Forex Signals Brief November 14: Will US CPI Inflation Get Markets Going Today?
Skerdian Meta•Tuesday, November 14, 2023•3 min read
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Yesterday traders didn’t have much to work with, making for a calm start to the new week. There were no significant data releases, which made traders more cautious as we anticipate crucial US economic numbers today. The USD wobbled following US treasury yields, with the USD/JPY creeping ever close to 152, which is the highest level since October last year. Aside from that, there isn’t much more going on, since adjustments have been minimal generally.
In the equity market, sentiment was more mixed, with European markets reversing higher toward the close after being bearish at first, while US stock markets continued Friday’s price action, making further gains. It’s possible that the momentum has slowed as a result of Moody’s lowering the US sovereign debt outlook, but following the recent surge, I believe this is only a little respite before we get back to business this week.
Today Market Expectations
Today starts with the UK employment report, and the unemployment rate is predicted to remain at 4.2% in the three months to September, with employment falling by 198K. The average earnings including bonuses are predicted to cool off to 8.3%, up from 8.1% before, while the average earnings without bonuses are expected to remain constant at 7.8%, down from 7.8% previously.
The big event of the week, the US consumer inflation report, will be announced later, with headline CPI figures predicted to fall to 3.3% from 3.7% in September. The Core CPI Y/Y is projected to remain stable at 4.1% vs. 4.1% previously, while the M/M reading is expected to be 0.3% vs. 0.3% previously. Fedspeak has shifted to the hawkish side since the last FOMC meeting, and while the market expects the Fed to hold rates steady until mid-2024, another rate hike is possible if the upcoming two CPI reports fall short of expectations and show persistently elevated underlying inflation. Of course, the entire response function will need to be matched with the NFP data in December.
Yesterday the volatility continued to remain low in the forex market, although we saw a decent jump followed by a reversal as US bond yields surged higher and the USD gained, but then they declined and the USD followed through. We opened several trading signals, with three of them closing yesterday, two of which reached the take profit target while one closed in loss.
GOLD (XAU/USD) continued lower last week, falling to its lowest level since October 19. Investors have been retreating from non-interest-bearing gold since the beginning of last week owing to conflicting signals from Federal Reserve officials regarding the rate-hike trajectory. Concerns over the escalation of the Israel-Hamas conflict have subsided, reducing Gold’s appeal as a safe haven, and Gold faced the 200 SMA (purple) yesterday, where it bounced from, but the bounce stopped at the 20 SMA (gray) which has been acting as resistance lately, so we’re hoping that the decline resumes since we are short on Gold
GBP/USD fell from July to the beginning of October, with the price reaching 1.20, but sellers were unable to close the gap. Although the UK economy is in recession, which has kept the GBP weak, this pair created a bottom in October, traded in a range for much of last month, and generated a big bullish reversal this month. Buyers botched their initial try at the 200 SMA last week, but they’re back after the price created a doji candlestick on Friday.
Bitcoin has continued to benefit from a more positive cryptocurrency environment, particularly since the Securities and Exchange Commission approved a Bitcoin spot ETF. As a result, late last month, this cryptocurrency soared, hitting $35,000 before weakening and collapsing. Despite not losing much ground, buyers took command of the situation and drove the price up to more over $36,000. BTC is presently trading around $35,000, and we witnessed another recovery off the 50 SMA (yellow) yesterday, with buyers stopping just below last month’s high of $38,000.
After the SEC approved Bitcoin spot ETFs last month, Ethereum benefited from the good attitude in the crypto market and soared beyond $1,800, gaining more than $300. The zone around $1,700 became support, and it now seems that the 50 SMA (yellow) has also become support, which is fantastic. ETH/USD pushed above $2,000 yesterday, indicating that buyers are in charge and we booked profit on our Ethereum signal.