Safe havens such as gold, JPY and the CHF retreated yesterday as tensions between the US and Iran seemed to eased along with market worries. It was characteristic that both sides seem to want to avoid further escalation of the situation as well as a possible direct conflict. According to media, US President Trump stated that the US did not necessarily have to retaliate and threatened with further economic sanctions on Iran. Also, media reported that Iranian foreign minister Zariff, stated that the strikes on military bases, “concluded” the Iranian response to the assassination of Soleimani by US forces. As a news outlet eloquently put it, the Iranian response seemed to be designed to impress yet also to avoid a war. Should there be no major development on the issue, we expect trader’s focus in the fundamental field, to return to the global growth prospects and a possible signing of a US-Sino partial deal in the coming weeks, if not next week. XAU prices tumbled yesterday breaking the 1585 (R2) and the 1565 (R1) support lines, both now turned to resistance. As the precious metal’s prices broke the upward trendline incepted since the 2nd of January and seemed to stabilise during today’s Asian session, we switch our bullish outlook for Gold in favour of a sideways movement, yet the bears could be just around the corner, as the RSI indicator in the 4 hour chart, seems to be dropping. Should the bulls dictate gold’s prices, we could see them once again rising and breaking the 1565 (R1) resistance line, aiming for the 1585 (R2) resistance level. Should the bears maintain control, gold’s price action could move lower, breaking the 1547 (S1) line and aim for the 1530 (S2) level.
…while the Aussie stabilises after a long drop…
The Aussie steadied yesterday against the USD, after consecutive losing sessions, as worries for global growth stemming from the US-Persia confrontation eased. Please note though that the Australian economy could suffer a direct hit, especially on consumption and growth, as the country faces extensive bushfires. Analysts tend to note that the size, intensity and duration of the current Australian bushfires may have a substantial economic impact, yet also underscore the possibility of government assistance and insurance payments offsetting it. Financial releases seemed positive for the Aussie as the country’s trade balance surpassed expectations, and we could see Aussie traders turning their attention to the release of the retail sales growth rate for November, tomorrow, during the Asian session. AUD/USD maintained a sideways movement yesterday, yet continuously tested the 0.6875 (R1) resistance line. We maintain our inclination towards a sideways movement for the pair, yet the pair’s persistence in testing the 0.6875 (R1) resistance line could imply some bullish tendencies. Should the pair come under the selling interest of the market, we could see it breaking the 0.6850 (S1) support line aiming for lower grounds. Should the pair’s long positions be favoured by the market, we could see it breaking the 0.6875 (R1) resistance line and aim for the 0.6905 (R2) resistance level.
Other economic highlights today and early tomorrow
Today during the European session, we get Germany’s industrial output growth rate for November as well as the trading balance for the same month. A bit later in the European session, we get Eurozone’s unemployment rate for November. In the American session, we get the US initial jobless claims figure for the past week and from Canada the building permits growth rate for November. During tomorrow’s Asian session we get Japan’s household spending growth rate for November and Australia’s retail sales growth rate for November. As for speakers, please note that there a number of central bank officials scheduled to speak, yet we tend to single out BoE Governor Carney, NY Fed President Williams and BoC Governor Poloz. Also, the ECB is to release the account of its last monetary policy meeting in December.
XAU/USD 4 Hour
Support: 1547 (S1), 1530 (S2), 1513 (S3)
Resistance: 1565 (R1), 1585 (R2), 1605 (R3)
AUD/USD 4 Hour
Support: 0.6850 (S1), 0.6820 (S2), 0.6790 (S3)
Resistance: 0.6875 (R1), 0.6905 (R2), 0.6930 (R3)
