Forex Signals Brief October 27: The BOJ, FED and the BOE to Keep Rates on Hold This Week

Last Week’s Market Wrap

Markets were confused and turbulent last week since there was no ground offensive in Gaza early in the week, and risk sentiment improved because the ground operation is viewed as the greatest risk by the markets. There was later evidence that Hamas was releasing hostages in response to Qatari-Egyptian mediation. Treasury rates were similarly erratic, though they finished the week lower overall.

Tuesday was PMI Day, and most of them were dismal, with the exception of the US Manufacturing and Services PMI, which surpassed forecasts, demonstrating once again that the US economy is in good form. The ECB left interest rates unchanged as widely expected, while ECB’s President Lagarde welcomed favorable inflationary trends but warned of future stagnation, leaving the EUro gloomy for most of the week.

As predicted, the Bank of Canada kept interest rates at 5.00%. The Bank of Canada (BoC) observed clearer signs that monetary policy is moderating spending and relieving price pressures. On Thursday, the US Q3 Advance GDP came in at 4.9% vs. 4.3% predicted, while US Durable Goods orders also above expectations. The US PCE came in at 3.7% year on year, compared to 3.7% predicted and 3.8% before (updated from 3.9%). Although the ground operation in Gaza soured mood at the conclusion of the week, risk assets fell and safe havens rose at the close.

This Week’s Market Wrap

The highlights for next week will be:

Monday: Australia Retail Sales.

Tuesday: Japan Jobs data, Japan Retail Sales and Industrial Production, Chinese PMI, BoJ Policy Decision, Swiss Retail Sales, Eurozone GDP and CPI, Canada GDP, US ECI, US Consumer Confidence, New Zealand Jobs data.

Wednesday: Chinese Caixin Manufacturing PMI, US ADP, Canada Manufacturing PMI, US ISM Manufacturing PMI, US Job Openings, FOMC Policy Decision.

Thursday: Swiss CPI, US Challenger Job Cuts, BoE Policy Decision, US Jobless Claims.

Friday: Chinese Caixin Services PMI, Eurozone Unemployment Rate, Canada Jobs data, US NFP, US ISM Services PMI.

The retail sales report from Australia will open the day, which is expected to show a slight increase to 0.3% for September from 0.25 in August. Today we have the Spanish and German CPI (consumer price index) inflation reports, with the Spanish inflation expected to jump to 3.8% YoY from 3.5% previously, while the German CPI MoM is expected to tick lower to 0.2%. The Geman GDP report for Q3 will also be released, and it is expected to show a contraction of -0.2%.

Forex Signals Update

This week markets were volatile, as the reports from Gaza kept coming in mixed, contradicting each other often, while the economic data and central banks also had their say in the price action. There were quite a few reversals as risk sentiment improved for some time, but in the end, it ended up negative. We opened 19 trading signals, with just four losing ones, which gives us a great win/loss ratio.

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.

AUD/USD – 240 minute chart

Cryptocurrency Update

Long on BITCOIN 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: $33,621.7
Stop Loss: $32,621.69
Take Profit: $34,821.71

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.