Forex Signals Brief July 24: BOC Expected to Cut Rates Again by 25 bps
Today we have the Services and Manufacturing PMI report from around the world, but the BOC rate decision will highlight the day.
With the exception of the JPY, the USD continued its upward trajectory against all major currencies yesterday as safe havens gained traction amid a general decline in risk appetite. The USDJPY is still trending lower and is set to challenge its key 100-day moving average, as well as its low from last Friday at 155.350. Despite trading up for most of the day, the market closed slightly lower. The S&P, Nasdaq, and Dow all experienced declines of -0.15%, -0.15%, and -0.06%, respectively.
AUD/USD and NZD/USD were the most vulnerable among the major currencies, continuing to face sell-offs due to China’s slowing growth. The USDCAD saw increased trading activity as oil prices continued their downward trend, marking the fourth consecutive day of declines, as traders responded to China’s economic slowdown. Today’s Richmond Fed Manufacturing Index came in lower than expected, at -17 vs. -7. Additionally, existing home sales were also below predictions, with inventories rising alongside prices, setting a new record.
Today’s Market Expectations
Today started with the July Manufacturing and Services reports from Australia, which leaned on the soft side. In July, Australia’s Flash Manufacturing PMI registered at 47.4 points, slightly up from June’s reading of 47.2 points. This indicates a marginal improvement in manufacturing sector activity, though it remains below the neutral 50-point mark, suggesting continued contraction. The Flash Services PMI for July came in at 50.8 points, a decrease from June’s 51.2 points. Despite the drop, the index remains above 50, indicating that the services sector is still expanding, albeit at a slower pace than the previous month.
Yesterday the USD advance continued, while the JPY also pushed higher. Gold and Silver tested the lows again but at the end of the day they ended up higher, suggesting that risk sentiment is off. We opened nine trading signals, remaining mostly long on the USD, and ended the day with 6 winning forex signals and three losing ones.
Gold Starts A bounce After Finding Support at the 20 Daily SMA
Last Wednesday, gold reached a new record high but then reversed direction, experiencing a four-day decline. Yesterday, the price dropped below $2,400, suggesting a potential further decrease below June’s lows of $2,300. However, the 50-day SMA might limit this decline. After its initial spike, gold started to decline gradually by midweek. This pullback intensified on Friday, following a rise in July, with gold prices falling by $50 to a low of $2,394 before closing at $2,400. After a three-day downward trend, XAU/USD opened with a slight positive gap and climbed to an intraday high of $2,411.91. Nevertheless, the 20-daily SMA (gray) rejected the price and yesterday we saw a bounce off this moving average.
XAU/USD – Daily chart
AUD/USD Falls to the Bottom of the Previous Range
After slipping back into its previous range, the pair has relinquished its 200-pip gain from earlier this month. It is now testing the lower boundary of this range, marked by the red 100-day SMA. As Australia heavily depends on exports to China for economic growth, the AUD/USD has been declining for the past two weeks due to traders reacting to China’s slowing growth. Following last week’s re-entry into the range, the AUD/USD’s decline has intensified this week. However, it has reached critical support at its rising 100-day moving average, currently at 0.66. Prices haven’t dropped below this moving average since May 2, with stop losses anticipated if it breaks below. We expected buyers to lean against the moving average.
AUD/USD – Daily Chart
Cryptocurrency Update
Bitcoin Consolidates Around $68,000
Bitcoin tumbled below $60,000 following a sharp decline earlier this month. The entire cryptocurrency market value sank, with Bitcoin plunging to below $53,000. However, buyers quickly returned, pushing the price back above $60,000 and past key moving averages. The rebound paused briefly around $65,000, but the 100 SMA (green) provided support on the daily chart, allowing BTC to continue its upward trajectory, reaching $68,000 over the weekend.
BTC/USD – Daily chart
MAs Turn into Support for Ethereum
Despite the launch of the ETH ETF, Ethereum has experienced lower highs since early March. It reached a peak of $3,830 before declining in June and falling below $3,000 earlier this month. Buyers then stepped in, driving the price up to the 50-day SMA (yellow), which initially acted as resistance. However, the buyers persisted, and now the 50 SMA is offering support.
ETH/USD – Daily chart
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