Last Week’s Market WrapMost of the attention last week was on the CPI (consumer price index) report from the US, which was expected to show another in
Last Week’s Market Wrap
Most of the attention last week was on the CPI (consumer price index) report from the US, which was expected to show another increase in headline consumer inflation in August, following the increase in July. This would confirm the short term trend, which is a good enough reason for the FED to keep one more rate hike on the table.
Inflation did increase instead, while the unemployment claims came below expectations, as the headline number keeps trending down in the right direction, indicating that the jobs market is in decent shape, which will keep the consumer demand up.
So, this was another round of positive economic data from the US, which means that the economy will likely not end up in a recession. Risk assets went hgiher on such news, which is something new in the last few months, as good news has been bad news for risk assets such as stock markets and commodity dollars, with the idea that the FED would keep raising interest rates and send the US economy into recession. But that might be changing now, which is one thing to keep in mind.
Besides that, the European Central Bank (ECB) raised interest rates by 25 basis points, taking the refinancing rate to 4.50% on Thursday. Although, the Euro ended up going down, as President Lagarde let markets know that this might have been the last rate hike.
This Week’s Market Expectations
Last week markets were quiet until the release of the inflation report from the US, which supported the USD further, helping it with the larger bullish trend. We remained largely long on the USD, which proved to be a profitable strategy once again.
Bullish Signal in GOLD After Bouncing Off $1,900
Gold has been declining for several months, making loser highs, with the 100-day Simple Moving Average (SMA) shown by the green line on the daily chart turning into resistance. Early this month we saw a rejection at this moving average, after the price bounced off the 200 daily SMA (purple). Gold returned to this moving average last week, but we saw another bounce from the 200 SMA, indicating that buyers might be getting control again, as the price makes higher lows, although we’ll have to see how Gold behaves this week.
XAU/USD – Daily chart
- Gold Sell Signal
- Entry Price: $1,906.34
- Stop Loss: $1,920.34
- Take Profit: $1,898.34
Remaining Short on EUR/USD
We remain bearish on this pair as the fundamentals and technicals keep pointing further down. Despite the ECB raising interest rates by 25 basis points on Thursday last week, EUR/USD fell below 1,07 in the wake of the central bank’s announcement. Christine Lagarde implied that this should be the cycle’s last rate rise. This assertion is supported by deteriorating economic forecasts for the next year.
EUR/USD slipped to 1.0656, below this month’s lows, as US data also drove this pair to decline with the USD climbing as a consequence of some optimistic economic sentiment. We closed several EUR/USD signals last week and left one open in profit to open the new week.
Cryptocurrency Update
BITCOIN Hesitating to Push Higher
BTC/USD – Daily chart
We are looking to open another buy Bitcoin signal yesterday after the pullback, going in long just above the 20 SMA on the daily chart above.
ETHEREUM Faling at the 20 Daily SMA
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
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