Yesterday’s Market Wrap

After the decline in the USD following the decline in ISM services last Friday, the market’s attention shifted to Jerome Powell, although he didn’t touch on the monetary policy and rate hikes. Traders took that as a dovish hint and the USD resumed the decline on Tuesday, while risk assets resumed the bullish trend. But they paused on Wednesday, as we approached the release of the US December consumer inflation numbers.

Expectations were for a slowdown to 6.5% in the headline CPI YoY, while core CPI YoY was expected to slow to 5.7%. They declined as expected but core CPI MoM showed a pick up in the pace of increase, as it ticked up from 0.2% in November to 0.3% last month. As a result, the USD rallied around 50 pips higher initially, but then reversed back down as traders focused more on the broader inflation picture. So, stock markets closed another bullish day while Gold popped above $1,900 for a moment.

Today’s Market Expectations

Today we had a number of economic figures from the UK, such as the GDP report for November, the construction output, The Index of Services 3m/3m, manufacturing production, etc, and most of them were negative. French Final CPI showed another decline of 0.1% in December which is a sign that inflation is slowing in the Eurozone. Although, the attention will be on the US Prelim UoM Consumer Sentiment and UoM Inflation Expectations in the afternoon, to see if the US consumer is feeling better as gas and energy prices decline.

Forex Signals Update

Yesterday markets were quiet until the USD inflation report was released, with a slight tilt to the upside for risk assets, as traders were expecting a soft report. The volatility picked up after the CPI numbers were published and we closed five trading signals in total, with only one losing signal and four winning ones.

Keeping Long in GOLD 

Gold continues to push higher and yesterday the price popped above the $1,900 level after the US CPI inflation numbers were released after a quick dip to the 100 SMA (green) on the daily chart. The price retreated after that, but moving averages held again and buyers resumed the uptrend. We had two buy Gold signals, both of which hit the take profit target.

XAU/USD – 60 minute chart 

 USD/CAD Overbought at the 200 SMA

USD/CAD turned bearish at the beginning of this year, as the USD resumed the decline and we decided to open a long term sell fore signal here after the retrace higher as shown on the H4 chart below. The price moved above the 20 SMA (gray) but sellers returned yesterday and we booked profit on this trade.

USD/CHF – 240 minute chart

Cryptocurrency Update

Cryptocurrencies continue to show buying pressure and the bullish momentum is picking up pace. This week we have seen some decent buying pressure as risk sentiment remains positive on softer US inflation, while the USD is declining, so buyers remain in control in cryptocurrencies.

Booking Profit on BITCOIN

Bitcoin was trading in a range as the price was consolidating since early November after the crash on the ETX bankruptcy, but it seems to be making a bullish reversal now.  We have seen some decent moves in the last two days and yesterday the price reached the take profit target in BTC/USD.

BTC/USD – 60 minute chart

 ETHEREUM Pushing Above the 200 SMA

Ethereum continues to be on a bearish trend in the larger time-frame charts as the highs keep getting lower, but yesterday buyers pushed above the 200 daily SMA (purple). This is an important break because ETH/USD hasn’t been above this level since early April last year.

ETH/USD – 240 minute chart