AUDJPY and NZDJPY Overview: BoJ can cut short-term rates
While the markets were focusing on Brexit Vote in the UK Parliament, CB Governors continue to send “easing in monetary policies” messages via the IMF and World Bank’s 2019 Fall Annual Meetings of finance ministers and bank governors in Washington.
First, BoE’s Carney said Britain’s planned Brexit deal would help the country’s economy, but “almost existential” worries about global trade wars might prevent the BoE from raising interest rates.
Asked if securing a Brexit transition meant the BoE would resume raising rates, Carney said: “Not necessarily. I’m not going to pre-commit, there is a lot of contingencies there.”
He said the IMF had stressed the precarious nature of the world economy, which has prompted other central banks including the U.S. Federal Reserve and the European Central Bank to provide more stimulus.
Carney was followed by BoJ’s Governor Kuroda.
The Bank of Japan will “certainly” reduce short- to medium-term interest rates if it needed to ease monetary policy, Governor Haruhiko Kuroda said, suggesting that deepening negative rates will be the primary tool to fight to heighten overseas risks.
“If we need further easing of monetary conditions, we would certainly reduce short- to medium-term interest rates. But we don’t want to reduce super-long interest rates,”
Considering that other major CBs are planning to increase their easing policies – more rate cuts, asset purchases, etc. – the determining factor of the Japanese Yen’s position at this point is the Safe Haven phenomenon.
Keeping the Kuroda’s words in mind, let us take a look at the Asia-Pacific Crosses.
The pair ended the week above EMA 50 Days period at 69.21. RSI has upside rooms on the Daily Chart. The upside is capped by SMA100 at 69.80. Daily closing above 69.80 would send the pair towards 71.80 SMA200 resistance on the Dail Charts.
Bearish Dragon pattern is completed at 69.20 as seen on the above chart.
I have updated the Live Interactive H4 Chart. Following the Bearish Cypher pattern, the Bearish Shark Pattern would be completed at 69.35. This level can be used as a selling opportunity. However, the short-term bullish trend would remain unchanged as long as the price holds above 68.40.
All potential patterns and targets have been mentioned on the Live Interactive Charts.
The big picture is similar to the NZDJPY pair. The price closed above EMA50 at 74.32.
EMA 50 support is 73.43 and the short-term bullish trend would remain unchanged as long as the price holds above the EMA 50 support.
Near term key resistance is 74.60 and 75.00. Upperside is capped by SMA200 at 76.10.
We see two major reversal patterns – Bearish Gartley at 75.20 and Bearish Swan at 75.56- in the Dail Chart.
As mentioned in the Live Interactive H4 Chart, Bearish Crab and Bearish Butterfly patterns indicate a minor reversal.
By the guidance of the harmonic patterns in the H4 chart, we can say that the price must break and close above 74.60 to continue its upward move.
Weak Euro. ECB Monetary Policy Decision on Dec 12th. ECB is expected to keep its monetary policy unchanged. The wait-and-see policy and emphasis on financial supporting can be expected to continue. UK General Elections and Brexit: General election poll projection claims Tories are set to win a 48-seat majority. The fact that the Conservative Party wins the elections with a majority, Boris Johnson is expected to activate the Brexit plan, which he had previously failed to approve in Parliament. And this will increase the possibility that Brexit will take place on January 30th. Cheap Sterling and potential upside rooms in GBP Index confirm the bearish continuation in the EURGBP pair.
The pair ended the week at 0.85113, below EMA 50, SMA 100 & SMA200. EMA 50 cuts the SMA100 which is a strong bearish signal. The upside is capped by SMA 100 and EMA50 at 0.88000. And potential pullbacks towards the resistance zone can be used as a selling opportunity.
As seen on the Headline Daily Chart, we have achieved our first target of Measured Move Down at 0.85200. The next key target of the pair is 0.84550 as long as it holds below 0.85000.
Our medium-term price prediction is 0.82800. BoE’s Monetary Policy Decision will determine the next direction of the pair. However, we keep our Q4 2020 price prediction as 0.80600.
Our latest short term short trades – Bearish Swan, Pennant and Bearish Camel Run – reached their target levels.
The first target of the Camel Bearish Run was 0.85000. As we mentioned and updated on the live interactive charts, our next targets are 0.84820 ( Camel Run ) and 0.84570 ( Structural Target of the Pennant ).
Bullish ABCD pattern would be validated at 0.84800 and we may see a technical correction between 0.84800 and 0.84580 towards 0.85400 – 0.85600 region.
As usual, we plan to sell potential pullbacks targeting 0.84500, 0.83800 and 0.82800.
Intraday trade opportunities will be posted later.
XAUUSD Gold Report: US-China Trade War and Risk Appetite
Reminder: This article is a shortened version of our Gold report which is prepared for our investors. It can not be used as a buy/sell signal.
December 12 – ECB decision: The ECB is not expected to make changes to its monetary policy. The wait-and-see policy and emphasis on financial support can be expected to continue. It will not have a significant impact on gold.
December 12 – UK elections: Polls suggest that the Conservative Party will win the UK elections by increasing the number of votes and the number of seats in Parliament. The fact that the Conservative Party wins the elections with a majority, Boris Johnson is expected to activate the Brexit plan, which he had previously failed to approve in Parliament. And this will increase the possibility that Brexit will take place on January 30th. This would help to eliminate a significant global uncertainty. GOLD NEGATIVE
But; After the realization of Brexit, the trade negotiations between the UK and the EU will create new uncertainties. GOLD POSITIVE
December 15 – US-China tariffs: The phase-1 agreement between the US and China, which is expected to be signed in mid-November, has not signed yet and tensions are rising due to the Hong Kong protests between the US and China. As the economic slowdown in China becomes more evident, China continues to take significant steps to ensure the agreement, as in the case of copyright, and to ensure that the agreement is achieved.
Some analysts think the signing of the deal could be by the end of the year.
As it is known, the US decided to impose a 10% import tax on the $ 156 billion consumers product imported from China but postponed it to 15 December. Whether these taxes will come into force will be the main determinant of the negotiations. If the US begins to impose these taxes, this could lead to a break in negotiations and serious disruption of risk appetite on a global scale.- GOLD POSITIVE –
The continuation of the process may even raise the expectations of further interest rates cuts from the Fed. This may trigger a new upward trend in Gold. – GOLD POSITIVE-
Although the global economy signals return from the bottom and major central banks do not signal additional easing policies, this outlook may be reversed by the failure of trade negotiations between the US and China. Therefore; The main determinants of gold prices will continue to be US-China developments in the near future.
On the weekly chart
• As seen on the chart, Gold is making its technical correction.
• As long as it stays above USD 1,376 in the long term, we consider the pullbacks as an opportunity to buy. Daily closing above 1508 would be the confirmation of Bullish trend continuation to add long positions. Targets are 1586 1600 & 1652.
• If XAUUSD makes daily closing below 1.445 $, it is likely to test 1437 1421 and 1406.
Bullish Bat pattern and ABCD 1.27 Ext. are working. Price reached the TP2 Level. However, the upside is capped by SMA200 H4 and SMA100 D1 at 1.474-1480.
Two emerging harmonic patterns can be used as a selling opportunity.
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