The PMI numbers for manufacturing and services were in focus yesterday, with mixed results observed in Europe and a decline in both sectors in the US. European services continued to show improvement, while manufacturing sank deeper into recession. Conversely, the US saw a decline in both manufacturing and services PMI, signaling a potential slowdown in the economy.

This weaker PMI data prompted speculation that the Fed may consider rate cuts, leading to a reversal lower for the US dollar. EUR/USD swiftly moved from 1.0660 to 1.0700 before stabilizing, while the pound strengthened to 1.2450, up 65 pips. Additionally, strong commodity currencies benefited from increased risk appetite in the market.

Today’s Market Expectations

Today started with the CPI inflation report from Australia.

• Headline CPI: Quarter-on-quarter increase of 1%, surpassing the anticipated 0.8% and the previous 0.6%. Monthly inflation figure was 3.5%, higher than projected. Year-on-year CPI stood at 3.6%, slightly exceeding the expected 3.5% but lower than the previous 4.1%.
• Trimmed mean CPI (a core measure): Quarter-on-quarter increase of 1%, in line with expectations and the previous figure. Year-on-year trimmed mean CPI was 4%, slightly lower than the previous 4.2%.
• Weighted median CPI: Quarter-on-quarter increase of 1.1%, exceeding expectations and the previous figure of 0.9%. Year-on-year weighted median CPI stood at 4.1%, lower than the previous 4.4%.
• Services inflation: Reported at 4.3% year-on-year, the lowest since June 2022.
• Goods inflation: Reported at 3.1% year-on-year

The European session is light, with only the German Ifo Business Climate which is expected to show a slight improvement at 88.9 points from 87.8 points in March. The Belgian NBB Business Climate is also expected to improve but it still remains in a negative territory. 

Later in the US session, we have the EIA crude Oil reserves, which should show a decent buildup after the API private inventories that were released yesterday, which also showed a building. But before that, we have the Retail Sales from Canada and the Durable Goods Orders from the US.

Forex Signals Update

Yesterday the economic and forex events kicked in with the manufacturing and services PMI reports, but again there was not much to drive markets. As a result, the volatility was low and we had only three closed forex signals, all losing trades, since we were long on the USD and the USD continued the retreat, especially after the weak US PMI readings.

Gold Falls Below $2,300 but the 20 SMA Holds

On Monday, the price action for the precious metal continued from the previous day. GOLD struggled to surpass its pivot point of $2,400, reflecting a pessimistic sentiment in the market. As a result, the price experienced a notable decline, dropping by over $100 and settling below the $2,300 mark. However, there was a reversal later in the session, with the price climbing back above the 20-day Simple Moving Average (SMA) indicated by the gray line on the chart. This reversal suggests a potential shift in momentum, but market participants remain cautious amid ongoing volatility.

XAU/USD – Daily chart

AUD/USD Tests the Second Resistance

The AUD/USD exchange rate experienced a reversal this week after declining by three cents over the previous two weeks. The increase in the exchange rate was supported by promising Australian manufacturing PMI data and weakness in the USD. As a result, the pair managed to break above the first resistance level at 0.6450 yesterday and continued to rise towards the second resistance level at 0.65. This upward movement indicates a shift in momentum favoring the Australian dollar against the US dollar, but further price action will determine whether the bullish trend persists.

AUD/USD – Daily Chart

Cryptocurrency Update

Bitcoin Stays Below the 50 SMA

Bitcoin’s price has experienced a recent decline, dropping below the $60,000 mark, its lowest level since early March. Currently trading around $61,200, the cryptocurrency remains close to its recent low of about $59,300, observed roughly a month ago. While there were expectations of reaching lower price targets if this level was breached, BITCOIN managed to find support in this zone and subsequently surged back above $65,000.

BTC/USD – Daily chart

The 100 SMA Holds for Ethereum

ETHEREUM experienced a decline last week, closing below the $3,000 level and piercing the 100-day Simple Moving Average (SMA) on the daily chart. However, the price managed to bounce back above $3,000. Buyers made significant gains yesterday, but the upward momentum stalled around the 20-day SMA (grey). Today’s price action will determine whether buyers can push the price above this moving average.

ETH/USD – Daily chart