05-Feb-2020

1) XAU/USD – Safe Haven Fades
2) USD/CAD – Bullish Channel Continues to Play
3) AUD/USD – Triangle Pat

1) XAU/USD – Safe Haven Fades

A day before, the gold was down for a second session, as it sank 1.5% to $1,552 an ounce. Gold prices climbed, healing from a sharp decline in the prior session, as safe-haven demand was prompted by concerns over a fast-spreading coronavirus break in China.

The death toll in China reached 490, as two U.S. airlines halted flights to Hong Kong following the first death there, and ten cases of Carona virus were verified on a quarantined Japanese cruise vessel.

The virus would prevent a rush in U.S. exports to China assumed from the Phase 1 trade agreement that is set to take effect this month, the White House’s top economic expert announced on Tuesday.

The safe-haven appeal is supporting the gold further was a private-sector poll that recorded growth in China’s services division delayed for a second straight period in January.

Gold dropped sharply to examine the support level of 1,550, and now it’s possible to examine the 50% retracement level at 1,560, which may extend substantial resistance to gold now. On the higher side, the resistance is expected to be 1,564, and the odds of bearish reversal can be seen below 1,564/65 level today.

2) USD/CAD – Bullish Channel Continues to Play

The USD/CAD edged down 0.1% to 1.3277. Canada’s December trade balance will be released later in the day (C$610 million deficit estimated). The dollar gains bullish momentum as the U.S. government bond prices came under pressure, as the benchmark U.S. 10-year Treasury yield advanced to 1.603% from 1.520% Monday, the biggest gain in nearly two months.

Oil prices had difficulty in posting a rebound despite reports that the Organization of the Petroleum Exporting Countries (OPEC) and its allies may call for deeper production cuts amid the expectation of lower demand caused by the coronavirus outbreak. Nymex crude oil futures dropped 1.0% to $49.61, and Brent was down 0.9% to $53.96.

The USD/CAD is binding higher with bullish sentiment at 1.3285, having an immediate resistance around 1.3300. The USD/CAD is yet keeping the bullish channel that is having it supported over 1.3260, adjacent with resistance around 1.3345.

The technical indicators, such as RSI and Stochastics, are operating in the overbought region, indicating strong odds of a bearish retracement in the USD/CAD. Let’s look for selling trade under 1.3310 and bullish over 1.3260 today.

3) AUD/USD – Triangle Pattern Breakout

The AUD/USD currency pair failed to stop its bearish rally and still to flash red despite the Reserve Bank of Australia’s governor’s positive comment that the economy is passing through a gentle turning point. As of writing, the AUD/USD currency pair is currently trading at 0.679 and consolidates in the range between the 0.6724 – 0.6746.

The governor was on the news soon before press time board continues to discuss benefits of further monetary stimulus, and the possibility for rate cut strengthen if the unemployment rate increases and inflation rate stays low.

Moreover, Lowe downplayed the worries of a continued slowdown due to coronavirus scare and bushfires and said that recent inflation, jobs data confirm things are slowly moving in the right direction.

However, the AUD currency has failed to pick up a bid, possibly because the governor’s take on the economy was largely in line with the message delivered by Tuesday’s RBA rate decision and policy statement.

At the data front, China’s Caixin Services PMI for January came in at 51.8, missing the expected release of 52.6 and down from November’s 52.5 reading.

The latest news came that at least 490 people in China have died from the coronavirus, officials said on Wednesday, and the number of confirmed cases of infection rose to 24,324, up from 425 deaths and 20,438 confirmed cases the day before. There is still plenty to be concerned for, and the price of oil is effective, sliding further overnight to a low of $49.41bbls. Chinese oil demand is already dropped by 20% because of dwindling air travel, road transportation, and manufacturing.

The AUD/USD pair is trading in the red near 0.6735; they are having found offers at 0.6743 in early Asia. The pair climbed from 0.6679 to 0.6742 on Tuesday after the RBA left rates unchanged at 0.75%.

The AUD/USD increased support around 0.6685 and has bounced off to achieve the retracement. We can anticipate AUD/USD to rise unto 0.6780, and here it’s expected to face resistance. The RSI and Stochastics are staying in overbought territory, though the bullish bias doesn’t appear to end.