Forex Signals Brief August 11: Market Attention Shifting to Producer Inflation

Posted Friday, August 11, 2023 by
Skerdian Meta • 4 min read

Yesterday’s Market Wrap

Yesterday the attention of traders and investors was focused on US consumer inflation CPI (consumer price index), given that the FED left the future of rate hikes at the mercy of the economic data. The NFP employment numbers from Friday leaned on the soft side and so did the unemployment claims yesterday, showing a slight increase from the previous week.

But that didn’t affect the markets much, as everyone was looking at the US CPI inflation. The monthly numbers came in line with expectations, showing a 0.2% increase in July, the same as in June. Although the yearly headline numbers were a bit softer, with the headline CPI YoY increasing by 2 points to 3.2%, but the expectations were for a bigger increase to 5.3%. Besides that, core CPI YoY ticked lower to .37% from 3.8% previously, with expectations for it to remain unchanged.

The monthly numbers were also lower at 0.16% and 0.17%, so 0.2% was a rounded number. That sent the USD lower initially, but it recovered and ended the day up after all. So, there is uncertainty, but this reversal shows that markets are bullish on the USD and probably expect another FED hike later this year.

Today’s Market Expectations

Today the economic data was very light during the Asian session, although the UK GDP report for June is on schedule. The UK economy fell in contraction again in May, showing a 0.1% decline in activity. But, expectations were for a reversal and a 0.2% growth in June. But, the Q2 GDP was expected to fall flat at 0.0% in the prev=lim reading today.

Later we have the US producer inflation PPI (producer price index) numbers to be released. They both are expected to show a 0.2% increase in July, coming from a 0.1% in July, which are very normal numbers and will keep the pressure down on consumer inflation CPI in the months to come. The Prelim UoM Consumer Sentiment will close the day and it is expected to come at 71.4 points after the downward revision for last month.

Forex Signals Update

Yesterday the volatility declined again after picking up somewhat on Friday, due to softer data from China and a downgrade of US banks. There was a slight momentum in favour of the US in certain assets, but the action was limited, apart from crude Oil which saw some decent moves both ways. We closed three trading signals in total, two reached the take profit target and one closed in loss.

For more detailed updates, please refer to the section below.

MAs Continue to Keep GOLD Down

Sellers continue to remain in control in Gold as it keep following a downward trend since mid-July, although it did show some strength briefly after a favorable reaction to the weak Non-Farm Payrolls (NFP) report on Friday. However, this upward momentum was short-lived. Despite the initial increase, Gold (represented by the chemical symbol “Au”) was the first to reverse its direction and has been consistently forming lower peaks, indicating that sellers are maintaining control in the market. Yesterday, we had two more sell Gold signals, a short and a long term signal, which turned out to be profitable as the price of Gold declined to $1,913 lows.

XAU/USD – 60 minute chart

Considering the current market conditions, we are providing a trading signal as follows:

Gold Sell Signal
Entry Price: $1,925-30
Stop Loss: $1,941
Take Profit: $1,910

WTI Oil Remains Supported by MAs

WTI crude Oil fell below the $80 level earlier this week. However, the subsequent recovery was substantial, with prices rebounding from a low of $79.97 to reach a high of $84.90 which was reached today, before the retreat showed strong buying momentum. Today we are seeing another dip, but buyers are keeping the price above $83, so we decided to open another buy Oil signal, with the 50 SMA (yellow) acting as support on the H1 chart.

WTI Oil – 60 minute chart

WTI Oil Buy Signal
Entry Price: $83.412
Stop Loss: $82.012
Take Profit: $84.212

Cryptocurrency Update

Buying BITCOIN During the Retrace

Bitcoin has exhibited signs of a bullish reversal recently after the slow retreat from above $30,000. The price fell below the crucial support level of $30,000 and further slipped below $29,000 in July but buyers are giving signs of life and they pushed the price above $30,000 at the beginning of August. Sellers have also displayed limited strength recently, as they haven’t demonstrated a strong inclination to make significant moves in the market.

On Monday, buyers reemerged and managed to push the price above the moving averages. This increase was prompted by the downgrading of US banks, which reintroduced uncertainties concerning the US banking system. BTC/USD climbed above $30,00 again, but retreated lower on Wednesday and yesterday we decided to open a buy BTC signal as the 100 SMA (green) was holding as support on the H1 chart.

BTC/USD – Daily chart

We’re looking to open another buy Bitcoin signal on Monday, playing the range again, buying BTC/USD just above $30,000:

BTC Sell Signal
Entry Price: $29,421.68
Stop Loss: $27,400
Take Profit: $32,400

The 100 Daily SMA Holds for ETHEREUM

Ethereum made a strong bounce and moved above $2,000 earlier this month as buyers remained in charge. We have had quite a few long term buy Ethereum signals since the trend has been bearish since the beginning of 2023, with the lows getting lower. Although since then the pressure has been to the downside, but Ethereum has still shown more resilience than Bitcoin. So, we decided to open a buy ETH signal on Monday after the retreat, so we’re betting on moving averages to act as support and hold the retreat and the 100 SMA (green) seems to be holding.