By Deepta Bolaky
An environment of caution remains especially ahead of the US central bank meeting. Global stocks advanced higher but risk sentiment remains fragile as investors are looking for more guidance from the central banks and governments while finding support on vaccine updates and the signs of economic recovery.
On the geopolitical front, the World Trade Organisation has ruled in Beijing’s favour, concluding that the US imposed some tariffs on China in violation of global trade rules. However, despite the tensions that may further escalate between the two powerful countries following the ruling, investors choose to ignore the headline on Tuesday.
Major US equity indices ended in positive territory on Tuesday:
In the FX space, major currencies were mixed against the US dollar. The British Pound, Antipodeans currencies and Japanese Yen were among the best performers.
The shared currency and the Canadian dollar underperformed compared to its peers. Unlike the other commodity currencies, the CAD was seen trading lower despite firmer commodity prices.
For the chart of the day, Adam Taylor CTEe views NZDCAD on the four-hour time frame as a battle of commodity-driven currencies emerges:
While the New Zealand Dollar drifts higher against a weakened US Dollar, the Canadian Dollar remains down in the doldrums due to significantly lower global oil prices.
On the chart above, the first element to note is the validated bullish trendline that originated back in late August. This trend continues to provide reliable support for the pair and looks set to challenge higher areas should it breach the resistance level of 0.8868.
Above this resistance, two potential upside targets open up with 0.8940 and 0.9011 being the obvious candidates.
Also worth noting is the curvature and change of directional bias for the 100-day moving average line in blue. It suggests bullish sentiment for this pair in the shorter-term, further enhancing the idea to move higher.
Suppose the bullish trendline fails or resistance above 0.8680 turns out to be a too formidable for buyers. In that case, areas of support for NZDCAD seem few and far between. We may end up with a slow-slide towards the previous support of 85.76 being a more probable scenario.
Finally, if you’re interested in CAD crosses, I’d recommend viewing a recent EURCAD article discussing a longer-term chart pattern called a cup & handle. Within the past few sessions, this particular chart is looking more and more impressive.
On the economic front, the Antipodeans currencies were supported by the buoyant Retail Sales and Industrial Production data in China. Retail Sales year-on-year change came out at 0.5% and turned positive for the first time since the virus outbreak started. Industrial Production (YoY) came better-than-expected at 5.6%.
Despite Brexit ongoing saga and the debate over the controversial Internal Market Bill which is plunging Brexit in another crisis, the British Pound emerged as the best-performing currencies lifted by upbeat employment data:
Crude oil prices found some upside momentum on the back of a weaker US dollar and an improvement in the equity markets. The API report towards the end of the session also helped crude oil prices to firm higher. Crude oil stock was down to -9.517M in September 11 from the previous 2.97M. As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) were trading slightly firmer around $38.37 and $40.53 respectively. Weekly oil reports will be the key events for the oil market.
Gold managed to push higher to trade above the $1,970 level but retreated to familiar levels towards the end of the session. As of writing, the XAUUSD pair has consolidated around familiar levels at $1,953.
Source: GO MT4
By Deepta Bolaky
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|Thursday, 17 September 2020
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