Yesterday’s Market WrapYesterday was relatively slow and quieter compared to Monday when we saw a surge in the Japanese yen and bond yields. In the fo
Yesterday’s Market Wrap
Yesterday was relatively slow and quieter compared to Monday when we saw a surge in the Japanese yen and bond yields. In the foreign exchange market, the U.S. dollar resumed the bullish momentum again after experiencing a decline on Monday. This was reflected in the USD/JPY pair, which climbed back above the 147.00 mark.
Additionally, the EUR/USD dropped to 1.07 lows, while the GBP/USD pair went down by 0.4% as it retreated to 1.2460. However, the decline in GBP/USD came after a less-than-ideal UK jobs report, as UK August payrolls changed by -1k vs 97k in July, which may have implications for the Bank of England’s (BOE) monetary policy decisions ahead.
The Eurozone and the German ZEW Economic Sentiment were released later, both of which showed another decline as sentiment falls deeper into negative territory. This further confirms the problems with the Eurozone economy, which weighs on the Euro.
In the equities market, risk sentiment was relatively calmer earlier but has started to retreat slightly, with U.S. futures moving lower. This shift in risk sentiment is influencing European stock indices, which had seen slight gains at the opening of the session. The bond market appears to be relatively unchanged for the day. Gold did tumble lower to $1,908 though. Overall, yesterday’s trading session in Europe can be characterized as a bit more subdued, with market participants seemingly awaiting the upcoming U.S. Consumer Price Index (CPI) report scheduled for tomorrow.
Today’s Market Expectations
Today starts with the July GDP report from the UK, which was expected to show a decline of 0.2%. The GBP lost around 560 pips yesterday after the lower employment for August, despite the increase in wages, so another negative number today will accelerate the decline in GBP/USD.
Although, the fate of this pair will also be decided by the US inflation numbers. The upcoming U.S. Headline Consumer Price Index (CPI) Year-on-Year (Y/Y) is expected to show a jump to 3.6% compared to the previous reading of 3.2%. The Month-on-Month (M/M) reading is expected to be 0.6%, up from the previous 0.2%. This increase in the Headline CPI is primarily attributed to higher energy prices, which are considered temporary in nature.
The Core CPI Y/Y, which is a more closely watched indicator by the Fed, is expected to decrease to 4.3% compared to the previous reading of 4.7%. The M/M figure for Core CPI is anticipated to remain unchanged at 0.2%, the same as the previous month. The market’s expectations for the September meeting of the Federal Reserve do not appear to be significantly influenced by this CPI report, unless it shows an uncomfortably high level of inflation across the board. The prevailing consensus suggests that the Fed will hold interest rates steady during the September meeting.
Yesterday the volatility was low but the market moved in one direction, long on the USD, which was good for us since we were mostly long on the Dollar as well. We opened several trading signals, five of which reached the targets, with four hitting the take profit levels, while one closed in loss.
Booking Profit in GOLD
Gold had been following a bearish trend since May, however, in the past two weeks, there was a notable reversal, and the price of Gold managed to rise above the $1,950 per ounce mark. The bullish momentum in Gold ended when the price reached the 100-day Simple Moving Average (SMA), represented by the green line on the daily chart. Following this, there were several doji candlesticks, which typically indicate market indecision and potential trend reversals.
Last week, Gold reversed lower after the doji candlesticks, and buyers attempted to retest the upside. However, they were unable to push the price above $1,930, and as a result, the price reversed to the 200-day SMA, represented by the purple line on the chart. We were short from last week and that signal closed in profit yesterday.
XAU/USD – Daily chart
- Gold Sell Signal
- Entry Price: $1,923
- Stop Loss: $1,937
- Take Profit: Closed at $1,915
NZD/USD Failing at MAs
Commodity dollars have been under pressure for around two months, as the USD has turned bullish on a less-dovish FED, as they refuse to call it quits with rate hikes, despite markets not expecting any more hikes. The larger trend in NZD/USD remains pretty bearish, but yesterday we saw some buying pressure, which has pushed the price above 0.59. Although the 100 SMA held as resistance we decided to go short on this pair.
Cryptocurrency Update
BITCOIN Reversing Higher Above $26,000
BTC/USD – Daily chart
We decided to open another buy Bitcoin signal yesterday after the pullback, going in long just above the 100 MS Aon the H4 chart above.
ETHEREUM Returns Above $1,600
The price of Ethereum jumped higher last month indicating that there was a level of buying interest and demand for Ethereum at the sone around $1,600. Buyers have stepped in on several occasions at the area above this level but the 20 SMA (gray) has been acting as resistance on the daily chart. It has been pushing the highs lower which was a strong bearish signal, and yesterday sellers finally pushed ETH/USD below the support zone.
ETH/USD – Daily chart
- ETH Buy Signal
- Entry Price: $1,671.79
- Stop Loss: $1,371
- Take Profit: $1,971
www.fxleaders.com
COMMENTS