Intraday Technical Analysis 3 January

ISM manufacturing activity expected to ease to 58.2

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The U.S. Dollar posted strong gains on Wednesday as price action in the greenback sent most of its peers to close lower on the day. Gold prices tried to inch higher but failed to keep the intraday gains. WTI crude oil prices, on the other hand, managed to close bullish.

Higher yen and gold prices reflected the risk-off sentiment in the market while the Kiwi Dollar, the AUD, GBP, and the Euro posted strong declines on the day.

On the economic front, manufacturing PMI from the Eurozone showed that activity in the sector was unchanged at 51.5 compared to the month before. This was however in line with the median estimates.

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In the UK, manufacturing activity rose to 54.2, marking a slight advance from the estimates of 52.5 and up from a revised reading of 53.6 in November. Markit’s manufacturing PMI for the U.S. showed a modest decline to 53.8 which was below estimates of 53.9.

Looking ahead, the economic data from the Eurozone is relatively quiet. In the UK, the construction PMI data is due to be released today. Forecasts point to a slowdown in the UK’s construction activity with the index expected to ease to 52.9. This is weaker compared to 53.4 registered the month before.

The NY trading session will see the release of the U.S. ADP private payrolls report for December. Economists forecast that private payrolls rose slightly by 180k in December, up from 179k in November. The weekly unemployment claims follow the ADP report.

The main event for the day will be the Institute of Supply Management’s manufacturing PMI report. Manufacturing activity should ease to 58.2 in December, down from 59.3 previously. The ISM prices paid is also likely to ease from 60.7 to 57.9.

EURUSD intraday analysis

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EURUSD (1.1368): The EURUSD currency pair posted strong losses on Wednesday as price action failed to breakout above the 1.1461 level of resistance. The minor trend line was breached invalidating the bullish ascending triangle pattern. The break down from the rising trend line saw the Euro currency testing lows of 1.1305 before recovering. The current rally off the lows near 1.1305 could see the EURUSD retesting the breakout level from the trend line. As long as the gains cap here, we expect further declines down to 1.1275 level.

AUDUSD intraday analysis

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AUDUSD (0.6939): The Australian dollar fell sharply on the day, losing 0.94% overall. Price action fell to a decade low of 0.6759 after closing a bit higher from the lows. The declines came following the break down of the support level near 0.7022. The current recovery could, however, keep the AUDUSD to consolidate just below the resistance level of 0.7022. As long as this level is not breached, the AUDUSD could be attempting to post a bottom. However, we cannot rule out further declines in the near term.

XAUUSD intraday analysis

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XAUUSD (1288.56): Gold prices continued to maintain the bullish momentum although price action was briefly retreating off the highs before recovering in today’s early Asian trading session. Establishing support at the 1280 handle has pushed gold prices slightly higher from Wednesday’s highs. However, with the Stochastics oscillator pointing to a bearish divergence, we anticipate that the support level at 1280 could give way to some downside in price action. A break down below 1280 will potentially push gold prices down to the 1250 handle where support could most likely establish.

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