The dollar traded bullish around 6-week peak high against the basket of currencies during the previous week as the U.S.-China trade agreement kept traders on uncertain. Japan's capital investment increased by 7.1% on year in the third quarter (+5.0% expected, +1.9% in the second quarter), according to the Government. While The Jibun Bank Japan Manufacturing PMI posted 48.9 for November (48.4 in October), signaling a continuation of the downturn in Japan's manufacturing sector.
The Caixin China Manufacturing PMI was reported at 51.8 in November (51.5 expected, 51.7 in October), showing a further modest improvement in the health of China's manufacturing sector during November.
XAU/USD - Gold's Descending Triangle In Play
The safe-haven-metal prices dropped after the upbeat Chinas data and stocks are gaining ground. As of writing, the anti-risk yellow metal is trading at session lows near $1,460, representing a 0.28% decline on the day.
Meanwhile, the futures on the S&P 500 are reporting a 0.30% gain. Japan's benchmark equity index Nikkei is currently up 1.13%, and the Shanghai Composite is adding 0.48%. Indices in Australia, New Zealand, South Korea, and Hong Kong are also flashing green.
The purchasing managers' index (PMI) for China's manufacturing sector ticked higher to 50.2 in November from 49.3 in October, the National Bureau of Statistics (NBS) said Saturday. That is the first above-50 reading in 13 months.
Moreover, the Caixin PMI, which focuses on the small and medium-sized export-oriented units, surged to 51.8 in November from 51.7 in the previous month, marking the fastest expansion since December 2016.
According to a forecasting point of view, inventors will likely continue to offer the gold prices in the wake of the signs of a turnaround in the world's 2nd-largest economy. Although, the gold may be dropped further if the tension rises more also regarding the United States and China trade talks.
It should be noted that the report came today that the United States must rollback the existing tariff from the Chinese goods as part of the deal.
XAU/USD - Daily Technical Levels
Gold - XAU/USD- Daily Trade Sentiment
Gold continues to trade within the same technical ranges as the investor awaits the ISM manufacturing PMI figure, which is due later in the day. The precious metal continues trading at 1,456 with a bearish preference. Looking at the 4-hour chart, we can notice a descending triangle, which is holding resistance at 1,462 following the 50 EMA, which also remains at 1,462.
Conversely, gold is exacted to discover the next support at 1,452 area, and the violation of this could begin further selling unto 1,446.
USD/JPY - Retracement Before Bullish Bias
The USD/JPY pair closed at 109.487 after placing a high of 109.669 and a low of 109.396. Overall the trend for USD/JPY remained Bearish that day. The USD/JPY pair rose to its highest level since May on Friday but reversed its direction on the back of weakened U.S. Dollar. The effect on Friday was escalated due to the Thanksgiving Holiday on Thursday and made the pair place a high of 109.669.
On the data front, at 4:30 GMT, the Tokyo Annual Core Consumer Price Index (CPI) remained flat at 0.6%, and the Unemployment Rate of Japan also remained flat at 2.4%. However, at 4:50 GMT, the Prelim Industrial Production of Japan for October dropped to -4.2% against the expectations of -2.0% and weighed on the single currency – Yen. At 10:00 GMT, the Consumer Confidence from Japan showed a rise to 38.7 from the expectations of 37.0 and supported Yen. Annual Housing Starts from Japan came in negative at - 7.4%.
The yen remained under demand due to an increase in consumer confidence on Friday and dragged the pair USD/JPY from its highest level since May. The drag was supported by U.S. President Trump's approval of the Hong Kong bill, which enhanced the chances of escalation in the US-China dispute.
Now traders are waiting for China's retaliation against this decision from Trump to further set the trend of USD/JPY. The decreased demand for riskier assets due to an increase in Yellow metal prices also dragged this pair prices at the ending day of the week.
USD/JPY - Daily Technical Levels
USD/JPY - Daily Trade Sentiment
The USD/JPY is presenting sideways trading session, while the pair trades at 109.500. On the technical side, the USD/JPY is binding in a bullish tone above 109.400; the resistance converts support mark. The 50 EMA is proposing buying with all the candles which have closed over 109.400. Consider staying bullish over 109.42 to target 109.700 and 109.900 resistance levels.
AUD/USD – Descending Triangle Violates
The AUD/USD closed at 0.67548 after placing a high of 0.67793 and a low of 0.67539. Overall the trend for AUD/USD remained Bearish that day. At 5:30 GMT, the Private Sector Credit from Australia for October showed a drop to 0.1% against the expectations of 0.3% and weighed on Aussie. At 8:00 GMT, the Housing Industry Association of Australia published the New Home Sales for October in negative at -0.5% and added in the pressure of Aussie.
The pair moved in a downward trend after weaker than expected macroeconomic data from Australia. The fundamentals were missing from the American side on Friday, but the U.S. Dollar remained in strength. Due to the fall of European currencies and pound against the U.S. Dollar, the U.S. Dollar index rose to its highest level near 6-weeks at 98.50 and added in the Bearish trend for AUD/USD.
Being the most significant economic partner of China, the Australian dollar was also under pressure on Friday after the heightened tensions between the U.S. & China. The phase-one deal also came under uncertain situations after Trump approved Hong Kong Act into law. The pressure on China-proxy Australian Dollar moved AUD/USD pair in Bearish trend at the ending day of the week.
AUD/USD - Technical Levels
AUD/USD - Daily Trade Sentiment
The AUD/USD has violated the descending triangle around 0.6770, and it has closed candles outside of the triangle range, which is suggesting chances of a bullish trend in the AUD/USD. On the higher side, the AUD/USD can continue bullish bias until the next target level of 0.6800 and even higher to 0.6830.
Investors are waiting for the RBA cash rate, which is due to come out on Tuesday, and on its release, they will be able to determine further trends. Consider staying bullish above 0.6765 to target 0.6810.
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