Top Trade Setups in Forex - Canadian GDP On Radar!

The US indices closed higher Wednesday, as the Federal Reserve cut interest rates for the third time this year. The Dow Jones Industrial Average rose 115 points (+0.4%) to 27,186, the S&P 500 climbed 9 points (+0.3%) to 3,046, and the Nasdaq Composite gained 27 points (+0.3%) to 8,303.

The Fed reduced its interest rate by 25 basis points to a target range of 1.50% to 1.75% as expected. Chairman Jerome Powell said: "We see the current stance of policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook."

Regarding U.S. economic data, the ADP National Employment Report stated that U.S. firms added 125,000 jobs in October (+110,000 jobs expected, +93,000 jobs in September). Also, U.S. third-quarter GDP grew at an annualized rate of 1.9% on the quarter (+1.6% expected, +2.0% in the second quarter). Later today, economists expect personal spending to grow 0.3% on month in September, while the Market News International Chicago PMI is anticipated to climb to 48.0 in October from 47.1 in September.

XAU/USD - Weaker Dollar and Rate Cut Supports Gold

The safe-haven metal prices rose by 0.2% as gold picked some safe-haven demand due to the United States announcement yesterday that it had canceled a November meeting of the Asia Pacific Economic Cooperation Council. This site was supposed to provide the original meeting place for the signing of an incomplete deal between the U.S. and China. That why the uncertainty surrounding the United States and China.

The reason behind the limitations in the rise of the safe-haven metal prices is that the U.S. still planned to sign the deal with Dragon nation during November even after the cancelation of the summit.

Due to mutual trust and mutual benefits, I believe both countries can get great success, said Zhu, who was directly involved in the respective trade talks as a vice finance minister until his retirement in 2018.

On the other hand, the United States Federal Reserve delivered the rate ut by the 25-basis-points t a range of 1.5% to 1.755 according to plan.

During the speech, Powell’s said there would not be a rate hike until there is a significant move up in inflation.

XAU/USD - Daily Technical Levels

Support Resistance 

1485.63 1501.21

1475.6 1506.77

1460.02 1522.36

Pivot Point 1491.19

Gold - XAU/USD- Daily Trade Sentiment

The precious metal gold prices are on a bullish track, trading at 1,503 level. Technically, gold is likely to continue bullish bias until the 1,507 resistance area. The three white soldiers’ candlestick pattern is likely to push gold prices higher towards 1,510 on the violation of 1,507 resistance. Investors should look for bearish trades below 1,510 and bullish trades around 1,500 today.

USD/CAD- Bearish Trendline Resistance 

The USD/CAD pair closed at 1.31593 after placing a high of 1.32081 and a low of 1.30743. The Overall trend for this pair remained Bullish that day. On Wednesday, Bank of Canada (BOC) kept its interest rates unchanged at 1.75% at 19:00 GMT. The BOC Governor, Poloz, commented on the published Monetary Policy in a press conference and said that uncertainties about future trade policies have heightened and has affected the business investment in a negative way. He added that there was no need for an accommodative policy at this time to address the downside risk.

Canadian Dollar came under pressure on the cautious note from Central Bank, which mentioned that risks were more tilted towards downside than before, and the uncertainty of the Market would continuously test the resilience of the economy of Canada.

The pressure on the Canadian Dollar gave a boost to USD/CAD and created a Bullish sentiment in the Market on Wednesday. The Bullish trend was then supported after the Hawkish Cut from Federal Reserve at 23:00 GMT.

Federal Reserve cut its rates by 25 basis points and gave signals to hold its monetary policy in its next meeting. The Greenback got support from the hints of pause in rate cuts by the Fed.  

Meanwhile, the weekly report published by Energy Information Administration (EIA) stated at 19;30 GMT that Crude Oil Inventories of the United States increased by 5.7M Barrels in the previous week, which weighed on Crude Oil Prices and also put pressure on Commodity Linked Currency – Loonie.

The Loonie, which was already under pressure on Wednesday, lost its traction against its rivals and supported the upward trend if USD/CAD further.

USD/CAD- Daily Technical Levels

Support Resistance 

1.3088 1.3222

1.3014 1.3282

1.288 1.3416

Pivot Point 1.3148

USD/CAD - Daily Trade Sentiment

The strength in the US Dollar added in the upward movement of USD/CAD and made the pair cross the 1.3200 level. USD/CAD placed a 10-day high of 1.32081. For now, the USD/CAD pair is trading with a bullish bias despite a weaker dollar. The USD/CAD pair has already completed 38.2% Fibonacci retracement at 1.3140. The USD/CAD may look for more buying above 1.3140 today until 1.32 and 1.3220.

AUD/USD – 38.2% Fibonacci Retracement In-Play

The AUD/USD pair closed at 0.68996 after placing a high of 0.69045 and a low of 0.68484. The overall trend for this pair remained Bullish that day. At 5:30 GMT, the Consumer Price Index (CPI) from Reserve Bank of Australia came as expected by 0.5%. The Trimmed Mean CPI also came as expected at 0.4%.

The markets for this pair AUD/USD were somewhat Bullish due to raised Trade Optimism after the announcement of the early signing of a portion of the Partial Trade Deal between US & China. The deal was supposed to be signed by both parties on APEC Summit in Chile, which has been canceled due to troubles there. But the optimism about the progress made by both countries has kept a Bullish Sentiment inn market for AUD/USD from past days.

However, the Hawkish rate cut by the Federal Reserve supported the Bullish trend of AUD/USD on Wednesday. Federal Reserve cut its rates by 25 basis points and gave signals to hold its monetary policy in its next meeting.

There were mixed reactions towards the rate cut by fed and the statement of pausing the monetary easing by Powell. Unlike previous reports, Federal Reserve gave a neutral comment this time. Powell said that the 3rd rate cut was insurance against the ongoing risks.

Despite a strong GDP of 1.9% and ADP Non-Farm Employment Change of 125K, the US Dollar was under pressure due to rate cut. And AUD/USD got further support from the reaction on anticipated Fed rate cut. 

AUD/USD - Technical Levels 

Support Resistance 

0.6865 0.692

0.6829 0.694

0.6774 0.6995

Pivot Point 0.6885

AUD/USD - Daily Trade Sentiment

The AUD/USD trades at 0.6889 level after violating the double top resistance level of 0.6880. Closings of the candle above this level suggest chances of a bullish bias for the Aussie Dollar. On the upper side, the AUD/USD may find resistance at 0.6920 and 0.6924. The 50 periods EMA stays at 0.6840, confirming the bullish bias for the pair. 

All the best for the U.S. session!

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