Forex Signals Brief Feb 8: China Inflation and US Unemployment Claims

Yesterday we saw a continuation of Tuesday’s price action, with the USD continuing the retreat, while US stock markets climbed higher. The S&P500 made a new record high as it peaked above $5,000 points. Risk currencies such as commodity dollars also moved higher, following the bullish reversal in the Chinese stocks this week.

The economic calendar was light, with only the EIA crude Oil inventories, which showed a considerable buildup. However, we had several Federal Reserve officials deliver presentations during the US session, including Boston Fed President Collins, Fed Governor Adriana Kugler, and Richmond Fed President Barkin. Their comments gave information on their unique biases and perspectives on current economic realities. Overall, Fed policymakers agree to exhibit patience when making monetary policy choices. They emphasized that there is no urgency to make adjustments, particularly given the strength of the labour market.

Furthermore, there are fears that, while inflation has been falling, further drops may see reduced salaries and service costs. There is also concern that the disinflation in goods prices will not continue to support the economy as it did in the previous 6 to 12 months.

Today begins with the release of the Consumer Price Index (CPI) report from China. Despite recent measures by the People’s Bank of China (PBoC), including a 50 basis points reduction in the Reserve Requirement Ratio (RRR), traders are indicating a desire for further action. The Chinese headline inflation year-on-year (YoY) is anticipated to be -0.5%, compared to the previous reading of -0.3%. Meanwhile, the month-on-month (MoM) number for January is expected to increase to 0.4%, up from 0.1% in December. There is no consensus for the Core CPI YoY, although the previous figure showed a 0.6% rise, consistent with the previous two months.

In the afternoon, the focus shifts to the United States with the release of the Unemployment Claims figures, which remain one of the most crucial indicators, offering a timely snapshot of the labor market. Initial Claims, which have hovered near lows during 2023, experienced a slight uptick in the past two weeks. Continuing Claims, on the other hand, have resumed their upward trajectory and are nearing cycle highs. This week’s consensus forecasts Initial Claims to be 220K, up from the previous week’s 224K. However, there is no consensus for Continuing Claims. In the previous report, Continuing Claims increased to 1898K from 1828K.

Ethereum Approaching $2,500

ETHEREUM has also been fluctuating in price, decreasing from around $2,700 since the debut of BTC ETFs, but the general trend remains favourable because it has yet to reach lower lows. The price fell below the 20 daily SMA (grey) yesterday, but it remains above the 50 SMA (yellow), which serves as the last support indicator during deeper pullbacks such as this one. We want to build another long-term buy ETH signal at the 50 SMA, but we’ll see how the price movement unfolds.

• ETH Buy Signal
• Entry Price: $2,290
• Stop Loss: $2,590
• Take Profit: $1,750