The FED is now expected to cut interest rates by 25 bps in November

Forex Signals Brief September 20: The FED to Hold Rates at 5.50% in This Meeting

Posted Wednesday, September 20, 2023 by
Skerdian Meta • 3 min read

The FED is now expected to cut interest rates by 25 bps in November

Yesterday’s Market Wrap

As markets continued to wait for the major events such as the FOMC meeting later today, trading remained rather calm yesterday, with most assets trading in a tight range. The USD was largely stable while Oil prices kept rising despite broader markets’ sluggish start to the week overall. UK WTI Crude climbed to $92.40 while UK Brent briefly crossed the $95 mark, but retreated below that level later.

The other major currencies were mostly trapped in tighter ranges for the day. We saw some modest advances in the NZD and AUD, which were not moved much by the Reserve Bank of Australia meeting minutes released early in the morning, After the mild advances, things were somewhat more choppy in the equity market, but there was still little interest.

Later in the day, the consumer inflation report (CPI) from Canada showed a bounce, with headline CPI jumping from 3.3% in July to 4.0% in August, beating expectations of 3.8%. The monthly inflation number also beat expectations which lent another helping hand for the CAD besides the surge in crude Oil.

We also had the housing data from the US for August, which is starting to show sents from elevated rates. Housing Starts fell by 11.3% on a monthly basis in August, according to the US Census Bureau’s monthly statistics. building permits, which had gained 0.1% in July, jumped 6.9% higher to a seasonally adjusted annual rate of 1,543,000, above the 1,545,000 estimate of the market.

Today’s Market Expectations

Today starts with the 1-y and 5-y Loan Prime Rate which is a benchmark lending rate set by the People’s Bank of China in its effort to influence short-term interest rates as part of its monetary policy strategy. The UK inflation is expected to show mixed figures as well, with headline CPI to jump two points up to 7.0% from 6.8%, while core CPI is expected to tick down to 6.8% in August from 6.9% in July.

However, the most important event is the FOMC meeting which will take place in the evening. Although the interest will be more on the DOT Plot and the press conference from Jerome Powell, since everyone is expecting the FED to pause rate h8ikes this month.

Forex Signals Update

Yesterday markets remained quiet, although the slight bearish tilt in the USD continued, which triggered the stop loss of our EUR/USD and Gold buy signals. We remain largely long on the USD nonetheless, as it proved to be a profitable strategy despite yesterday’s results.

GOLD Hesitating at MAs Ahead of the FED Meeting

Gold was bullish until May, but reversed lower after failing to break the record highs, with the highs getting lower. Although XAU/USD has been finding support at the 200 SMA (purple) and the price bounced off this moving average at the beginning of the month. But there was a rejection by the 100 SMA (green) which returned Gold to the 1200 SMA. a rejection at this moving average. But another bounce from the 200 SMA followed, although the climb stalled yesterday below the other MAs as we await the FOMC meeting.

XAU/USD – Daily chart

Gold Sell Signal
Entry Price: $1,906.34
Stop Loss: $1,920.34
Take Profit: $1,898.34

The 20 SMA Keeping NZD/USD Down

Commodity dollars have been under pressure for almost two months. There have been unforeseen negative developments in China’s economy, which have put pressure on risk assets. NZD/USD slipped below 0.60 earlier this month and the 20 SMA (gray) has turned into resistance on the daily chart now. Yesterday we decided to open a sell NZD/USD signal below the 20 SMA since it keeps rejecting the price.

NZD/USD – Daily chart

Cryptocurrency Update

BITCOIN Testing MAs From Below Now

The price action of the last two weeks is indicating a shift in sentiment for Bitcoin, with the cryptocurrency experiencing a bullish reversal after a period of bearishness. The breach of the $25,000 support level and the subsequent rally above $27,000 are notable price movements that have attracted market attention. Although BTC is now facing the 50 and 200 SMAs on the daily chart as resistance indicators.

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 Retesting the 20 Daily SMA

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. However yesterday buyers had another go at this moving average and pushed the price above it for some time.