Forex Signals Brief June 18: No Rate Cut from the RBA

Yesterday started with a round of data from China which came out mixed. Retail sales jumped by 3.7% YoY, beating expectations of 3.0%, but Industrial Production slowed to 5.2% YoY last month, down from 6.7% previously. However, the sentiment remained positive throughout the day, with markets throwing behind last week’s worries after the European elections.

The RBA kept the cash rate unchanged at 4.35%

In the US session, the Empire Manufacturing Index exceeded expectations, coming in at -6.0 points compared to the forecast of -9.0 points. Although this figure remains negative, it marks an improvement from the previous month’s reading of -15.6 points. The index reflects the conditions of the manufacturing sector in the New York region based on a monthly survey.

Despite the positive performance of the Empire Manufacturing Index, US interest rates continued to rise. Nevertheless, US markets closed higher, with the Nasdaq Composite extending its winning streak to six consecutive days and the S&P 500 also showing gains.

In the Forex market, the EUR emerged as the strongest among major currencies for the day. Conversely, the JPY was the weakest performer, while the USD showed mixed results, indicating varied performance across different currency pairs.

Today’s Market Expectations

The Reserve Bank of Australia (RBA) decided to maintain the cash rate at 4.35% during their recent meeting. This decision reflects their cautious stance amid ongoing concerns about inflation and economic conditions. Despite expectations of potential future rate hikes, the RBA revised its outlook, now indicating that interest rates are likely to remain unchanged until mid-2025. This shift in stance comes after recent economic data, including higher-than-expected inflation reports and robust labor market figures, which support the case for maintaining current monetary policy settings.

Turning to the US economic front, the upcoming focus is on the Retail Sales month-over-month (M/M) figures. Analysts project a 0.3% increase, compared to a flat reading in the previous period. Excluding autos, the expectation is for a 0.2% rise, which mirrors the previous figure. These forecasts suggest that consumer spending remains steady, buoyed by strong wage growth and favorable employment conditions. However, there are concerns stemming from the University of Michigan Consumer Sentiment Index, which hints at potential weakness in consumer spending going forward. This indicator will be closely watched for further insights into consumer sentiment and its impact on the broader economy.

Yesterday the USD was retreating after the bullish move in the second part of last week, and we leaned on USD shorts, while going long on risk assets such as stock markets. We opened 13 trading signals, with only two ending up in loss, while the rest of the forex signals hit the Take Profit target.

Gold Remains Subdued by MAs

On Wednesday, gold experienced a notable rally, surpassing the $2,340 mark, but it encountered resistance at the 100-day Simple Moving Average (SMA), resulting in a pullback. From a technical perspective, indicators suggest the potential for further declines, with initial support expected around the 200 SMA near $2,290. Additionally, the monthly low at $2,286.70 represents a critical support level to monitor in the near term. Despite recent setbacks, geopolitical tensions and uncertainties continue to underpin gold prices. Factors such as political instability in Europe and unrest in the Middle East have contributed to a more optimistic sentiment towards gold, particularly evident in Friday’s rebound.Chart XAUUSD, H4, 2024.06.16 22:55 UTC, MetaQuotes Ltd., MetaTrader 5, Demo

XAU/USD – H4 chart

Keeping Long in USD/JPY

USD/JPY fell significantly earlier this month, but it maintained strong support at the 50-day Simple Moving Average (SMA), a crucial level where buyers typically join the market. This SMA has been critical in maintaining the bullish trend, as the price has lately recovered twice from this level. According to the BOJ’s statement and press conference, USD/JPY buyers have nothing to worry about until we hit 160, at which point the Bank of Japan may be tempted to intervene again.Chart USDJPY, D1, 2024.06.18 00:18 UTC, MetaQuotes Ltd., MetaTrader 5, Demo

USD/JPY – Daily Chart

Cryptocurrency Update

Closing the Bitcoin Sell Signal

The Australian Securities Exchange approved the first spot Bitcoin ETF listing, but BTC remained at its lows for the week. The Bitcoin price fell by more than $5,000, from around $70,000 to roughly $65,000. This reduction corresponded with whale activity and large institutional withdrawals. During the decline, technical indicators such as the 20-day Simple Moving Average (SMA), which is shown in grey, were violated and we closed our sell BTC signal for a $6,000 profit. However, the 100-day SMA remains a key support level for BTC, indicating resilience in the face of selling pressure, so we’re looking to buy now.

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

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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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