Market Focus

US markets rallied on Thursday as lawmakers finally reached a deal to increase the debt ceiling in the short-term. Dow Jones jumped roughly 1%, Nasdaq rose 1.1%, while the S&P climbed 0.8%. The majority of stocks turned around as investors are temporary relieved about the news that the US will avoid an unprecedented default, for now. Currently, the market is awaiting the release of the US Nonfarm payrolls, which is scheduled to be on Friday.

The Asian market is set to open higher as China’s markets are going to resume after a week- long holiday known as the golden week. In China, markets are likely to concentrate on the debt woes in its property sector and Beijing’s updated regulations to limit monopolistic behavior.

Elsewhere, oil prices rebounded after the US mentioned that it had no plans at the moment to increase its output to calm rising oil prices. In the meantime, the price of iron ore looks to wriggle as markets see the strength amid concerns that Chinese demand is evaporating.

Main Pairs Movement

Gold slid on Thursday, down 0.43%, after the US economy looked like it would gradually recover according to the jobless data on Wednesday. With ongoing improvements in the labour market, the US Fed is likely to accelerate the reduction of its monetary support soon. The price of bullion is likely to waver from Friday’s Nonfarm Payrolls data. As of now, gold is waiting for catalysts to move up and down.

WTI crude oil held steadily high as the energy benchmark cheered for upbeat market sentiment. Oil prices got fueled by the US Department of Energy’s suggestion that there will be no consideration currently to release and increase the national reserves, keeping the oil supply crunch on the table.

The Japanese Yen looks to be undermined against the US dollar as US bond yields rise, which potentially reduces the interest for the safe-haven currency. By the end of the day, USDJPY closed with 111.607, 0.19% higher.

Technical Analysis

USDJPY (4 hour Chart)

The USD/JPY pair recovered over 30 pips from its daily swing lows and climbed to fresh daily tops, last seen around the 111.60 region during the North American session.

A combination of factors assisted the USD/JPY pair to attract some dip-buying near the 111.20 region on Thursday. The risk-on impulse in the markets was seen as a key factor that undermined the safe-haven Japanese Yen and extended some support to the major. This, along with a modest pickup in the US dollar demand, provided a modest lift.

For buyers to resume the attack to 112.00 and beyond, they would need a daily close above 111.50. In case of that outcome, the next supply zone would be 112.00; on the flip side, the first support level is 111.00, followed by the September 8 high at 110.42, then at 110.00.

The RSI indicator is at 62.50 and modestly bullish, suggesting the consolidation of the pair may come to an end as the uptrend resumes.

Resistance: 112.00, 114.26 (Oct. 2018 high)

Support: 111.00, 110.42, 110.00

EURUSD (4 Hour Chart)

After two consecutive days of printing red, reaching a new yearly low at 1.1528, the pair is staging a comeback, EUR/USD is trading at 1.1564, modestly up 0.06% in the day market, during the New York session at the time of writing. The market mood is turning to risk-on mode, portrayed by European stock indices finishing the day hovering between 1.17% and 2.14%. Meanwhile, major US stock indices rose more than 1%, during the day.

On the technical front, the RSI indicator pulled back from overbought territory to the 35 figure, however, it still suggests a bearish sentiment at its current stage. Meanwhile, the Moving Average’s 15- and 60-long indicators both retain descending movement. The MACD is holding at 0, lacking suggestions of movement.

On slip side, we expect the last time low, 1.153, will give the pair short-term support guidance. If break down the threshold, we foresee the downside support will eye the psychological level at 1.15.

Resistance: 1.157, 1.161, 1.1675

Support: 1.153, 1.15

USDCAD (4 Hour Chart)

Loonie broke below the critical support of the last day,1.254, in the day market, where it was also the lowest level since Sept 7. It remains near the lows with a bearish intraday bias, favoured by a weaker dollar and higher crude oil price. The U.S. dollar index is down 0.09%, sitting at 94.14. Furthermore, the U.S. 10-years T-bond benchmark note is advancing to sit at 1.565% as of writing, putting the breaks on the buck’s fall against major currencies. On the political front, Russian president Vladimir Putin has offered to increase natural gas supplies for Europe to deal with the current spike in energy prices.

From a technical perspective, the RSI index fell to 34, suggesting bearish momentum ahead. Meanwhile, the MACD side, indicator turn into negative territory, suggesting a downside movement.

For the slip way, we expecting effectively support will between 1.255 and 1.256. Moreover, if market slip below 1.255, we see next support will be 1.25. On up way, the first resistance will be psychological level at 1.26.

Resistance: 1.256, 1.26, 1.2635

Support: 1.255, 1.25