Yesterday’s Market Wrap

Yesterday was another quiet day, ahead of the big day today. The push and pull ahead of today’s FED meeting continued, while the USD kept a firmer hand. Stock markets saw a decent start but then reversed lower and bond yields continued to push higher in the run-up to the central bank bonanza this week.

Regarding the economic data, German producer prices (PPI) saw a record monthly and yearly increase in August as surging cost pressures continue to build in Europe’s largest economy. That won’t provide much comfort with July’s current account coming in at a major deficit – the widest since the global financial crisis more than a decade ago and will likely keep the pressure on consumer inflation to remain high. Inflation cooled off in Canada in August by 3 points, falling to 7.0%, as the report released in the afternoon showed, which kept the CAD bearish.

Today’s Market Expectations

Today the economic calendar is pretty light, with the US existing home sales on the schedule ahead of the FOMC meeting in the evening. Not much is expected until we approach the FED meeting which is at 18:00 GMT, although we might see some position adjustments during the day. The FED is expected to raise interest rates by 0.75% for the third time, taking them to 3.25%, although there’s a small possibility of a 100 bps (basis points) hike. But, traders will be more interested to hear about the future of the monetary policy, which will decide th3 fate of the USD for the coming weeks, as well as that of risk assets.

Forex Signals Update

Yesterday we opened five trading signals, mainly in forex but also a Gold signal, although only three signals reached the targets, since the volatility was low, apart from a move in the European session. Today we are following the market to pull a trade or two if we see some decent price action, although I expect it to be quiet until the FED meeting in the evening.

Buying USD/CHF 

USD/CHF was bullish during most of August, although we saw a sharp retreat at the beginning of this month. The decline stalled and the price has been trading sideways mostly since then, although with a bullish bias. My colleague Arslan opened a buy forex signal here yesterday, which closed in a loss as the price retreated to the 200 SMA (purple) on the H1 chart.

USD/CHF – H4 chart

Selling GOLD  Again

Gold continues to remain bearish since reversing in March, after failing to hold gains above $2,000. Last week we saw a bullish retrace higher, but the 100 SMA (green) held as resistance on the H1 chart, refusing buyers and we opened a sell Gold signal on Monday. Yesterday we opened another sell signal as the decline continued.

Gold XAU – 60 minute chart

Cryptocurrency Update

Cryptocurrencies reversed higher on Monday after turning bearish last week, but yesterday there was no continuation of the bullish reversal. Most major crypto coins stalled, apart from Ripple XRP which made some decent gains. So, the overall bearish momentum continues in the crypto market.

 ETHEREUM Failing at MAs Once Again

Ethereum launched the transition from power-of-work (PoW) to power-of-stake (PoS) last week, which should improve scalability and reduce gas fees. But instead of improving, the sentiment turned negative and Ethereum fell below $1,300. On Monday we saw a bullish reversal, but that stopped at the 100 SMA (green) on the H1 chart and yesterday Ethereum retreated lower.

ETH/USD – H1 chart

 RIPPLE Pushing Above $0.42

XRP/USD has been one of the most bearish cryptocurrencies since the legal battle with the SEC (Securities and Exchange Commission) started nearly two years ago and the zone around $0.40 turned into resistance since June. In the last three days, we have seen a reversal as both Ripple Labs and SEC are pushing for a quick ruling over the case, which traders thought might go in favour of Ripple, hence the bullish momentum. On Monday we saw a reversal after buyers failed to push above $0.40, but yesterday buyers finally pushed the price above $0.40.

XRP/USD – H4 chart