Forex Signals Brief September 2: BOC Rate Cut and NFP Week

Last week the attention was on the US PCE inflation report, which is the FED’s preferred inflation measure, however until Friday there were many data releases. US Durable Goods Orders posted a massive jump in July, but the core number showed a -0.2% decline. The prelim GDP report for Q2 beat expectations, coming at 3.0%, with prices also showing some upside pressure, however, the PCE report on Friday leaned on the soft side, however, the USD ended the week higher after retreating during most of August.

Elsewhere, we saw some weak CPI inflation numbers from Germany and Spain during the week, which foretold the story for the Eurozone August CPI inflation which was released on Thursday. Consumer inflation showed a further slowdown, as anticipated. That left the Euro on the back foot for most of the week, even with the ECB already set for more rate cuts this week.

This Week’s Market Expectations

This week starts slow with the US and Canada off for Labour Day today, but in the following days we have two major forex events, such as the Bank of Canada meeting, which is expected to deliver another rate cut, while on Friday we have the US NFP report, which will attract a lot of attention, after the weak report in the previous month.

Upcoming Economic Events for the Week:

• Monday:
  • US and Canada Holiday
  • China Caixin Manufacturing PMI
  • Swiss Manufacturing PMI
• Tuesday:
  • Swiss CPI
  • Swiss Q2 GDP
  • Canada Manufacturing PMI
  • US ISM Manufacturing PMI
• Wednesday:
  • Australia Q2 GDP
  • China Caixin Services PMI
  • Eurozone PPI
  • Bank of Canada (BoC) Policy Decision
  • US Job Openings
  • Fed Beige Book
• Thursday:
  • Japan Average Cash Earnings
  • Swiss Unemployment Rate
  • Eurozone Retail Sales
  • US ADP Employment Report
  • US Jobless Claims
  • Canada Services PMI
  • US ISM Services PMI
• Friday:
  • Canada Labour Market Report
  • US Non-Farm Payrolls (NFP)

last week we had rough start, but made up during the week as the USD buyers returned, while we remained mostly long on the USD. We opened 29 trading signals in total, ending the week with 7 losing signals and 22 winning forex signals at the end of the week.

Gold Returns Down to $2,500

Earlier this week, gold reached a new high of $2,531 but then experienced a sharp decline, dropping to $2,470 following a $60 decrease on Thursday. This dip was driven by positive U.S. economic data, including a recovery in home sales that reversed the previous month’s losses and a robust Services PMI reading above 55 points, indicating strong growth in the services sector. Despite these positive economic indicators, dovish comments from Federal Reserve Chairman Jerome Powell helped gold prices rebound above $2,500. Buyers managed to push the price back up to $2,526, but it has since settled around the $2,500 level. The 50-day Simple Moving Average (SMA) is currently providing support on the daily chart, which could potentially drive prices higher again.

XAU/USD – Daily chart

USD/CHF Bounces After Touching 0.84

The USD/CHF pair saw significant gains in the first four months of 2024, rising approximately 8 cents as the Swiss franc weakened following two consecutive rate cuts by the Swiss National Bank (SNB). However, the pair has been in a downward trend since May, as market sentiment shifted, suggesting that the SNB has limited room for further rate cuts. This downward movement accelerated in July and early August, wiping out all the gains made earlier in the year, with the pair falling to a low of 0.84 last week. The depreciation of the Swiss franc highlights the challenges facing the SNB in balancing the strength of the currency with the stability of the economy, as a stronger franc can have negative impacts on Switzerland’s export-driven economic growth.

USD/CHF – Daily Chart

Cryptocurrency Update

Bitcoin Consolidates Below $60K

BTC/USD – Daily chart

Ethereum Consolidates Below $2,500

Ethereum has been on a downward trajectory since March, characterized by a series of lower highs, suggesting the potential for further declines in August. After a steep drop from $3,830 to below $3,000, Ethereum managed a brief recovery in June, rising above the 50-day SMA. However, persistent selling pressure led to another decline, bringing the price below the 200-day SMA, before bouncing back to around $2,600. Currently, buyers are testing the 20-day SMA, pointing to a likely clash between bulls and bears over the future direction of the market. This tussle around the 20-day SMA is likely to be a crucial factor in determining whether Ethereum can mount a sustained recovery or if the downtrend will continue.

ETH/USD – Daily chart