Yesterday’s Market WrapOn Monday markets were quiet, with a tilt toward the USD as we have seen throughout this month. FED’s Jerome Powell left the fu
Yesterday’s Market Wrap
On Monday markets were quiet, with a tilt toward the USD as we have seen throughout this month. FED’s Jerome Powell left the future of the monetary policy to the data at the Jackson Hole Symposium, so the economic figures from the US continue to hold major importance for the USD. As a result, the attention was on the JOLTS job openings since the labour sector remains robust but this indicator has shown weakness in the previous several readings.
Although, before that, we had the unemployment rate from Japan, which jumped by 2 points from 2.5% to 2.7%, keeping the Yen bearish, with USD/JPY surging to 147.40. The German GfK consumer climate indicator dipped further into negative territory, which is one more bearish sign for the Euro.
Later came the data from the US, which missed expectations, showing that the economy is cooling off further. The Conference Board consumer confidence indicator posted a dive to 106.1 points from 117 points in July, which was also revised lower to 114 points. Expectations were for a reading of 116.2 points, so this shows that the US consumer which has been keeping the economy afloat is feeling the heat from higher interest rates. The JOLTS jobs openings also showed another slowdown to 8.83M from 9.58M in July, which was also revised lower to 9.17M, so that weighed on the USD, sending it more than 50 pips down across the board.
Today’s Market Expectations
Today started with the inflation report from Australia, with expectations for a 2-point decline from 5.4% to .52% in July. We also have the first inflation readings for August from Spain and Germany ahead of tomorrow’s Euroome CPI report for July. Spanish CPI Year-on-Year inflation is expected to show a 2-point increase to 2.5%, while the German CPI Month-on-Month is expected to remain steady at 0.3%.
Later we have some more important economic data from the US, with the prelim GDP report, which is expected to remain unchanged from the advance reading at 2.4%. We have another jobs report, the ADP employment figures which are expected to show a considerable slowdown to 194K from 324K previously, which would confirm that the employment sector is cooling off. Although the expectations for this report have continuously been exceeded in the last several readings.
Yesterday the price action continued to be slow during the first half of the day, but picked up pace later after the release of the US data, with traders pricing at the end of the hiking cycle for the FED. We have been mostly long on the USD in recent weeks as buyers have been in charge, while risk assets have been in retreat but yesterday we turned mostly short on the USD, with three sell signals. For more detailed updates, please refer to the section below.
The 100 SMA Holding As Support for GOLD
Since May, there has been a consistent downward trend in Gold, with lower highs indicating bearish sentiment. The selling pressure has been strong enough to drive the price below important moving averages. At the beginning of this month, the XAU/USD pair fell below the $1,900 mark.
However, a positive shift occurred due to increased uncertainty leading up to two significant summits last week. This change in sentiment led to a reversal in the upward direction. Buyers entered the market and managed to push the price above the moving averages which now have turned into support on the H1 chart. Interestingly, these moving averages have now transformed into levels of support. In light of this, a decision was made to initiate a “buy” signal for Gold yesterday which closed in profit after the surge following the soft US data release.
XAU/USD – Daily minute chart
- Gold Buy Signal
- Entry Price: $1,915.01
- Stop Loss: $1,901.01
- Take Profit: $1,923.01
Trying EUR/GBP Shorts at the 200 SMA
Both the Eurozone and the UK economies are headed for a recession. This situation has prompted traders to reevaluate their expectations concerning further interest rate increases by the European Central Bank (ECB) after September. The likelihood of such an increase is currently estimated to be around 50%. Moreover, previously optimistic predictions about the upper limit of interest rates set by the Bank of England (BOE) have been adjusted downward. This revision in forecasts has led to a postponement in the anticipated timing of these rate adjustments.
EUR/USD has displayed more resilience lately, meanwhile, the British Pound (GBP) has lagged, resulting in an uptick in the EUR/GBP exchange rate. Although the 200-day Simple Moving Average (SMA) is acting as a resistance, so we decided to issue a “sell” signal in EUR/GBP yesterday.
Cryptocurrency Update
BITCOIN Jumping to $28,000
BTC/USD – H4 chart
We’re looking to open another buy Bitcoin signal on Monday, playing the range again, buying BTC/USD around $26,000
ETHEREUM Moves Above $1,700 Again
Ethereum has demonstrated a higher level of resilience when compared to Bitcoin. Although it was not unaffected by the recent crypto market crash and the ETH/USD pair dropped below $1,600, there’s a significant observation on the weekly chart. The 200-day Simple Moving Average (SMA), represented by the purple line, functioned as a support level during this tumultuous period.
Taking into account this observed support and Ethereum’s historical behavior, we have now taken a long position on Ethereum once again. It’s important to acknowledge that the cryptocurrency market can be exceptionally volatile. Conducting thorough research and prioritizing risk management are essential factors prior to making any trading decisions.
ETH/USD – Daily chart
- ETH Buy Signal
- Entry Price: $1,671.79
- Stop Loss: $1,371
- Take Profit: $1,971
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