Forex Signals Brief November 16: Attention on US and Australian Unemployment Numbers

Yesterday everyone was looking at the US retail sales after the softer CPI inflation numbers on Tuesday. The headline sales for October came in at -0.1%, slightly higher than the projected -0.3%. Positive changes for the previous month were also made. Before this month’s drop, retail sales had increased for five straight months, despite being negative. The decline might not be a pattern.

Nevertheless, it was a bad sign, and given the current state of the economy, traders are more alert to a slowdown in spending. As the month goes on, they will be watching for evidence of continued spending in other statistics. The PPI, on the other hand, came in lower than anticipated overall today, coming in at 1.3% year over year as opposed to 1.9% as predicted. Compared to 2.7%, the core reading was 2.4%.

After a steep decline on Tuesday, US treasury rates did rise today despite the weak retail sales and lower-than-expected PPI. In terms of the foreign exchange markets, the NZD concludes the day as the most robust of the main currencies, with the GBP being the least strong. The USD had a mixed day, but closed with a little increase driven by gains against the majors.

Today Market Expectations

Today starts with the employment report from Australia which is expected to come at 18k in October, up from 6.7k in September, with the unemployment rate rising to 3.7% (up from 3.6%) and participation maintaining at 66.7%. The RBA’s latest SoMP dropped its unemployment rate prediction for the horizon period, while the December forecast was reduced from 4.00% to 3.75%. Labor-market conditions have gradually improved across a range of measures, but they remain tight. Employment growth has slowed from its fast pace late last year, and it now almost matches population growth among those of working age. Firms have altered employee working hours in response to the decreasing development of the economy’s demand. As a result, the rate of underemployment has risen somewhat.

Unemployment Claims will be released in the afternoon. They have recently shown a weaker labor market through fewer job prospects rather than more layoffs. In reality, Continuing Claims have been continuously climbing, while Initial Claims have stayed low around the 200-220K mark. At the time of writing, there is no consensus on this week’s statistics, but it will be one of the most crucial releases.

Yesterday we saw some decent moves, although the volatility declined from the previous day since retail sales and the producer inflation numbers didn’t offer much. The USD started to reverse and made some gains, but stopped since traders are not expecting more hikes by the FED. We opened three trading signals although just two closed, the long term Gold signal which closed in profit and a short term fore signal which closed in loss.

 GOLD Stops at the 50 SMA After Breaking the 20 SMA 

In October, gold had huge increases, pushing the price beyond the important round mark of $2,000. However, XAU fell in the first ten days of this month. The obvious reason for the surge in October was geopolitical difficulties in the Middle East, but gold fell this month as tensions in the region did not rise higher. However, following yesterday’s US inflation statistics, the mood has flipped and buyers are back in charge. The 100 SMA (green) was also acting as resistance on the H4 chart, which is now an obstacle to overcome by buyers. Although the retreat stopped right at the 50 SMA (yellow) which is now acting as support on this timeframe. This is a bullish sign as moving averages are turning from resistance into support, so we decided to open a buy Gold signal on Tuesday evening.

XAU/USD – Daily chart

• Gold Buy Signal
• Entry Price: $1,963.12
• Stop Loss: $1,949.12
• Take Profit: $1,971.12

AUD/USD Climbing Above 0.65

Following the dismal US CPI inflation statistics for October, the AUD/USD made a big upward swing as risk sentiment improved dramatically in financial markets and US bond rates fell by more than 20 basis points. The US dollar fell roughly 200 pips across the board, sending this pair above 0.65 and above the 100 daily SMA, suggesting that buyers are in command and that we may witness a trend reversal if today’s US retail sales are also weak.

AUD/USD – Daily minute chart

Cryptocurrency Update

BITCOIN Rebounding off the 100 SMA

Since the Securities and Exchange Commission approved a Bitcoin spot ETF, Bitcoin has continued to benefit from a more optimistic cryptocurrency environment. As a consequence, this cryptocurrency rose late last month, reaching $35,000 before weakening and falling. Despite not losing much ground, buyers grabbed charge and pushed the price up to more than $36,000. BTC is now trading around $35,000, and yesterday we saw another recovery off the 50 SMA (yellow), with buyers stopping just below last month’s high of $38,000. On Tuesday we saw a retreat but the 100 SMA held as support and yesterday BTC bounced above $37,000 again.

BTC/USD – 240 minute chart

ETHEREUM Falling Below $2,000 Again

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