US Brief: top Trade Setups in Forex - Canadian CPI
|A day before, the UK PM Boris Johnson showed his willingness to leave the European Union (E.U.) with the departure period not extending beyond 2020. The bill draft for that purpose will soon be submitted to the Parliament for voting, where Conservatives hold the majority.
The U.S. official data showed that housing starts amounted to an annualized rate of 1,365,000 units in November (above 1,345,000 units expected, 1,323,000 in October). Building permits unexpectedly climbed to 1,482,000 units in November (above 1,410,000 units expected, 1,461,000 units in October), the highest level since 2007.
XAU/USD - Sideways Sessions Continues
The safe-haven-metal prices remain under pressure for the second consecutive day despite the risk-off market sentiment due to the Brexit and trade fears. The greenback recovered heavily on the upbeat data and the Federal Reserve supportive speak.
The phase-one trade deal failed to reclaim the US-China trade delay because markets worry regarding the on-going disputes between the world's two largest economies. Moreover, Fitch recently said that phase one US-China trade deal is unlikely to decrease the uncertainty, given the prolonged phase two discussions on structural issues.
Moreover, United States diplomats like Treasury Secretary Steve Mnuchin and Trade Representative Robert Lighthizer have been appreciating the advantages of phase-one to the economy while giving credits to the U.S. President Donald Trump.
At the Brexit front, the UK PM Boris Johnson showed a willingness to leave the European Union (E.U.) with the departure period not extending beyond 2020. The bill for the same will soon be shown in the Parliaments for voting where Conservatives hold the majority.
Whereas the trade/Brexit headlines shifted the market's risk sentiment, the United States' ten-year treasury yields and Gold showed less reaction, possibly due to USD recovery. Upbeat data from the U.S. and comments favoring the present monetary policy and growth stand by the Federal Reserve (fed) officials are possible reasons for the greenback's strong gains.
XAU/USD - Daily Technical Levels
|
Support |
Pivot Point |
Resistance |
|
1473.44 |
1477.01 |
1479.78 |
|
1470.67 |
1483.35 |
|
|
1464.33 |
1489.69 |
Gold - XAU/USD- Daily Trade Sentiment
Gold's choppy trading extends as traders did not find any substantial logic to determine trends following the December vacations. Gold is trading in a tight trading range with next support around 1,474 and resistance at 1,480. Violation of this range can ascertain farther trend for Gold.
Closing of candles under 1,474 may drive more selling until 1,469. Let us focus on 1,474 because Gold may exhibit buying above and selling below this level today.
USD/CAD - Bearish Channel Continues to Play
The USD/CAD closed at 1.31581 after placing a high of 1.31849 and a low of 1.31453. Overall the trend for USD/CAD remained bullish throughout the day.
On the data front, the Manufacturing Sales of Canada in October were declined to -0.7% against the expectations of 0.0% and weighed heavily on the Canadian Dollar.
Weaker than expected manufacturing Sales from Canada dragged the single currency Loonie against its counterpart U.S. dollar, and hence, USD/CAD pair surged on Tuesday.
On the other hand, the data from the United States continued supporting the U.S. dollar and added in the upward direction of the USD/CAD pair.
The Housing Starts, Building Permits, Industrial Production, Jobs Opening, and IBD Economic Optimism all came in favor of the U.S. dollar on Tuesday. The increased number of Building permits by 1.48M and the increased numbers of Residential buildings that started its construction by 1.37M remained supportive of the U.S. dollar.
The Industrial Production from the United States showed a 1.1% growth in November and raised U.S. dollar against CAD, and hence USD/CAD moved in a bullish trend.
More than expected, U.S. Job Openings in October that is 7.27M against expected 7.01M, also added in the upward movement of the pair.
Loonie was also supported by the raised prices of WTI Crude Oil on Tuesday. CAD gained strength against the U.S. dollar on the back of rising crude oil prices ahead of the American Petroleum Institute's (API) weekly crude oil inventory report.
The strength of commodity-linked currency Loonie holds the upward trend of pair USD/CAD, and the pair ended its trading day with a small bullish candle.
USD/CAD - Daily Technical Levels
|
Support |
Pivot Point |
Resistance |
|
1.3122 |
1.3148 |
1.3181 |
|
1.3089 |
1.3207 |
|
|
1.3031 |
1.3266 |
USD/CAD - Daily Trade Sentiment
The USD/CAD pair bounced off over 1.3096. The USD/CAD has previously achieved a 61.8% Fibonacci expansion. Additionally, the USD/CAD has also created a bearish channel, which is driving bearish bias for the USD/CAD bearish.
The USD/CAD extends to trade bearish following the breaking out of the double bottom support mark of 1.3170. On the 4 hour chart, the USD/CAD has created a bearish engulfing candle, which may drive further selling until 1.3110 and 1.3090.
AUD/USD – Resistance Retest In Aussie
The AUD/USD closed at 0.68503 after placing a high of 0.68854 and a low of 0.68381. Overall the movement of pair AUD/USD remained bearish throughout the day.
The Minutes of RBA's December meeting revealed that Central bank was prepared to start 2020 by loosening monetary policy again in February. The decision to cut interest rates again by RBA was taken in concerns that weak wages growth and higher mortgages were weighing on household spending plans while the businesses were becoming more risk-averse.
In its December meeting, RBA kept its rates on hold at 0.75%. The downgraded economic forecast by the central bank of Australia was largely due to the low spending from households because of weak growth in income. This leads to a low-risk appetite for willingness to invest and hence low economic growth.
The NAB economist KaixinOwyong said that "in our view, RBA will downgrade its outlook for consumer spending and growth when it reviews its forecasts in Feb 2020. At that point, we believe the RBA will be forced to cut the cash rate. Past that point, the RBA could cut further and undertake quantitative easing next year unless the government changes course and delivers a meaningful fiscal stimulus."
The dovish future stance from RBA put pressure on Aussie, and the pair AUD/USD fell sharply to place a low of 0.68381 on Tuesday.
Adding in the bearish momentum of AUD/USD was stronger than expected macroeconomic data from the United States on Tuesday. The Building permits and Housing Starts from the United States showed growth in November and supported the U.S. dollar.
The JOLTS Job Opening for October and Industrial Production for November also showed growth signs and helped the U.S. dollar to gain traction against weak Australian Dollar.
The weak Aussie due to dovish RBA minutes and strong U.S. dollar amid stronger than expected economic data dragged the AUD/USD pair prices to move in a bearish trend.
AUD/USD - Technical Levels
|
Support |
Pivot Point |
Resistance |
|
0.687 |
0.6884 |
0.6899 |
|
0.6854 |
0.6913 |
|
|
0.6825 |
0.6943 |
AUD/USD - Daily Trade Sentiment
The AUD/USD has broken the horizontal support mark of 0.6865. The bearish violation of 0.6860 exposes further opportunity for selling unto 0.6840 and 0.6820.
The MACD and RSI are still staying in a bearish zone, implying the chances of the additional bearish trend in the AUD/USD. The AUD/USD has lately fallen under 50 periods EMA which is likely to drive further selling sentiment for the AUD/USD.
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