Last week all the attention was on the inflation figures from the US, with the Consumer Price Index CPI report being released on Tuesday, followed by the Producer Price Index PPI report later in the week. Inflation resumed the declining trend, heading to normal levels, which led the market to solidify its conviction that the FED is done raising interest rates, which kept the US dollar declining throughout the week.
The headline CPI YoY declined to 3.2% in October vs. 3.3% expected and down from 3.7% in September, while the Core CPI YoY ticked down to 4.0% vs. 4.1% expected and 4.1% in September. So, the US CPI report underperformed all expectations, causing significant movements and prompting the market to move ahead of time on rate cut odds.
Bonds remained bearish for most of the week, although we saw a jump to 4.65% for the 10-year US treasury yields, after the positive retail sales from the US, which showed that the US consumer remains robust and will likely keep the economy upbeat. But they couldn’t keep the gains and dived back down below 4.50%. That left the USD closing the week near the bottom, while other currencies took advantage of the USD weakness and continued to make gains last week.
This Week’s Market Expectations
- Monday: PBoC LPR.
- Tuesday: RBA Meeting Minutes, Canada CPI, FOMC Minutes.
- Wednesday: US Durable Goods, US Jobless Claims.
- Thursday: US Thanksgiving Day, Australia/Eurozone/UK PMIs, ECB Meeting Minutes, New Zealand Retail Sales.
- Friday: Japan CPI, Canada Retail Sales, US PMIs, US Black Friday (early markets close).
This week starts with the Canadian inflation report on Tuesday and the CPI YoY is expected to fall to 3.2% vs. 3.8% in September, which will likely weigh on the CAD. On Wednesday we have the unemployment claims from the US. ast week’s US Jobless Claims data fell short of forecasts in every category, despite continuing claims evidently continuing their steady upward trend. The consensus for this week is 225K initial claims, up from 235K last week.
On Thursday we’ll get the release of the manufacturing and services PMI figures for Eurozone and UK, which will likely set the tone for the day. As of this writing, there is no agreement on the other measures, but it is anticipated that the Japanese Core CPI Y/Y will rise to 3.0% from 2.8%. The BoJ will not be affected by this inflation report unless there are some very surprising developments. With the June 2024 spring wage discussions in mind, the BoJ is concentrating on pay growth.
Last week was quite volatile, with traders getting back on following the inflation and retail sales reports from the US, after a quiet week. We saw some decent moves and the USD turned quite bearish, while risk sentiment improved. We changed the strategy from long to short on the USD, which proved right since we only had four losing signals out of 15 trading signals in total, with the rest of the forex signals closing in profit.
GOLD Still Hesitating Closer to $2,000
As Middle Eastern tensions increased last month, the price of gold topped $2,000 per ounce. In contrast, over the first ten days of this month, XAU fell. Geopolitical tensions in the Middle East were undoubtedly the catalyst for the October spike, but this month saw a fall in gold prices as tensions in the region did not escalate. But with the US inflation statistics from yesterday, buyers have taken control of the market again. Even if the retreat stopped right at the 200 SMA (purple), which is serving as support at this moment. This is a sign of strength, as gold seems to be moving back toward $2,000 again, although traders still seem reluctant to break and hold above that level.
XAU/USD – Daily chart
- Gold Buy Signal
- Entry Price: $1,963.12
- Stop Loss: $1,949.12
- Take Profit: $1,971.12
GBP/USD Bouncing Between 2 MAs
Following a month of stabilization in October, the GBP/USD pair went bearish in July. However, this month has seen some strong bullish reversing indicators, with higher highs and higher lows. Despite the fact that the British economy is still failing, which should continue to weigh on the pound, the 100 SMA is providing support while the 200 SMA is functioning as resistance.
GBP/USD – Daily chart
BITCOIN Continues to Remain Well Supported
The cryptocurrency market continued to be volatile last week, with Bitcoin nearly hitting $35,000 following a decline and then rising to nearly $38,000 following a rise. We’re still waiting on an announcement on an ETF. A more positive cryptocurrency climate has continued to favor Bitcoin since the Securities and Exchange Commission approved a Bitcoin spot ETF. Because of this, late last month, this cryptocurrency increased and reached $35,000 before declining and weakening. Buyers took the initiative and drove the price up to more than $36,000, even though they did not lose much ground. With buyers pausing just below last month’s high of $38,000 and retreating lower, BTC is experiencing another bullish wave.
BTC/USD – Daily chart
Buying ETHEREUM After the Retreat
After a few encouraging developments for the digital market, Ethereum gained more than $300 and surged above $1,800 thanks to the bullish sentiment in the cryptocurrency market. It’s great that the zone around $1,700 turned into support, and it appears that the 50 SMA (yellow) has done the same. Earlier this month, the price of ETH/USD broke above $2,000, signaling that buyers are in control and that we should have taken profits on our prior Ethereum signal. However, given that the 20 SMA is serving as support, we choose to open another ETH signal following the lower retreat of last week.
Ethereum – 240 minute Chart
- ETH Buy Signal
- Entry Price: $1,947.38
- Stop Loss: $1,490
- Take Profit: $2,500