Forex Signals Brief for July 31: The Stage is Set for the FOMC
Rowan Crosby • 2 min read
I can’t think of a bigger day on financial markets than the one we have ahead of us today.
There has been so much anticipation as to exactly what the FOMC has in store for us and as a result, we must be ready for the volatility to follow.
All the focus today is not on the pending rate cut, but rather the direction Fed boss Jerome Powell feels they will take rates in the months ahead. Today’s looming rate cut, which will be the first cut in over a decade in the US, is now all but a certainty. What traders are more interested in is what lies ahead.
The expectation is that Powell won’t be as dovish as many had previously thought. Hence we have seen a rally in the USD recently. So if the market’s expectations and that of Powell’s are not on the same page, there could well be some wild moves in the Greenback, GOLD and also the SPX.
Aside from the FOMC, we will also get a first look at the US employment data for the month, with the private ADP data to be released today. This can be a good guide as to what we can expect come Friday when the official non-farm payroll data hits.
In Europe, the EUR/USD could be in for a busy session as well as we get German employment data and Eurozone CPI.
Overall, it is a stellar day to be a trader and I am really looking forward to hearing from Jerome Powell.
Forex Signal Update
The FX Leaders Team finished with 2 wins from 4 signals in a quiet session as markets were awaiting the FOMC decision today.
USD/JPY – Active Signal
Our USD/JPY signal is holding on and is ultimately stuck in a range ahead of today’s FOMC. Keep a close eye on this one if we are holding it into the FOMC as there could very well be some volatility on the USD side. For the time being, we are in the green and price is moving our direction.
USD/CAD – Active Signal
The USD/CAD has been pushing higher off the 1.3000 level, but as we approach the FOMC, price has fallen away. The same sort of message awaits us ahead of today’s announcement, with the need to be cautious. Fortunately, the two active signals are effectively hedged against one another so we are protected going in here. Higher WTI prices are not helping us here either.
BTC has managed to tick higher in the last 24 hours but still remains below the key $10,000 level.
Price is trying now to reclaim the swing high at $9,600 and so far it is succeeding. On a fundamental level, we are seeing two interesting forces working against one another.
Hashrate, which is a key metric Bitcoin fans follow which effectively is telling us how much it is being utilized, continues to make all-time highs.
At the same time, the US Government enquiry into the sector has many people suggesting that even though there are calls to shut the industry down, it might not be so easy to do so.
Clearly, we don’t have a real consensus on what is going on here at the moment and hence price is sitting in a range waiting for a clear catalyst.