Forex Signals Brief November 10: Powell Convinces Markets the FED Is Not Done Yet
The USD was bearish during the Asian and European sessions yesterday, but made a bullish reversal as FED policymakers continued to underline the flexibility of rate hikes. In a speech, Jerome Powell stressed the hawkish themes from last week’s press conference while being silent on the dovish points, which boosted the US dollar since markets took this as a hawkish signal for one more hike.
The Treasury auction was the worst showing since 2011 which had a 5.7 bps tail. There was some discussion of technical troubles and ransomware as possible explanations, but bond yields remained bullish until the end, putting a floor in the 10-year notes just below 4.50% until at least next week’s inflation report.
The rise in rates and risk aversion in equities gave the USD a major boost in the US session, knocking EUR/USD 60 pips off the highs as USD/JPY rose to 151.30. It was a consistent trend that contributed to the unwinding of some commodity currency gains in early North American trade. Despite the paucity of US economic data, the trading day was surprisingly active. The winning run in US stock markets which started at the and of October came to an end at eight, setting up an intriguing Friday session with UMich sentiment on the table.
Today’s Market Expectations
The UK GDP report for Q3 and September is the main event of the day and it is expected to show a contraction of -0.1% month-month in September (after expanding by +0.2% in August and contracting by 0.5% month on month in July). Analysts at Investec observe that September’s PMI indices were lackluster, with manufacturing, services, and composite all falling below the 50-point line. According to Investec, the downturn might be ascribed to “the (deliberate) impact of higher interest rates”. However, the impacts of the weather “have led to at least a partially offsetting boost in hospitality spending and also allowed for more construction work to go ahead than usual at this time of the year” . Overall, the desk expects a 0.1% decrease; such a result would leave Q3 Q/Q growth at -0.1%. Given the policy implications,
Later we have the University of Michigan Consumer Sentiment Report which has lost its market-moving power anyway. One explanation is that the market is more focused on the falling jobs statistics, which will likely bring inflation back to goal in the future. Nonetheless, it is a significant poll for consumers’ personal financial perspective. Consumer Sentiment is expected to rise to 64.0 points from 63.8 points in October.
Yesterday the volatility returned as US bond yields surged higher and the USD gained late in the US session after falling earlier in the day, so there were two reversals yesterday. We opened four trading signals with two of them closing in profit, while the other two closed in loss.
GOLD Starting to Reverse Higher After the Doji
Gold surged higher during the European and early US sessions yesterday as the USD went through an air pocket, hitting the 20 SMA (gray) on the H4 chart but failing to break through it. The price was then reversed downward by Powell, prompting us to open a sell Gold signal. 
XAU/USD – Daily chart
- Gold Sell Signal
- Entry Price: $1,671.79
- Stop Loss: $1,371
- Take Profit: $1,971
USD/CHF Falling Below the 200 SMA
USD/CHF dipped below 0.90 late last week, but it came to a halt around the 50 daily SMA, which became support, and began to recover again this week. However, there is a lot of uncertainty, and neither buyers nor sellers want to take charge just now, so the price is hovering around 0.90.
USD/CHF – 240 minute chart
Cryptocurrency Update
BITCOIN Surges to $38,000
Bitcoin has continued to profit from a better atmosphere in the cryptocurrency sector, particularly since the Securities and Exchange Commission approved a Bitcoin spot ETF. As a result, this cryptocurrency skyrocketed late last month, exceeding $35,000 before faltering and plummeting. Despite not losing much ground, buyers grabbed control of the situation and pushed the price up to over $36,000. BTC is now trading around $35,000, while we saw another rebound off the 50 SMA (yellow) yesterday as the 50 SMA (yellow) pushes the lows higher, with buyers stopping just below last month’s high of $38,000 yesterday.
BTC/USD – 240 minute chart
Boking Profit in ETHEREUM As It Reaches $2,000
After the SEC approved Bitcoin spot ETFs last month, Ethereum benefited from the good attitude in the crypto market and soared beyond $1,800, gaining more than $300. The zone around $1,700 became support, and it now seems that the 50 SMA (yellow) has also become support, which is fantastic. ETH/USD pushed above $2,000 yesterday, indicating that buyers are in charge and we booked profit on our Ethereum signal.
Ethereum – 240 minute Chart
- ETH Buy Signal
- Entry Price: $1,671.79
- Stop Loss: $1,371
- Take Profit: $1,971
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