Risk-on Sentiment
The safe-haven-metal prices came under pressure and representing losses on the day, mainly due to the positive news of the United States and China concerning a trade deal. As of writing, the gold prices dropped to $1,470 during the early European trading hours erasing yesterday's gains. The improving market bias in the other half of the day made it difficult for safe-haven gold to find demand.
The U.S. President Donald Trump, on Thursday, tweeted out they were getting very close to a big trade deal with China. This event helped to bring the risk-on flows to dominate the markets. Moreover, the Wall Street Journal reported that the United States was planning to offer a 50% reduction on $360 billion worth of Chinese goods as part of the phase-one trade deal and provided an additional boost to risk -on.
Trump will be meeting his trade advisers at 19:30 GMT on Thursday to discuss the trade negotiations with China, and markets will be paying close attention to headlines coming out of this meeting.
After the positive market mood, the ten-year United StatesTreasury bond yield is now up 5.2% on the day, and Wall Street's three main indexes are adding between 0.4% and 0.5%.
In the meantime, rising bond yields supported the greenback to gather strength after Wednesday's FOMC-inspired selloff and allowed the bearish pressure to remain intact.
At the moment, the U.S. Dollar Index is uphill 0.37% on the day at 97.50.billion worth of Chinese goods. In the event the tariffs were not canceled by Friday, we will likely see a surge in risk-off ahead of the weekend that will likely benefit gold.
XAU/USD - Daily Technical Levels
| Support | Pivot Point | Resistance |
| 1460.28 | 1473.55 | 1483.1 |
| 1450.74 | 1496.37 | |
| 1427.92 | 1519.18 |
Gold - XAU/USD- Daily Trade Sentiment
Gold prices rose to trade nearby 1,485 and slid distinctly following the Conservative party news, which took the lead over Labor partly. With the victory of the Conservative party, the safe-haven market for XAU/USD collapse, pushing the metal deep on Thursday to 1,461. For the time, the gold consolidates near 1,467, producing an essential resistance around 1,470/72. Following this, we can assume gold to gain support near 1,463 and 1,457.
USD/CAD - Triple Bottom Pattern In-Play
The USD/CAD closed at 1.31814 after placing a high of 1.31940 and a low of 1.31626. Overall the movement of the USD/CAD pair remained bullish throughout the day.
On Thursday, the Governor of Bank of Canada Stephen Poloz said that the low global interest rates were likely to persist under the continued slow growth of the global economy.
He said that import tariffs had forced the companies to dismantle the supply chains and find a substitute, which was less efficient. He added that increased trade uncertainties had made the future of trade policies uncertain due to which companies have cut their investment plans, which could lead to less future economic growth.
The Bank of Canada holds its interest rates at 1.75% last week, where they have remained for more than a year. Central Bank of Canada has stood out from many of the global peers that have to loosen their monetary policy and cut interest rates to offset the global economic slowdown. When the BoC held its rates steady, it said that global recession chances were fading, but the ongoing trade conflicts still weighed on the global economy.
Poloz said that the low global interest rates would have consequences and could result in continued growth in household and government. He added that the Central Bank would continue to work on the renewal of inflation target agreement with the Federal government in 2021. The Bank aims to keep its inflation target at 2%.
On the other hand, WTI Crude Oil prices jumped to $59.42 per barrel after the U.S. government said that it would reduce 50% tariffs on Chinese goods. The increase in crude oil prices gave strength to commodity-linked Loonie.
The offer for 50% tariff removal by the United States to China was made in exchange for higher U.S. agricultural purchases. This action raised the U.S. dollar across the board on Thursday, and hence, USD/CAD ended its day with a bullish candle.
USD/CAD- Daily Technical Levels
| Support | Pivot Point | Resistance |
| 1.3151 | 1.3173 | 1.3189 |
| 1.3134 | 1.3211 | |
| 1.3096 | 1.325 |
USD/CAD- Daily Trade Sentiment
The USD/CAD seems to have violated the double bottom support level of around 1.3170. Looking in the 4-hour chart above, the USD/CAD has formed bearish engulfing right above 1.3170 support, which signals the violation of this level.
The USD/CAD may find the next support near 1.3145 and 1.3110 today, while the resistance can stay around 1.3200. Today, consider staying bearish below 1.3173 to target 1.3120.
AUD/USD – Double Top In-Play
The AUD/USD pair closed at 0.69075 after placing a high of 0.69128 and a low of 0.68673. Overall the movement of pair remained bullish throughout the day. The AUD/USD pair moved to its highest level since November 7 at 0.69128 on Thursday amid the increased trade optimism.
A few days before the latest round of tariffs, a positive statement from U.S. President Donald Trump related to the trade deal gave the market a significant movement. On Thursday, Trump tweeted that "Getting VERY close to a BIG DEAL with China. They want it, and so do we!".
Hopes for completion of the phase-one deal before the 15th December deadline increased and raised the bars of china-proxy Aussie. Aussie showed a sudden rise after escalated trade optimism.
U.S. officials have also offered china with a 50% cut in existing tariffs in return. They have asked for a large number of us agricultural goods purchases. China is still to respond, but the market already raised hopes and moved in the hope that China would accept the offer.
Furthermore, the weakened than expected PPI & jobless claims from the U.S. weighed on the U.S. dollar on Thursday, and the pair AUD/USD moved further upward after the release of macroeconomic data.
AUD/USD - Technical Levels
| Support | Pivot Point | Resistance |
| 0.6891 | 0.6915 | 0.6953 |
| 0.6854 | 0.6977 | |
| 0.6793 | 0.7038 |
AUD/USD - Daily Trade Sentiment
On Friday, the AUD/USD is trading with the bullish sentiment, reaching below 0.6929. The Aussie is closing doji and bearish candles below this double top pattern, which may drive the bearish trend in the AUD/USD.
On the lower side, the Aussie may find support around 0.6900, which markets 38.2% Fibonacci area. Eyes also stay on the U.S. Retail Sales data as it's likely to drive some movement in the market. Today, let's look for selling trades below 0.6930 level to capture 40/50 pips.
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