Time to make trading plans today since the markets are more relaxed

Forex Signals US Session Brief, May 30 – Markets Take A Moment to Breathe

Posted Wednesday, May 30, 2018 by
Skerdian Meta • 3 min read

Yesterday’s financial markets took a dive. Market sentiment has been deteriorating partly due to Donald Trump’s cancellation of the Iran deal and partly due to Trump’s trade tariffs. But, the main event to trigger a massive selloff across all markets has been the political situation in Italy.

The two parties in Italy’s political situation are populist Euro-skeptics. Although they have been vocal about remaining in the Eurozone recently, the markets have been fearing Italy’s potential exit from the EU. Yesterday, the panic set in and everyone dumped the risk assets for safe haven currencies. Today, the sentiment has improved, but in my opinion, this is just temporary before we see the next round of selloff. Let’s have a look at today’s main forex events and the coming events for the US session.


The European Session

  • German Data – The German retail sales jumped by 2.3% this month. Last month’s number was revised higher as well. The monthly inflation CPI grew by 0.5%, which is quite impressive. This should calm the Germans for some time. Import prices also grew considerably compared to last month.
  • French Data – We can’t say the same for the French figures, unfortunately. The consumer spending declined by 1.5% while the GDP only grew by 0.2% month-on-month, against 0.3% last month.
  • Canadian Data – The current account deficit grew more this month by an additional $3 billion. The RMPI (raw material price index) was expected to grow by at 2.1% this time, same as last month. But, this data missed expectations and came in at 0.7%. Are Donald Trump’s tariffs already hurting the Canadian economy? Perhaps this is just a bad month for Canada, we will see in the coming months.
  • US Data – The prelim GDP report was published a few minutes ago and it slightly missed expectations. It was expected at 2.3% but it came at 2.2%. That’s still a respectable number nonetheless, so it is not weighing on the USD at the moment. The ADP non-farm employment numbers came lower than expected as well.
  • Trade Tensions Resurface Again Between the US and China – The trade war was put on hold a couple of weeks ago. Nevertheless, the US will push for Steel and Aluminium tariffs on China causing China to fight back. The Chinese are calling for a united front against the US, particularly with European and Asian countries. Chinese officials accepted to increase food products from the US, but they are threatening with retaliation on US farm products. That’s another factor which should weigh on market sentiments.
  • New Elections in Italy – Italy is forming a caretaker government. Italy’s Cinque Stelle leader said earlier that they want new elections (which are likely to be held in late August or September). His party doesn’t want a coalition with Nord League. However, with the current electoral law, they’re bound to get together again. We will have to wait a few months to see where this is going.

The US Session

  • Interest Rate Decision by the Bank of Canada – The Bank of Canada (BOC) is expected to keep interest rates on hold today at 1.25%. So, there won’t be any surprises there. At the same time, the rate statement will be interesting and it might be a major market mover for CAD pairs. The economic data from Canada took a dovish turn today and that might reflect in the statement. If the BOC acknowledges that, I expect some more weakness in the CAD.
  • Swiss National Bank Chairman Speaks – The SNB Chairman Jordan will hold a speech in about an hour. The CHF has been appreciating considerably in the last two week and I’m sure the SNB doesn’t like that. There is a chance that Jordan might try to talk the CHF down, which means up for EUR/CHF.
  • The selloff of Italian stocks has stopped and the sentiment has improved from yesterday. That has helped the Euro and other risk currencies climb up. That might end soon as they start to reverse again. I expect some more bearish price action in EUR/USD, AUD/USD and USD/JPY in the afternoon today.


Trades in Sight

Bearish USD/JPY

  • The trend is bearish
  • The pullback is complete on the H1 chart
  • The 50 SMA is providing resistance
  • Stochastic is overbought


The 50 SMA has been resisting well

We sold USD/JPY a while ago as it was hitting against the 50 SMA (yellow). The moving average is providing resistance while stochastic is overbought. That means that the retrace is complete while the trend is still very bearish. We decided to take a trade up there which is going well at the moment.   


In Conclusion

The price action is much slower than yesterday but that’s not keeping us away from trading. We have closed several forex signals and several others which remain open. Let’s concentrate on the charts and the signals in the afternoon.

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