Forex Signals Brief January 19: UK, Canada Retail Sales to Close the Week
The day started with the USD being on a slight retreat after the advance on Wednesday following the strong retail sales report and the sentiment starting to improve somewhat. The first data for the day came from Australia, with the Unemployment Change falling by -65.1K in December, missing expectations for an increase of 15.4K. That sent the AUD diving 20 pips lower, but it reversed back up pretty fast and AUD/USD the day 40 pips higher nonetheless, with the Unemployment Rate remaining unchanged at 3.9%.
The European session was stable, with most assets trading in a tight range awaiting the US Unemployment Claims report, which shows that the employment sector remains in decent shape. Jobless claims fell below 200K, which is considered a strong reading. Initial jobless claims for the week fell to 187K, below the predicted 207K and the lowest number since September 2022.
The four-week moving average likewise decreased to 203K, from the previous week’s corrected total of 208K. That sent the USD 30-40 pips higher across the board, but buyers couldn’t sustain the gains and the retreat resumed again in late US session.
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Today’s Market Expectations
The day starts with the Core CPI YoY for Japan which is predicted to slow down by 2 points to 2.3% from 2.5% previously. Inflation in Japan has been rapidly declining due to prices falling, while the growth in wages is also slowing, which is negative for the JPY. This means that USD/JPY will eventually get to 150 again.
The UK retail sales report will come next, with the headline number predicted to come at -0.5%, resuming the previous downward trend following a 1.3% increase in November, most likely due to Black Friday. This data comes after the CPI rose to 4.0% in December from 3.9% before, but the core CPI remained stable at 5.1%, surprising market expectations of a 2-point decrease to 4.9%. However, the average cash earnings exhibited a dip earlier this week.
Later in the US session, we have the retail sales report from Canada, with the headline number expected to fall flat at 0.0% in November from 0.7% in October, despite Black Friday, while the core number is expected to show a slight increase of 0.1%. This report won’t likely have any impact on the Bank of Canada meeting next week, which has already been decided on, but it’s another piece of data to keep an eye on.
Yesterday the volatility declined so we only opened 4 trading signals, with the USD being on a retreat at first and risk assets on the advance, until the US unemployment claims numbers were released. We saw a jump in the USD after the report, but it didn’t stretch too far and reversed back down again, slipping lower slowly. We had two winning and two losing signals, after the two reversals in the markets.
Gold Returns Quickly Above the 50 Daily SMA
This week, we had a reversal lower in Gold on Tuesday and the price lost $50 in two days, with XAU falling to $2,003, breaking below the 50 SMA (yellow) on the daily chart. This opens the possibility for the price to test the $2,000 level which is a major zone to watch. But sellers couldn’t push the price down there, despite the jump in the USD after the jobless claims and Gold reversed back up, ending the day above the 50 SMA again.
XAU/USD – Daily chart
Is AUD/USD Rebounding Above the 100 SMA?
AUD/USD used to be quite bullish in Q4 of 2023, but it made a reversal at the end of December and it has been falling for the past three weeks, having been bullish when it reversed higher in November, to the resistance zone below 0.69. This pair has dropped roughly 300 pips since the top, and after stalling for a few days late last week, the downturn resumed this week. However, yesterday the price formed a hammer candlestick which is a bullish reversing signal on the daily chart.
AUD/USD – Daily chart
Cryptocurrency Update
Bitcoin Heads for Support Above $40,000
Bitcoin has been bullish for more than a year, but after the retreat from $49,000 last week, it is showing no will to get the uptrend going. The crypto market witnessed high demand as the SEC prepared to authorize the Bitcoin EFT which pushed BTC to $49,000 before the event, but there was no follow-through after the approval. But, after the fourth day of the Bitcoin ETF trading, the results are far from the +$2 billion that Bitcoin bulls predicted in the first few days. That is keeping the BTC uncertain around $42,000-$43,000.
BTC/USD – Daily Chart
Ethereum Bouncing Off the 50 SMA
Ethereum remains bullish overall, however, we saw a retreat yesterday, as Bitcoin also fell back below $43,000. But the price remains above moving averages which are acting as support, pushing lows upward. But last week we saw an even bigger retest which sent the price below $2,500, however, buyers returned this week, so they’re likely to reaper soon, therefore we are holding our ETH signal open.
Ethereum – Daily Chart
- ETH Buy Signal
- Entry Price: $1,947.38
- Stop Loss: $1,490
- Take Profit: $2,500
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