Will US manufacturing numbers keep up with the rest of the data this week?

Forex Signals Brief September 15: NY Manufacturing, UoM Consumer Sentiment to Close a Bullish Week for the USD

Posted Friday, September 15, 2023 by
Skerdian Meta • 4 min read

Yesterday’s Market Wrap

Yesterday we saw some heightened volatility in financial markets, after some important events which got markets moving after several slow days since last Thursday. It started with the employment report from Australia, which remained upbeat for August, keeping the Aussie supported for most of the day.

Later the European Central Bank (ECB) held its meeting and they raised interest rates again by 4.25%, bringing the refinancing rate to 4.50%. Although this was a dovish hike, with hints suggesting that they are done with hiking rates now. This was a dovish hike, which is the worst-case scenario for the Euro, and eventually, EUR/USD tumbled below 1.07 with the help of better economic data from the US.

We had a round of data that showed further improvement in the US economy, raising the odds of another November rate hike by the FED. Retail sales beat expectations again, as did unemployment claims and core PPI, suggesting that the consumer is feeling good as sales remain decent, the employment sector is in good shape and inflation might continue to increase in the next few months. The USD resumed the bullish trend again, so we remain long.

Today’s Market Expectations

Today started with the Chinese Industrial Production YoY which is expected to increase by 3.9% in August, up from the 3.7% we saw in July. The previous month had seen some disappointing results, so this economic release was eagerly awaited to assess any improvements or continued challenges in China. Retail Sales are also expected to improve in August and show a 3.0% increase from the prior figure of 2.5%. Retail sales data reflects consumer spending trends in China, and it’s an essential indicator of the health of the domestic economy. A higher figure would indicate stronger consumer activity.

Later on, we have some manufacturing figures from the US as well, starting with the Empire State Manufacturing Index which is expected to show an improvement from last month, but at -9.9 points it remains in negative territory. Industrial Production is expected to show a slowdown from 1.0% to 0.1% for August.

The Prelim UoM Consumer Sentiment will be the last piece of data for the week, and the expectation is for a slight drop to 69.0 points this month from the previous reading of 69.5 points. This survey is more focused on consumer finances compared to the Conference Board Consumer Confidence report, which leans toward labor market sentiment. Given rising energy prices, the markets anticipate a less optimistic report and potentially higher inflation expectations from consumers.

Forex Signals Update

Yesterday the volatility picked up in the US session as markets were waiting for the economic events to take place in the earlier sessions. We opened four trading signals, two Gold signals, and two forex signals, with three of them closing in profit, while the others remain open from previous days.

GOLD Heading for $1,900 Again

Gold has been trending downward since June, although there was been a  turnaround earlier this month, and the price of Gold was able to reach $1,950 per ounce. The upward trend in the price of gold stopped as it got close to the 100-day Simple Moving Average (SMA), which is shown by the green line on the daily chart.

Following them, there were more doji candlesticks, which are frequently used to indicate market volatility and potential trend reversals. We have been selling Gold retraces higher since the rejection by the 100 SMA which have closed in profit, and yesterday we booked profit on another sell Gold signal after the US data release sent the price close to $1,900.

XAU/USD – Daily chart 
  • Gold Sell Signal
  • Entry Price: $1,906.34
  • Stop Loss: $1,920.34
  • Take Profit: $1,898.34

Booking Profit Remaining Short on EUR/USD 

Despite the ECB’s 25 basis point rate hike today, the EUR/USD dropped from 1.0730 to 1.0695 in the aftermath of the central bank decision. The major issue is that they indicated that this should be the final rate increase of the cycle. Weaker economic and inflation projections for the next year corroborate this claim.

Although there were various approaches the ECB might have taken today, I believe this is the worst one for the Euro. The EUR/USD pair has dropped to 1.0656, below this month’s lows, as US data also prompted this pair to fall as the USD rose as a result of some encouraging economic data. We were short on this pair and booked profit as the price tumbled lower.

EUR/USD – 240 minute chart

Cryptocurrency Update

 BITCOIN Pushing Above the 20 SMA

After digicoins traded in a narrow range for a while, the cryptocurrency market is again seeing some turbulence. Cryptocurrencies saw a significant decline last week, dropping below the $25,000 support zone where we had placed our Stop Loss (SL) objective for the purchase BTC signal after the $2,000 gain late in August and the reversal back down. Around $25,000 is predicted to be a significant support and resistance level for the Bitcoin market. It is a huge psychological threshold, so we were watching to see whether it would hold or if the drop would continue and lead to more losses. BTC, on the other hand, suddenly changed direction this week, gaining more than $1,500 to reach $26,700 after being bullish for three days and pushing above the 20 daily SMA (gray).

BTC/USD – Daily chart

We are looking to open another buy Bitcoin signal yesterday after the pullback, going in long just above the 20 SMA on the daily chart above.

ETHEREUM Returns Above $1,600

The price of Ethereum jumped higher last month indicating that there was a level of buying interest and demand for Ethereum at the sone around $1,600. Buyers have stepped in on several occasions at the area above this level but the 20 SMA (gray) has been acting as resistance on the daily chart. It has been pushing the highs lower which was a strong bearish signal, and yesterday sellers finally pushed ETH/USD below the support zone.

ETH/USD – Daily chart
  • ETH Buy Signal
  • Entry Price: $1,671.79
  • Stop Loss: $1,371
  • Take Profit: $1,971
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