Central banks returning again this week with heavy action

Forex Signals Brief June 5: Will the BOC or the RBA Hike Rates This Week?

Posted Monday, June 5, 2023 by
Skerdian Meta • 3 min read

Last Week’s Market Wrap

During May, the US dollar has been gaining strength as CPI figures demonstrated that consumer inflation is not slowing as fast as expected, which has been raising the odds of the FED raising rates further. However, this week we saw some inflation indicators show a considerable slowdown which sent the USD on a significant retreat, while other trading assets took advantage and increase in value. The Chinese Caixin manufacturing numbers for May showed expansion in activity, contrary to expectations of a contraction which helped risk sentiment further on Thursday and sent crude Oilsurging higher toward $70.

US manufacturing prices for May fell to 44.2 points from 53.2 in April which show contraction and the revision of Q1 unit labor costs lower to 4.2% (compared to an expected 6.0%), contributing to push the USD lower on Thursday. But the sentiment improved on Friday for the USD, after the impressive NFP payrolls report, which came in quite strong.

This Week’s Market Expectations

This week starts with the Swiss CPI inflation report today, which is expected to increase by 0.3%, followed by the US ISM Services PMI in the afternoon which are expected to show an improvement in activity. The Reserve Bank of Australia (RBA) meeting is on Tuesday and they are expected to keep rates unchanged at 3.85%, but we might get a surprise move. The Australian Q1 GDP report is expected to show a slowdown to 0.3% in Q1 on Wednesday morning, while in the afternoon we have the Bank of Canada (BOC) meeting, which is expected to hold rates at 4.50%, but we might also get a surprise move after the strong GDP figures last week.

Forex Signals Update

This week started slow but the volatility picked up and we saw a couple f reversals which made trading a bit difficult. Although, we made some nice profit after opening 19 forex signals, 6 of which closed in loss while the rest hit the take profit target, with a couple remaining open.

 GOLD Rejected  by the 50 Daily SMA 

Gold has been falling lower for about a month, unable to push above its all-time high of $2,075. This decline has been consistent, however, the 100 SMA (green) has provided support, preventing further downward movement. XAU/USD bounced off that moving average and was testing the 50 SMA (yellow) toward the end of last week. On Friday we saw a bearish reversal in Gold as USD buyers came back now the price is headed for the 100 SMA again, so we remain bearish on Gold.

XAU/USD – Daily chart 

EUR/USD Resuming Downtrend 

EUR/USD shifted to a bearish trend early last month as buyers of the USD began to emerge. This led the pair to reach lows around 1.06 yesterday. The 20-period Simple Moving Average (gray) and the 50 SMA (yellow) have been acting as resistance levels at the top of the chart. Traders have been selling retracements higher at these levels. On Thursday last week, we saw a bullish reversal which pushed this pair above the 50 SMA but the 100 SMA (green) stopped the climb and the downtrend resumed once again.

 EUR/USD – 240 minute chart

Cryptocurrency Update

BITCOIN Bouncing Between 2 MAs

Cryptocurrencies have been bullish overall since the beginning of this year, but since late April we have seen a retrace lower. However, the 100-period Simple Moving Average (green) held as support on the daily chart and the price bounced above the 50-period SMA (yellow), but it was unable to sustain that level and has since reversed downward, moving towards the 100-period SMA once again where we decided to open a buy Bitcoin signal.

BTC/USD – Daily chart

The 50 SMA Hold As Support for [Ethereum]] 

In recent weeks, the buying pressure for Ethereum has slowed down, and we have witnessed a retreat in its price over the last few days. However, the correction appears complete as the 100 SMA (green) held as support for ETH/USD and buyers pushed the price above the 50 SMA as well. Now it seems that this moving average has turned into support.

ETH/USD – Daily chart 
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