Forex Signals Brief October 24: Manufacturing and Services Day Ahead
Yesterday market sentiment improved and risk currencies surged, but today we come back to reality with the manufacturing and services data
Yesterday’s Market Wrap
Yesterday markets were quiet in the Asian and European sessions, after a quiet week in the Middle East, with no further escalations in the region. Stock markets opened with a bearish gap lower once again though, in anticipation of further trouble across the globe.
But, the opposite happened as first we heard some rumours of Hamas releasing hostages earlier on, followed by the release of two hostages. As a result, the sentiment improved, sending the USD and other safe havens such as the CHF and Gold lower. Risk assets on the other hand turned bullish, with commodity currencies making some decent gains, while the Euro and the GBP gained nearly 100 pips.
Cryptocurrencies also felt better, with Bitcoin surging above $31,000 after some positive news. Grayscale court ruling sent Bitcoin ETF approval back to SEC. “I’ve been thinking we should approve one for the past five years,” SEC’s Hester Peirce said on CNBC today. “The logic for why we haven’t approved [a Bitcoin ETF] was always a mystery for me.”
Today’s Market Wrap
We will receive the manufacturing and services PMIs for Australia, Japan, the Eurozone, the UK, and the US during all day today. As the central banks are anticipated to hold interest rates stable until they gather additional data and allow the monetary policy lags to permeate the economy, they are unlikely to have an impact on the near-term policy outlook at this time.
Given the recent increase in long-term rates, the market is more likely to respond to negative shocks. The UK, the Eurozone, and particularly the US PMIs will be the most significant ones, with the European manufacturing and servies already in recession, while the activity in the US services sector is expected to fall into contraction this month after hoding up well until now.
The UK employment report will also be released this morning. Last week, the ONS only released data on wages, job openings, and real-time employment information. Falling LFS survey response rates forced the release of the remaining UK labor market statistics to this week. The consensus is that the 4.3% unemployment rate will not change.
Forex Signals Update
Yesterday the volatility was low dueing the first half of the day, but increased in the second half as US Treasury yields reversed from above 5.00%. Risk currencies surged higher while the USD retreated lower. We were long on the USD, although closed the trades in profit before the USD decline started,
GOLD Remains Well Supported
Gold prices have benefited greatly from the Middle East turmoil; by Friday night, they had reached their highest level since late July, at $1,997. Short-term demand for Gold is growing as global concerns over the Middle East war continue to escalate. The late September XAU/USD pair experienced a fall to $1,810 as the USD gained tremendous momentum, but then turned around when geopolitics took hold. Gold is currently rising beyond $2,000 once more after rising almost $180 over the previous two weeks.
XAU/USD – 60 minute chart
- Gold Buy Signal
- Entry Price: $1,977.08
- Stop Loss: $1,963.08
- Take Profit: $1,985.08
NZD/USD Climbs Above the 100 SMA
As risk assets like commodity currencies declined in value relative to the US dollar and had been down for more than two months, the New Zealand dollar went negative in July. Even yet, since early September, the NZD has been holding up better and has been trading in a range, with a support zone below 0.59. Risky assets were negatively impacted by China’s economic difficulties, although recently, there have been some improvements. Yesterday this pair retraced higher and climbed above the 100 SMA (green) on the H1 chart, although this is unlikely to contiune higher.
NZD/USD – 60 minute chart
Cryptocurrency Update
BITCOIN Facing the Next Resistane Above $31,000
The cryptocurrency market had two spikes last week. The first occurred early in the week when Coin Telegraph revealed that the SEC had authorized a spot ETF, pushing Bitcoin to $30,000. However, the price pulled back to $28,000 and stabilized there for a few days until the positive trend reappeared later in the week. Bitcoin completed the week around $30,000 after pushing higher once again. Following some encouraging news, Bitcoin surged past $31,000 yesterday as SEC reissued permission of the Bitcoin ETF following a grayscale court judgment.
BTC/USD – Daily chart
- BTC Buy Signal
- Entry Price: $26,248.2
- Stop Loss: $24,500
- Take Profit: $28,000
ETHEREUM Moves Above $1,700
Yesterday ETH/USD also surged higher although the move was smaller. Late last month, Ethereum’s price began to surge above its support level, showing that there was some purchasing interest and demand for Ethereum at roughly $1,600. Buyers have regularly entered the zone above this level, but the daily chart’s 100 SMA (green) has acted as resistance. Following Sunday’s rise, this moving average reversed, wiping away all of September’s gains.
ETH/USD – Daily chart
- ETH Buy Signal
- Entry Price: $1,671.79
- Stop Loss: $1,371
- Take Profit: $1,971
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