Forex Signals Brief October 27: Core PCE Price Index to Close the Week
Yesterday’s Market Wrap
Bond rates retreated yesterday, but equities fell as well, so it was a mixed day overall. Crude oil fell in tandem with the stock market. The USD was mixed in the FX market, which is likely consistent with other markets today. The drop in rates occurred despite Q3 GDP coming in higher than projected at 4.9% vs. 4.3% and better durable goods data of 4.7% vs. 1.7%. Continuing claims were higher than predicted and have been trending more positively in recent months.
The rationale might be that the economy cannot possibly be stronger in the upcoming quarter after growing by 4.9% in the previous quarter. This quarter, consumer spending increased by 4.0%. That’s a lot of money. With greater energy costs and more credit card delinquencies, matching that growth will be difficult.
In forex, the New Zealand dollar is finishing as the strongest of the main currencies. The Swiss Franc was the most vulnerable. The US dollar lies in the middle of the table, with about equal gains and losses against the main currencies. With a gain of 0.29%, the USDCHF was the greatest dollar mover to the upside. The AUDUSD gained 0.33% against the USD.
Today’s Market Wrap
Today started with the Tokyo CPI which is a leading indication for National CPI in Japan. It has been slowing for some time, however the Core-Core consumer inflation measure appears to be more stable. The consensus expects the headline YoY inflation to tick lower to 2.7% this month from 2.8% before, although the CPI ex-Fresh Food YoY will remain constant at 2.5%. But, the JPY is waiting for the BOJ intervention rather than inflation figures.
The US PCE price index will be released later on, and the YoY number is predicted to fall to 3.4% from 3.5% previously, while the M/M reading is likely to fall to 0.3% from 0.4% previously. The Fed’s preferred measure of inflation, Core PCE Y/Y, is forecast to be 3.4% vs. 3.5% before, while the M/M number is predicted to be 0.3% vs. 0.1% previously.
This data should not be market changing because it is unlikely to impact the near-term policy outlook and we recently received the more timely CPI. The Revised US UoM Consumer Sentiment will be released in the end, but it’s nt expected to change from the initial reading.
Forex Signals Update
Yesterday markets were slower, waiting for the US data at first, but the impressive GDP and durable goods orders didn’t induce much volatility. We opened five trading signals, although just three forex signals closed yesterday. Two of them reached the take profit target while one closed in loss.
Buying GOLD at MAs Which Keep It Well Supported
GOLD is on the rise again, gaining for the second day yesterday after falling earlier in the week. The precious metal was trading at $1,985 earlier yesterday with moving averages acting as support, but we saw another pullback after the US GDP report, but the 100 SMA (green) held as support again on the H1 chart.
The rise in gold prices can be ascribed in part to the growing tensions in the Middle East area. Surprisingly, despite the headwinds of rising US Treasury bond rates and a strong US Dollar (USD) supported by a hawkish Federal Reserve (Fed), this positive feeling appears to be enduring. Yesterday the pullback stopped at MAs once again where we decided to open a buy Gold signal.
XAU/USD – 60 minute chart
- Gold Buy Signal
- Entry Price: $1,977.08
- Stop Loss: $1,963.08
- Take Profit: $1,985.08
AUD/USD Continues to Make Lower Highs
AUD/USD has been declining for a few months now, owing mostly to a stronger US dollar, but also to global concerns that have driven traders away from risk assets, such as the considerable challenges that China’s economy has caused, sending the AUD/USD below 0.63. AUD/USD rebounded higher earlier this week but it reversed down yesterday despite higher CPI inflation figures.
It has yet to hit higher highs, thus the trend remains negative despite the slowdown. The support zone below 0.63 has been broken, so sellers are in control again in this pair and we remain bearish. We opened a sell AUD/USD signal yesterday, after selling NZD/USD earlier.
USD/CHF – 240 minute chart
Cryptocurrency Update
Looking to Buy BITCOIN As It Retreats Below $34,000
The bitcoin market had two jumps last week, the largest of which occurred this week. The first was when Coin Telegraph revealed that the SEC had authorized a spot ETF, which caused Bitcoin to surge to $30,000. However, the price plummeted below $28,000 for a few days before resuming its upward trend later in the week. Bitcoin ended the week near $30,000, having continued to grow. Bitcoin hit $35,000 yesterday as the SEC reinstated clearance for the Bitcoin ETF in reaction to a recent court judgment.
BTC/USD – Daily chart
- BTC Buy Signal
- Entry Price: $26,248.2
- Stop Loss: $24,500
- Take Profit: $28,000
ETHEREUM Finally Overcomes the 200 Daily SMA
ETH/USD rose yesterday as well, albeit the rise was less. Late last month, the price of Ethereum began to rise above its support level, indicating that there was some buying interest and demand for Ethereum at around $1,600. Buyers have entered the zone above this level on a regular basis, but the daily chart’s 100 SMA (green) has functioned as resistance. Following the recent advance, the price surged above the 200 daily SMA (purple), but the rice has since returned and is now finishing the day at this moving average.
ETH/USD – Daily chart
- ETH Buy Signal
- Entry Price: $1,671.79
- Stop Loss: $1,371
- Take Profit: $1,971
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