Forex Signals Brief for December 14: US Inflation Dips to 7.3% Sending USD Lower Ahead of the FED
Yesterday we saw a surge in risk assets while the USD tumbled lower after the softer US CPI inflation numbers
Yesterday’s Market Wrap
Yesterday markets were quiet as traders were awaiting the US consumer inflation report ahead of today’s FED meeting, which is expected to produce a 50 basis points (bps) rate hike, although the pace of future hikes will be more important, which increased the importance of the US CPI (consumer price index) report yesterday. Earnings showed an uptick in the UK to 6.1% early yesterday, but strikes are erupting everywhere as wages remain way behind inflation.
Then the US inflation report was released and the volatility picked up, with risk assets surging higher as risk sentiment improved, while the USD tumbled around 150 pips lower again. headline inflation cooled off to 7.1% in November against 7.5% expected, down from 7.7% in October. Core CPI also cooled to 6.0% down from 6.3% in October, while the real weekly earnings increased by 0.2% from -0.1% prior which was revised to 0.0%.
Today’s Market Expectations
Today started with another important release from the UK such as the consumer inflation report which showed a cool slowdown as it fell below 11%, while the industrial production from the Eurozone which will be released soon is expected to turn negative in October. The highlight of the week comes later in the evening with the FOMC meeting which is expected to produce a 50 bps hike. Although as we mentioned above, the press conference from Jerome Powell will be more important since it will hint at future hikes. After that, the Q3 GDP report from New Zealand will be released which is expected to show a 0.8% expansion.
Forex Signals Update
Yesterday the volatility was low in the first part of the day and we opened with a losing short term signal in Gold. But, made up later with a winning long term Gold signal, as well as two other long term signals which reached the take profit target after the surge in risk assets following the soft US inflation number.
S&P500 Reaching Take Profit
Stock markets were bullish through this ear until the middle of October as the FED started giving strong signals of slowing down with rate hikes while the sentiment improved. The 200 SMA (purple) turned into resistance for some time but then it was broken and turned into support, so we decided to open a long term buy signal off that moving average and yesterday that signal reached the TP target as risk sentiment improved further.
SPX – 240 minute chart
Booking Profit on GOLD
Gold turned bullish in November after a retreat in October and buyers have been in total control as the USD has been declining. Moving averages have been acting as support at the bottom and yesterday my colleague Arslan opened a buy Gold signal at the 50 SMA (yellow) which closed in profit after the jump.
XAU/USD – 240 minute chart
Cryptocurrency Update
Cryptocurrencies continue to display bullish pressure after reversing late last month, following the FTX drama. in the crypto market. The sentiment has improved in financial markets as central banks start to slow down and yesterday we saw a jump in crypto coins after the US CPI report.
BITCOIN Breaks the Resistance
Bitcoin continues to display some slight bullish pressure and has finally broken above the resistance zone around $17,200-300, which was stopping buyers for several weeks. We were long on BTC/USD and we were confident on this signal after the 200 SMA (purple) turned into support on the H4 char, while yesterday the surge post-US CPI numbers triggered the take profit target on our BTC signal.
BTC/USD – 240 minute chart
ETHEREUM Pushing Above $1,300
Ethereum continues to be on a downtrend overall, as it keeps making lower highs on the daily chart but the situation is improving on smaller timeframe charts. Moving averages have turned into support on the H4 chart although the area around $1,300 turned into resistance for some time. But, that level was broken yesterday so the bullish trend is taking shape.
ETH/USD – 240 minute chart
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