Forex Signals Brief for September 13th: Equities Are Booming as Risk-On is Back!
Rowan Crosby • 3 min read
Without a doubt, the GBP was the story of yesterday. After a stronger than anticipated Consumer Price Index (CPI) reading, the pound rallied which is setting up for an interesting Bank of England (BOE) rate decision on Thursday.
Equities elsewhere continued to perform strongly as the SPX flirts with the 2500 level, while the safe havens continue to back off as fears over North Korea and Hurricane Irma halted. Worldwide equity markets are getting set to make record highs, and the appetite for risk is still present.
Today we have CPI data out of both Germany and Spain, along with unemployment from the UK. As we near the official interest rate decision from the BOE, we might be at the point where new data won't move markets too much. We can often fall into a holding pattern ahead of central bank news, so I’ll be interested to see if we have the same level of impact that we saw from yesterday’s data.
Top Economic Events Today
EUR – German and Spanish CPI
CPI data from both Germany and Spain are set for release at 06:00 and 07:00 GMT respectively. Analysts are predicting no change from either country. CPI is a key measure of inflation, and as it increases so does the likelihood of a rate hike.
Swiss PPI data is out today at 07:45 GMT with analysts predicting an increase of 0.2% compared to the flat reading last month. PPI is another indicator of inflation albeit slightly less so than CPI.
GBP – Employment Data
The UK has a number of employment statistics out today at 08:30 GMT including the unemployment rate, claims, and average earnings. Employment is a key driver of the economy and any increase in jobs is a positive for the pound.
EUR/USD – Trendline Holding Strong
It was an unusual trading session yesterday, where we saw strength in the GBP with a degree of weakness in the EUR. That said, the trendline that I’ve been interested in is still well and intact, and I’m still looking to buy dips. Longer term I’m still bullish on the Euro.
EUR/USD – 240 min Chart
EUR/USD – Trading Plan
I want to buy on breaks below 1.1950. The trendline is still in tact, and I feel that the momentum is certainly to the upside.
Yesterday there was some initial weakness, but price came bouncing back hard and fast which makes me think there is still buying interest there.
Gold – Hitting Support
After the excitement of last week, Gold and all the safe havens for that matter have eased off. We saw a big rally in the USD/JPY as trade continue to unwind their hedges. There’s still a degree of uncertainty as to exactly what will happen with North Korea as UN sanction appears to be ramping up. I still think it’s worth looking for buying opportunities in the short term.
Gold – 240 min Chart
Gold – Trading Plan
1325 has been a strong level for gold traders in the past, and I think it presents an opportunity to buy. We’ve pulled back from the highs and now that the flight-to-safety has disappeared, we’re getting a bit more value on a long entry. If anything negative come across the wires gold is going to be ready to spike. I want to buy below 1325. This is a little bit of a counter-trend trade, given the risk-on feel we had yesterday, but I'm expecting markets to mean-revert in the short term.
We are at an interesting point in time, especially in equities. Good luck today traders.