Forex Signals Brief for May 21: UK Inflation in Focus
Rowan Crosby • 2 min read
Markets are still somewhat jittery today as the US-China trade wars carry on and equities continue to sell-off.
The data isn’t as thick today, but there are a host of events taking place that will impact the majors. The GBP/USD will be in focus today as Bank of England Governor Mark Carney testifies to Parliament about the May inflation report.
Inflation, or a lack thereof, has been one of the key issues facing almost all Central Banks around the world at the moment. UK inflation is due for release tomorrow and the expectation is for a CPI print of 2.2% YoY, which in the scheme of things is actually pretty high and far better than most at the moment.
Either way, it will be interesting to hear what the BOE members think about the situation and what impact it might have on potential interest rate movements for the Pound.
In the US, Existing Home Sales are the key data point of the day at a time when equities need to bounce. The ES is currently up 0.4% to get the day rolling on the front foot.
Forex Signal Update
The FX Leaders Team finished with two wins from two trades in what was a quiet start to the week, but a positive one nevertheless.
NZD/USD – Active Signal
The NZD/USD remains in a steep downtrend and we are back in for another short here. This has been a good trade for us lately, ever since the weak CPI print led to a rate cut. Hopefully, there is more downside to come here.
AUD/USD – Pending Signal
The AUD/USD is in focus thanks to the RBA minutes which suggested the door is open for a rate cut, should the employment situation warrant it. Price didn’t sell off that hard and held 0.6900. However, when RBA Governor Lowe spoke a few hours later, he suggested they would look closely at a cut in June. We are hunting a short here and if price holds below 0.6900, that could be the signal.
BTC is continuing to battle with the $8,000 level and so far today, price is holding below that point.
We’ve seen this price action before though and given how powerfully price rebounded from the flash crash I am still hesitant to be trying to short here.
I am watching the current highs closely and if they break, that would really open the door for a move to the $9,000 level and even $10,000. Which I feel is a higher probability spot at the moment, than trying to fade the strength that we’ve been seeing. Of course, price has to regain $8,000 first and foremost.