Forex Signals Brief August 14: Retail Sales and Canada Inflation This Week

Last week the USD continued the bullish momentum despite softer consumer inflation, while this week we're looking at retail sales and FOMC..

Skerdian Meta•Monday, August 14, 2023•4 min read

Lower core PCE inflation helping stock markets

Last Week’s Market Wrap

After the FED meeting in the previous week, when the FED raised interest rates by 25 basis points and chairman Powell left the next hike on the economic data, markets have been taking every economic release very seriously. Last week the attention was focused on the US inflation numbers, with the consumer inflation CPI and producer inflation PPI scheduled for the last two days.

The headline US CPI YoY (consumer price index) showed a 2-point jump in July to 3.2% from 3.3% in June, but it missed expectations of 3.3% and the monthly numbers came a bit on the soft side as well. Core CPI YoY also ticked lower to 5.7%, which gave the USD a push lower initially, but then the Buck reversed back up and it resumed the bullish momentum from last week.

The producer inflation PPI report was released on Friday and it showed that both the headline and core CPI numbers came above expectations, possibly indicating a pick-up in inflation in the months to come. So, the USD continued the upside and ended the week on a bullish footing.

The UK GDP figures which were released early on Friday gave the GBP a boost. A better-than-expected June monthly Gross Domestic Product (GDP) data contributed to a more positive overall outlook for the second quarter (Q2). The UK’s GDP is now estimated to be only 0.2% below its pre-pandemic level in the fourth quarter of 2019. This is a favorable development, surpassing expectations. However, concerns regarding the UK economy and the potential risks of stagflation to the future outlook still remain which left GBP/USD bearish in the end.

This Week’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

This week we remained mostly long on the USSD as it kept the bullish momentum from the previous week, although it wasn’t a straightforward week, since we saw some spikes in risk assets as well. The volatility declined, particularly in the first half of the weeks, with the economic data being very light too. We opened 17 trading signals in total in forex, commodities and cryptocurrencies, ending up with 12 winning trades and 5 losing ones.

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

The 20 SMA Has Turned into Resistance for GOLD

Gold continues to remain bearish since it failed to keep the bullish momentum going and reversed lower about a month ago. it keeps making lower highs, although we have seen spikes higher. However, the retraces higher have been short-lived and the 20 SMA (gray0 has turned into resistance for XAU/USD, pushing the highs lower. We have been selling the spikes and last week we opened several sell Gold signals, all of which closed in profit as sellers remained in control.

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

EUR/USD Facing MAs on the Way Down

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

MAs Giving Signs of Supporting BITCOIN During the Retrace

Bitcoin has been bearish for about a month since it reversed above $32,000. The price fell below $28,000, although it has been showing some bullish signs recently after a couple of jumps above $30,0000, pushing above moving averages on the H4 chart. Although both attempts have faded and BTC/USD has reversed back below $30,000. But, it seems like the 50 SMA and the 100 SMA (green) have turned into support on this timeframe, so we decided to open a buy Bitcoin signal.

BTC/USD – H4 chart

We opened another buy Bitcoin signal on Monday, playing the range again, buying BTC/USD below $30,000:

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

ETHEREUM Trading Between MAs

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.

ETH/USD – Daily chart

Entry Price: $1,860
Stop Loss: $1,740
Take Profit: $2,020

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ABOUT THE AUTHOR See More

Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.