Forex Signals Brief August 12: Inflation and Retail Sales Ahead
This week the CPI inflation and retail sales report will attract attention, as investors analyze the shape of the global economy
Last week started in the worst way possible with markets crashing lower during the Asian session, with Nikkei diving 12% lower, pulling all risk assets lower, following the soft NFP data on the previous Friday. However, the decline stopped in the US session, with the ISM services showing that this sector came out of contraction in July.
Besides that, on Thursday Unemployment Claims showed a 17K decline from the previous month, falling to 233K, which further calmed markets, improving the risk sentiment, and keeping stock markets bullish until Friday close. Besides that, we also had the RBA meeting, which held interest rates unchanged at 4.35%.
This Week’s Market Expectations
This week the economic calendar is more congested with forex events, such as the RBNZ policy meeting and the UK GDP report for June. However the inflation report and the retail sales data will take all the attention, with many such releases, particularly from the US.
This Week’s Main Economic Events
Tuesday:
- Australia Wage Price Index
- UK Labour Market Report
- Eurozone ZEW
- US Producer Price Index (PPI)
Wednesday:
- Reserve Bank of New Zealand (RBNZ) Policy Decision
- UK Consumer Price Index (CPI)
- US Consumer Price Index (CPI)
Thursday:
- Japan Q2 GDP
- Australia Labour Market Report
- China Industrial Production and Retail Sales
- UK Q2 GDP
- US Retail Sales
- US Jobless Claims
Friday:
- UK Retail Sales
- US Housing Starts and Building Permits
- US University of Michigan Consumer Sentiment Index
Last week all risk assets crashed lower on Monday, but the sentiment improved in financial markets, with stock markets and cryptocurrencies making some gains by the end of the week. We opened 27 trading signals, ending up with 21 winning forex signals and just 6 losing ones, giving us a great Win:Loss ratio.
Gold Climbs Above $2,400 Again As the Pullbacks Ends
On the daily chart, gold found support at the 50 SMA (yellow) early last week, which helped to stop its descent. By Monday morning, the price had dropped to $2,364.34. Gold recovered from that level, exhibiting some bullish activity that took XAU above $2,430 after it had bounced back from below $2,400. Financial market volatility appears to have subsided, which keeps buyers in control and maintains a stable risk mentality.
XAU/USD – Daily chart
EUR/USD Bounces Off the 100 SMA
The USD experienced a sharp rise following the release of the latest weekly unemployment claims report, which showed a decrease. This strengthened the dollar and pushed EUR/USD below 1.09. The pair dropped from 1.0930 to 1.0900, breaking below the 20 SMA (gray) on the H4 chart, which had been acting as support. However, the 100 SMA (green) provided a new support level, and EUR/USD rebounded from this point.
EUR/USD – H4 Chart
Cryptocurrency Update
Bitcoin Finds Resistance at MAs
A few days ago, the cryptocurrency market experienced a significant downturn, with Bitcoin dropping below $50,000. However, the situation appears to be improving. Last week marked a strong recovery, as risk sentiment increased, leading to a substantial rebound. Despite the recent volatility, the 200 SMA (purple) on the daily chart provided resistance, and Bitcoin is hesitating below this moving average now.
BTC/USD – Daily chart
The 200 SMA Holds As Support for Ethereum
Ethereum has been showing a pattern of lower highs since early March, pointing to a potential decline that materialized in August. After peaking at $3,830, Ethereum’s price dropped below $3,000 in June. Buyers re-entered the market, pushing the price above the 50-day SMA, which had been acting as resistance. However, with the recent increase in selling pressure, Ethereum has experienced another bearish reversal, falling below the 200 SMA and continuing the downward trend. Yesterday, the price dipped to $2,000 but has since bounced back to $2,400.
ETH/USD – Daily chart
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