Will the recovery in Chinese GDP help improve risk sentiment?

Forex Signals Brief for October 25: Chinese GDP Picks Up Again, European and US Economies Slow Further

Posted Tuesday, October 25, 2022 by
Skerdian Meta • 3 min read

Yesterday’s Market Wrap

Yesterday was quite loaded with economic and political events, starting with the Chinese data being released, after being postponed for the People’s Party congress. The GDP showed a 3.9% expansion in Q3 after a slowdown to 0.4% in Q2. That was positive news for markets but was followed by the Eurozone and UK services and manufacturing PMI reports, which showed that these sectors fell further into contraction.

Later on, the US services and manufacturing also fell deeper in contraction, although this is a case where bad news is good news, since it puts pressure on the FED to pause rate hikes. This improved the sentiment and stock markets ended up higher at the end of the day. In the UK, a new prime minister has been appointed, which should be a positive event too, but let’s see what he has in plan.

Today’s Market Expectations

Today the economic calendar is light and markets are expected to be quiet ahead of the ECB and BOC meetings, where they are expected to raise rates by 75 bps and 50 bps respectively. It started with the core CPI inflation in Japan which remained unchanged at normal levels of 1.9%, unlike in Europe and the US. The German Ifo business climate softened further, while later on, we have the US Conference Board consumer confidence which is expected to show a slowdown as well.

Forex Signals Update

Yesterday was a relatively quiet day without much direction as markets kept reversing in tight ranges, apart from stock markets which remained bullish. We did open four trading signals, mostly in forex as usual, with my colleague Arslan doing a good job in the Asian session.

Remaining on GOLD 

Gold has been bearish since early this month, falling below moving averages on the H1 chart which turned into resistance, especially the 100 SMA (gray). So, have been mostly bearish on Gold. But, on Friday we saw a strong bullish move as the USD turned bearish on FED’d Daly comments. Yesterday though it retreated lower and Arslan opened a sell signal which closed in profit.

XAU/USD – 60 minute chart

Selling AUD/USD Oil 

AUD/USD has been bearish as well since the beginning of the year and it still remains so, with moving averages acting as resistance and ending retraces higher. Last Friday we saw a jump as the USD declined, but that bullish move might have ended at the 100 SMA on the H4 chart, as it is starting to retreat. We caught some pips during the retreat yesterday.

US WTI Oil – 240 minute chart

Cryptocurrency Update

Cryptocurrencies are still showing some volatility this week, but the moves are getting smaller and the rangebound price action continues, as uncertainty prevails. Ethereum tried to make a breakout, but it continues to trade within the range below $1,4000.

BITCOIN Approaching at $20,000

Bitcoin has been bouncing in a range, that stretched from $18,000 lows up to around $20,500 roughly speaking. But, the range is getting narrower, as the top gets lower while the bottom gets higher. We are long on BTC from the bottom of the range but we might close this signal manually as buyers are failing to push the price above $20,000 where our take profit is.

BTC/USD – H4 chart

 ETHEREUM Remaining Below $1,400

Ethereum is also trading in a range for a month, since the decline in September ended, although last week we saw sellers take a stand and give this crypto a push lower. But, the decline stopped at $1,160 and buyers returned again. They have been trying to push above the 200 SMA and yesterday they succeeded during the strong bullish move, but ETH still remains below the $1,400 level, which is the top of the range.

ETH/USD – H4 chart
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