Forex Signals Brief October 16: US Retail Sales And Global Inflation for the Week

Posted Monday, October 16, 2023 by
Skerdian Meta • 3 min read

Last Week’s Market Wrap

This week we saw a lot of volatility as the conflict in the Middle East escalated, while also getting some important data from the US. Gold and Oil surged higher early and late in the week, which suggests that there is genuine concern about a bigger war beyond Gaza. At the very least, markets indicated prudence as well as some short covering.

The Swiss franc was the safe haven of choice, with USD/CHF ending the day close to the big round level of 0.90, while EUR/CHF made a break below the long-term support zone above 0.95. The risk currencies remained the major losers, with a three-day drop in commodity dollars. This comes on the heels of China’s announcement of further fiscal stimulus, emphasizing the level of concern.

US bond yield rates were less of an influence last week as they retreated overall, but with fluctuations and the retreat wasn’t as big, with the 10-year yields declining 10 basis points all week on a safe-haven bid. That’s not so bad following this week’s disastrous auction.

This Week’s Expectations

Monday: Japan Industrial Production, NZ CPI, PBoC MLF.
Tuesday: RBA Meeting Minutes, UK Jobs report, German ZEW, Canada CPI, US Retail Sales, US Manufacturing Production, US NAHB Housing Market Index.
Wednesday: China GDP, China Industrial Production, China Retail Sales, China Unemployment Rate, UK CPI and PPI, US Housing Starts and Building Permits.
Thursday: Australia Jobs report, US Jobless Claims, Fed Chair Powell speaks.
Friday: Japan CPI, PBoC LPR, UK Retail Sales, Canada Retail Sales.

This week is loaded with economic data, although the US retail sales for September and inflation reports from the rest of the world will take the spotlight. Today the Asian and European sessions are light but we have the US Empire State Manufacturing Index which is expected to turn negative, although this is a volatile indicator.

Later in the evening, we have the New Zealand CPI inflation which is predicted to fall to 5.9% from 6.0% before, while the Q/Q number is expected to be 2.0% from 1.1% previously. The high inflation rate is mostly attributable to the substantial increase in gasoline prices. Unless there is a significant upside surprise, the RBNZ is unlikely to respond with another rate hike because it has signaled that it is willing to see past the short-term “noise.”

Forex Signals Update

This week the volatility was high and we saw many reversals as the sentiment kept shifting in financial markets. We have been mostly long on the USD, but played both sides last week and ended up with an 82/17 win/loss ratio after opening 17 forex signals in total, and having only three losing ones.

GOLD Reversing at the 20 Daily SMA

Gold has risen more than $100 from its lows late last week, with all of today’s $50 jump owing to Middle East concerns, but it also corresponds with Treasury rates falling back down on Friday following the Thursday surge. Typically, geopolitical buy Gold trades should fade at some point since the reality of battle rarely matches the fear (at least for those of us who aren’t in it), but if the gain is driven more by technicals and deficits, it might extend wider and continue longer.

XAU/USD – Daily chart

Gold Buy Signal
Entry Price: $1,905
Stop Loss: $1,875
Take Profit: $1,935

WTI Surges Back up

Crude Oil was on a retreat since last year, but August and September saw some positive price action for crude Oil due to Saudi Arabia’s production cutbacks, which in turn drove up demand. However, there was a turnaround at the end of September, which sent prices down sharply. The price of WTI crude Oil shot up to just over $95, before crashing to lows of $80, reaching the bottom at $81.60.

However, by the middle of last week, the US dollar started retreating lower. Crude Opened with a big bullish gap on Monday, although buyers failed to keep the price above the 50 SMA (yellow) on the daily chart. Yesterday we opened a sell Oil signal below that moving average and eventually crude Oil reversed lower.

WTI Oil – Daily chart

Cryptocurrency Update

BITCOIN Consolidating Above the 50 Daily SMA

Bitcoin has been steadily rising since bottoming out at $25,000, and the cryptocurrency market has recently experienced another rise. On the daily chart, buyers failed to break above moving averages such as the 100 SMA (green) and the 200 SMA (purple), and we observed a bearish candlestick. Sellers have seized control in recent days, despite the fact that they are now confronting the 50 SMA (yellow).

BTC/USD – Daily chart

BTC Buy Signal
Entry Price: $26,248.2
Stop Loss: $24,500
Take Profit: $28,000

ETHEREUM Stabilizes Below $1,600

Late last month, the price of Ethereum began to rise off its support level, indicating that there was some purchasing interest and demand for Ethereum at around $1,600. Buyers have repeatedly entered the zone above this level, but the 100 SMA (green) has served as resistance on the daily chart. Following Sunday’s advance, we had a reversal at this moving average, which wiped out all of September’s gains.