Forex Signals Brief June 17: RBA, SNB and BOE Meetings This Week

Last week started with the Euro opening with a bearish gap lower, after the European Parliamentary elections, which saw a considerable rise of the right spectrum parties. The reasons are known, such as surging prices, high immigration, and stagnating wages. Macron announced new elections in France and the polls are showing him in third place. As a result, the Euro remained bearish throughout the week, however with the right parties having a bigger say, the economic policies are expected to be positive, possibly leading to an appreciation in the Euro in the mid term.

However, the attention was on the US inflation reports and the FOMC meeting, with traders eager to know if the FED was contemplating interest rate cuts soon. The CPI (Consumer Price Index) inflation was expected to come lower than last week and it was even weaker, which sent the USD more than 1 cent lower, reinforced by the softer PPI on Thursday as well.

However, the Federal Reserve didn’t look too in hurry to give any signals about the start of the monetary policy easing cycle, so traders were left with nothing about rate cuts. That lowered the odds to just one rate cut in 2024, which turned the USD bullish, however Treasury yields were declining.

This Week’s Market Expectations

This week we have more central bank meetings, so volatility is still expected in financial markets. It kicks off with the Reserve Bank of Australia tomorrow, which is expected to keep the Cash Rate at 4.35% as expected, followed by the Swiss National Bank which already delivered a 25 bps rate cut in the last meeting,, bringing them to 1.50%. while the Bank of England is also expected to hold the Official Bank Rate unchanged at 5.25%. However, there are many other economic event to be released in between:

Upcoming Economic Events:

Monday:

• PBoC MLF (Medium-term Lending Facility): The People’s Bank of China will conduct MLF operations, which provide liquidity to commercial banks.
• New Zealand Services PMI: Monthly indicator of the business conditions in the New Zealand services sector.
• China Industrial Production and Retail Sales: Important economic data releases from China indicating the health of its industrial sector and consumer spending.
• Eurozone Wage Growth: Data reflecting changes in wages across the Eurozone, which is crucial for understanding inflationary pressures and consumer spending.

Tuesday:

• RBA (Reserve Bank of Australia) Policy Decision: The Australian central bank will announce its monetary policy decision, which includes interest rate decisions and policy outlook.
• Eurozone ZEW: Survey measuring the sentiment of institutional investors and analysts towards the Eurozone economy.
• US Retail Sales: Key indicator of consumer spending trends in the United States.
• US Industrial Production: Monthly measure of industrial output in the United States, indicating the health of the manufacturing sector.

Wednesday:

• UK CPI (Consumer Price Index): Inflation data for the United Kingdom, important for monetary policy decisions.
• US NAHB (National Association of Home Builders) Housing Market Index: Monthly survey gauging the sentiment of home builders in the United States.
• BoC (Bank of Canada) Meeting Minutes: Detailed record of the BoC’s latest monetary policy meeting, providing insights into future policy decisions.

Thursday:

• New Zealand GDP (Gross Domestic Product): Quarterly data release showing the overall economic performance of New Zealand.
• PBoC LPR (Loan Prime Rate): China’s reference rate for new loans.
• SNB (Swiss National Bank) Policy Decision: The Swiss central bank’s monetary policy announcement.
• BoE (Bank of England) Policy Decision: Monetary policy announcement from the Bank of England.
• US Housing Starts and Building Permits: Key indicators of the health of the US housing market.
• US Jobless Claims: Weekly data on initial claims for unemployment benefits in the United States.

Friday:

• Australia/Japan/Eurozone/UK/US Flash PMIs: Preliminary Purchasing Managers’ Index readings for major economies, providing early insights into economic activity.
• Japan CPI: Inflation data for Japan.
• UK Retail Sales: Monthly measure of retail spending in the United Kingdom.
• Canada Retail Sales: Monthly measure of retail spending in Canada.

Last week, the USD started it on the wrong foot and going through a major retreat after the soft inflation report, so we were buying risk assets such as commodity dollars and Dow Jones in the first half of the week. Then the situation reversed after the hawkish FOMC so we also reversed the trade, going long on the USD. We opened 44 trading signals in total during the week, ending up with 31 winning forex signals and 13 losing ones.

Gold Rebounds Again

Gold initially surged above $2,340 on Wednesday but encountered resistance at the 100-day Simple Moving Average (SMA), prompting a decline. Technical indicators are signaling a potential further drop, with the 200 SMA providing initial support at $2,290 and the monthly low at $2,286.70 also acting as a crucial level. Geopolitical tensions remain a supportive factor for gold prices despite recent declines, which helped in the bullish reversal on Friday. Uncertainty in European politics and instability in the Middle East could potentially bolster gold prices further.

XAU/USD – H4 chart

AUD/USD Returns to the Bottom of the Range

AUD/USD. which had been trading at the bottom of the range the week before, surged higher and broke above the 200 SMA on Wednesday in response to the dismal US CPI inflation data. Support was seen on the daily chart at the red 100 SMA. The US Dollar’s (USD) renewed upward bias, which continued to reverse this pair on Wednesday night and hold the price low until the end of the week, caused the AUD/USD pair to give up some of the large gains recorded in the previous session. However, it’s possible that the RBA may suggest a rate decrease this week, which would cause the Australian dollar to plummet.

AUD/USD – Daily Chart

Cryptocurrency Update

Bitcoin Stays Supported by MAs After the Retreat

Bitcoin (BTC) continues to maintain its long-term uptrend above the 100-day Simple Moving Average (SMA). However, recent price movements suggest a period of retracement and consolidation. The failure to sustain levels above $70,000 and the breach below the 20-day SMA indicate short-term bearish sentiment. Given the significant selling pressure observed during recent attempts to push prices higher, maintaining a sell strategy may be prudent and we’re holding our sell signals from above 70K. However moving averages are still acting as support on the daily chart.

BTC/USD – Daily chart

Ethereum Forms A Bullish Reversing Pattern

Ethereum (ETH), since the launch of its ETF, has traded within a range and reached a peak of $3,832.50. This surge was driven by increased market confidence following the SEC’s favourable stance on spot Ether ETFs. Ethereum experienced a notable 25% increase from its previous highs, underscoring robust market demand and investor interest. Despite this positive momentum, Ethereum’s price has recently retreated, with ETH/USD slipping below $3,5000. But over the weekend we saw a bullish reversal after the 100 SMA held as support.

ETH/USD – Daily chart