Forex Signals Brief September 7: Attention Shifts to Labor and the Costs

Posted Thursday, September 7, 2023 by
Skerdian Meta • 4 min read

The US labour market is not slowing

Yesterday’s Market Wrap

Yesterday, Australia released its GDP (Gross Domestic Product) report, following the Reserve Bank of Australia (RBA) meeting held on Tuesday. The Australian economy was anticipated to have expanded by 0.3% in the second quarter (Q2), although there are concerns that the risks are skewed towards the downside. But, the actual reading came in at 0.4%, showing a better economic outlook.

The Chain Price Index, which is an indicator of inflation, stands at -2.2% for the quarter. This marks a better-than-expected outcome for the growth data for the period ending on June 30th. However, it’s important to note that it’s not all positive news, as labor productivity experienced a decline in the second quarter (Q2).

Later the attention shifted to the ISM services from the US, which were expected to show a slight decline. Markets were worried about a bigger slowdown in activity, but the number came at 54.5 points, which showed that this sector is outperforming.

This was a bit unexpected, especially in light of the recent decline in the S&P Global PMI just before the ISM report. The important takeaway here might be that despite the retail segment showing a decrease, the broader services sector is still demonstrating resilience and strength. The Bank of Canada held its meeting yesterday, but they sounded balanced, which kept the CAD stable.

Today’s Market Expectations

Today starts with the trade balance reports from Australia and China, both of which were expected to show a decline from last month, showing that the trade activity is slowing in Australia as well, as it slows in China, which is its biggest partner. Shortly we will have the Final Employment Change and the Revised GDP report from the Eurozone, which are expected to remain unchanged.

Later the attention will shift to the labour market, with unemployment claims expected to show little change for August, which would be positive for the USD since this sector has been showing a slowdown recently, weighing on the USD last week. The Revised Unit Labor for Q2 is expected to come higher at 1.8% which would also be welcomed by USD buyers. The Ivey PMI is expected to show a slight improvement but remains in contraction, although I don’t think it will have much impact after yesterday’s BOC meeting.

Forex Signals Update

Yesterday the USD was retreating during the Asian and Europen sessions as bonds were being sold off, so there was enough volatility. We had four trading signals opened in total, although only two hit the TP and SL targets, since there were a couple of reversals taking place.

The Retrace in GOLD is Over

Gold experienced a shift in market sentiment over the past two weeks after it had been bullish for most of August but turned bearish. Initially, the price briefly dropped below the $1,900 mark. However, this bearish sentiment led to a more optimistic outlook for Gold as buyers re-entered the market. This resulted in a price increase, with gold reaching $1,953 by Friday afternoon. The price encountered significant resistance and has been retreating lower since then.

Currently, on the H4 chart, Gold seems to be heading lower after being overbought earlier. The 200 SMA (purple) was acting as a support indicator, but sellers pushed the price below this moving average yesterday, so the picture is looking bearish again for Gold.

XAU/USD – Daily chart

EUR/USD Breaks Below the 200 SMA

Yesterday we saw some slight buying pressure in EUR/USD, although that has come from the USD side, as the Treasury bonds were being sold off earlier, which was helping erase some of yesterday’s gains in the US dollar, during European trading today. EUR/USD increased to 1.0750, although we saw a reversal later in the afternoon after the strong ISM services figures, which sent this pair to 1.07 lows.

EUR/USD – Daily Chart

Cryptocurrency Update

BITCOIN Getting Comfortable Below $26,000

The cryptocurrency market has been experiencing a downturn since mid-July. However, there was a notable uptick in prices following a recent legal victory by Grayscale against the U.S. Securities and Exchange Commission (SEC). A D.C. court ruled that the SEC had improperly rejected Grayscale’s proposal for a Bitcoin Spot Exchange-Traded Fund (ETF). As a result, the court ordered a review of the petition and the vacating of the commission’s order.

This news had a significant impact on the price of Bitcoin (BTC), which surged $2,000 higher in response to the court’s decision. However, the rally encountered resistance at the 200-day Simple Moving Average (SMA), which seems to be a critical level for the cryptocurrency. The price subsequently reversed and fell below the $26,000 mark, where Bitcoin had been trading for several days.

BTC/USD – Daily chart

We decided to open another buy Bitcoin signal yesterday after the pullback, going in long just above the 100 MS Aon the H4 chart above.

BTC Buy Signal
Entry Price: $27,157.1
Stop Loss: $25,113
Take Profit: $29,113

ETHEREUM Keeps Trading in the Range Above $1,600

Ethereum has demonstrated a higher level of resilience compared to Bitcoin. While it was not immune to the recent crypto market crash, with the ETH/USD pair dropping below $1,600, there’s a significant observation on the weekly chart. The 200-day Simple Moving Average (SMA), represented by the purple line, acted as a support level during this turbulent period.

Considering this observed support and Ethereum’s historical behavior, a decision has been made to take a long position on Ethereum once again. This suggests confidence in the cryptocurrency’s ability to rebound and potentially perform well in the future.