Forex Signals Brief October 31: Canadian GDP and BOJ Meeting on Agenda Today
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 EUR/USD 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.
Today’s Market Wrap
Today starts with the Bank of Japan meeting, which is projected to retain rates at -0.10% and the YCC to aim the 10-year JGBs at 0% with a +/-50 bps soft cap and a 1% hard limit. However, there is considerable conjecture regarding a change in the YCC policy. The central bank is also anticipated to revise its inflation estimates, indicating that prices would surpass the 2% goal in 2023 and 2024.
The Eurozone CPI Y/Y is predicted to dip to 3.2% from 4.3% previously, while the Core CPI Y/Y is expected to be 4.2% from 4.5% previously. The ECB stopped its tightening cycle at its most recent meeting, with the market anticipating the central bank to stay on hold until mid-2024, when it is expected to begin the rate-cutting cycle.
The US Consumer Confidence Index which will be released later has fallen to 100 points from 103 before. The Conference Board poll focuses on the labor market, whereas the University of Michigan study focuses on household financial outlook. The labor market specifics have recently revealed some weakness, which has been reflected in increased continuing claims.
Forex Signals Update
Yesterday the volatility declined from last week, as the conflict in Gaza didn’t spread further in the region. The risk sentiment improved in financial markets, sending risk assets higher while the USD retreated lower. We were long on the USD from last week, so two of our forex signals closed in loss, but we made up with a long Bitcoin signal which closed in profit.
GOLD Retreating After Breaking Above $2,000
GOLD (XAU/USD) rose beyond the psychologically critical $2,000 milestone on Friday, reaching its highest point since May 16 and its third weekly increase in a row. The continuous confrontation between Israel and Hamas has spurred safe-haven demand, supporting the precious metal. However, traders are treading carefully, abstaining from strong bullish positions as they await important central bank meetings this week. Yesterday we saw a pullback below the $2,000 level, but it 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
- Stop Loss: $1983
- Take Profit: $2,005
AUD/USD Continues to Make Lower Highs
In the last few months, AUD/USD has been decreasing, owing mostly to a stronger US dollar, which has been positive as most central banks turn soft while markets continue to anticipate a last rate rise by the FED in November or December. However, global worries have been pulling traders away from risk assets, such as the significant hurdles that China’s economy has encountered this year across a range of industries, as well as the Gaza war. 
AUD/USD – 240 minute chart
Cryptocurrency Update
Booking Profit in Bitcoin After $34,000
The Bitcoin market had two price increases last week, the greatest of which happened this week. The first was when Coin Telegraph announced that the SEC had approved a spot ETF, causing Bitcoin to skyrocket to $30,000. However, the price fell below $28,000 for a few days before rising again later in the week. Bitcoin closed the week at $34,500, continuing to rise and yesterday, Bitcoin reached our take profit target as the price approached $35,000.
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.
ETH/USD – Daily chart
- ETH Buy Signal
- Entry Price: $1,671.79
- Stop Loss: $1,371
- Take Profit: $1,971
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