Forex Signals Brief August 30: Loaded for US PCE and EU CPI Inflation

Yesterday the day started with the German Prelim CPI inflation, which was expected to fall flat at 0.0% in August, after the 0.3% jump in July, but it showed a -0.1% decline, indicating that inflation is falling fast in Europe and last month’s jump was a one-off. The Euro resumed the decline, with the idea that today’s CPI inflation from the Eurozone will also be soft.

US and Eurozone inflation data will end the month

In the US session, we had the latest GDP and Unemployment Claims data, which gave he US dollar a notable boost as the Q2 GDP was revised higher to 2.0% while jobless claims came as expected, showing stability. The USD continued to push higher, possibly influenced by repositioning or month-end adjustments. The hotter inflation component in the GDP report suggests that today’s PCE inflation report could come in stronger than anticipated, but this may already be accounted for in the June adjustments, potentially creating a higher base for July to draw down from.

Later in the day, the US dollar began to pull back from the highs but this wasn’t the end of the day’s movement, however, as the dollar saw renewed buying interest later, particularly against commodity currencies, as equity markets softened. By the end of the session, the dollar had closed near its session highs against the AUD, CAD, and NZD, although it was still down on the day.

Today’s Market Expectations

The day started with the Tokyo Core CPI for August, which was expected to remain unchanged at 2.2% YoY. The figures indicated that inflation is rising faster than expected in Japan, with headline CPI jumping to 2.6% from the previous month’s 2.2%. Core inflation measures, excluding fresh food and energy, also show significant increases, suggesting broader price pressures. On the employment front, the unemployment rate ticked up to 2.7% from 2.5%, while the job-to-applicant ratio slightly improved, pointing to a still-tight labor market.

The Eurozone CPI year-over-year is forecasted to decrease by 0.4 percentage points to 2.2% this month, down from 2.6% in July, while the Core CPI year-over-year is expected to dip by 0.1 percentage points to 2.8%, compared to 2.9% previously. This data is unlikely to alter the European Central Bank’s (ECB) current plans, as the ECB is set to cut rates by 25 basis points in September. However, these inflation figures could lead to an increased number of rate cuts later in the year.

In the US, the Personal Consumption Expenditures (PCE) year-over-year is expected to hold steady at 2.5%, matching last month’s figure, while the month-over-month PCE is predicted to rise to 0.2%, up from 0.1% previously. The Core PCE year-over-year is forecasted to be 2.7%, slightly higher than last year’s 2.6%, with the month-over-month reading expected to remain at 0.2%, consistent with the prior month. Forecasters have a clearer view of the PCE data after the release of the CPI and PPI figures, so market expectations are already aligned.

Forex Signals Update

Yesterday we had rough start, as markets jumped around after the US prelim Q2 GDP and Unemployment Claims showed stability in the economy, while prices were revised higher s well. We had two losing trades at the start of the US session, but made up during the day, with three winning forex signals by the US close.

Gold Returns Higher as the 50 SMA Holds Above $2,500

Gold hit a new high of $2,531 earlier this week but then sharply fell to $2,470 following a $60 decline on Thursday. This drop was triggered by positive U.S. economic data, including a rebound in home sales, which reversed the previous month’s decline, and a strong Services PMI reading above 55 points, indicating robust growth in the services sector. Despite these favorable economic indicators, Fed Chairman Jerome Powell’s dovish remarks helped gold climb back above $2,500. Buyers took charge, pushing the price up to $2,526, but gold (XAU) has since retreated to around the $2,500 level. Here, the 50 SMA (yellow) acts as support on the daily chart, potentially driving prices higher again.Chart XAUUSD, H4, 2024.08.29 16:30 UTC, MetaQuotes Ltd., MetaTrader 5, Demo

XAU/USD – Daily chart

AUS/USD Breaks Above 0.68 for the First in 2024

The Australian dollar has shown impressive strength this month, with the AUD/USD pair bouncing back over 4 cents from its early August low below 0.6350 to reach above 0.68 for the first time this year. This represents a significant turnaround, as the AUD/USD has surged from its lowest to highest point of the year in just a few weeks. The pair has quickly recovered, gaining 467 pips in three weeks and breaking through the upper boundary of its previous range near 0.67. However, the stochastic indicator shows that the pair is currently overbought, and the 100-week SMA (red) at 0.6840 poses potential resistance.Chart AUDUSD, W1, 2024.08.29 16:14 UTC, MetaQuotes Ltd., MetaTrader 5, Demo

AUD/USD – Daily Chart

Cryptocurrency Update

Bitcoin Returns to $60K Again

Bitcoin’s price has bounced back from its early-August low, with steady buying pushing it above $62,000, recently approaching the $65,000 mark. However, Bitcoin is currently encountering resistance from the 100-day and 200-day simple moving averages (SMAs), which are key hurdles for further upward movement. This week, Bitcoin reversed after forming an upside-down pin bar, signaling a bearish reversal, and dropped below $59,000. This reversal indicates weakening bullish momentum, with sellers stepping in to capitalize on the recent gains.

BTC/USD – Daily chart

Ethereum Dips below $2,500

Ethereum has been trending downward since March, with a series of lower highs suggesting further declines in August. After a sharp fall from $3,830 to below $3,000, Ethereum briefly recovered above the 50-day SMA in June. However, persistent selling pressure led to another drop, pushing the price below the 200-day SMA before it rebounded to around $2,600. Currently, buyers are testing the 20-day SMA, setting up a potential clash between bulls and bears for control over the market’s direction. This battle around the 20-day SMA will likely decide whether Ethereum can mount a sustained recovery or if the downtrend will continue.

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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