Forex Signals Brief Feb 16: Will Retail Sales Finally Convince the BOE?
Yesterday the post-CPI reversal continued, with stocks, bonds, and the USD almost completely undoing the movements seen on Tuesday. Most indices bounced back above its pre-Tuesday levels. The retail sales report showed a decline in the US during January, which escalated the decline in the dollar.
This raised concerns about the strength of the US economy, potentially signaling a need for FED rate cuts, which sent EUR/USD closer to 1.08. Meanwhile, the GBP faced pressure from dismal UK GDP figures but found support from comments by BOE officials suggesting stronger future quarters.
Commodity dollars also remained supported despite a lack of support from Asian markets. The New Zealand dollar quickly returned to its pre-CPI levels, while the AUD/USD rate remained robust. The Canadian dollar benefited from rising crude Oil prices, so all three currencies rallied on improved risk appetite.
Today’s Market Expectations
The UK retail sales are expected to increase by 1.0% month-over-month (M/M) in January, rebounding from a 3.2% drop in December. Recent retail data indicates mixed trends, with the British Retail Consortium’s (BRC) retail sales index showing a 1.4% year-on-year increase. However, the accompanying report notes that easing inflation and weak consumer demand have slowed retail sales growth. While January saw increased spending in the first two weeks, this momentum was not sustained throughout the month.
The US Producer Price Index (PPI) Year-over-Year (Y/Y) is anticipated to stand at 0.7%, a decrease from the previous 1.0%, while the Month-over-Month (M/M) figure is expected to rise to 0.1% from the prior -0.1%. In terms of the Core PPI Y/Y, a decline to 1.6% from the previous 1.8% is projected, with the M/M reading forecasted to be 0.1%, up from 0.0% previously. Given the upcoming focus on the US Consumer Price Index (CPI) report on Tuesday, it’s unlikely that this news will significantly impact the markets.
Ethereum Approaching the $3,000 level
The price of Ethereum has shown a steady upward trend since experiencing a drop in January that brought it close to $2,000. Our decision to open a buy signal for ETH at that level proved successful, as buyers returned to the market. They managed to push the price beyond $2,800 this week so far, triggering the take profit for our trade. However, the price retraced slightly yesterday, falling $100 lower. Despite this minor pullback, the overall trend for Ethereum remains positive, with buyers demonstrating strong interest in the cryptocurrency.
Ethereum – Daily Chart
- ETH Buy Signal
- Entry Price: $2,290
- Stop Loss: $2,590
- Take Profit: $1,750
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