Forex Signals Brief October 15: Canada and NZ CPI Inflation Highlight the Day
Today we have the CPI inflation reports from Canada and late in the evening from new Zealand with will highlight the day
Today’s risk sentiment took a hit due to ongoing geopolitical tensions in the Middle East and disappointing data from China. Despite these pressures, stock markets managed to reach new highs. However, holiday closures slowed activity in key markets, with limited engagement in the U.S. and Canada, while Japan’s market led the action in Asia. The Chinese yuan faced downward pressure following a much-anticipated news conference that failed to deliver on expected stimulus measures, which also impacted other risk-sensitive currencies.
The Australian dollar struggled, with the AUD/USD and other commodity dollars down, hovering near the day’s lows. Despite subdued Wall Street trading due to the holiday, U.S. futures recorded slight gains, while European indices also saw a modest rise. The U.S. session began with mixed outcomes for major index futures: while the Dow Jones Industrial Average started the day lower, the S&P 500 hit its 46th record close, showing resilience in the face of broader market uncertainty.
Late in the US session, crude oil prices tumbled lower, with U.S. WTI crude slipping to $72 per barrel. This downturn follows a report in the media, which claims that Israeli Prime Minister Netanyahu does not intend to target Iran’s nuclear or oil facilities in any retaliatory actions, removing some of the risk premium from Oil prices.
Today’s Market Expectations
The UK Labour Market report shows that the unemployment rate is expected to remain at 4.1% through August, the same as in July. Job creation is forecasted at 250,000 new jobs over the three months ending in August, slightly lower than July’s 265,000. Average weekly earnings, including bonuses, are anticipated to slow to 3.8%, down from 4.0% previously, while wage growth excluding bonuses is projected at 4.9%, compared to the prior 5.1%. As for monetary policy, there is an 80% chance of a 25 basis point rate cut in November, with markets pricing in 36 basis points of easing by year-end. BoE Chief Economist Pill has warned about the risks of cutting rates too quickly or too much. Governor Bailey recently indicated a potential shift towards more aggressive rate cuts, which caused a GBP selloff.
In Canada, inflation data reveals that the focus is on core inflation metrics, which are crucial for the Bank of Canada’s strategy. The Trimmed Mean CPI is expected to rise slightly to 2.5% YoY from 2.4%, and the Median CPI is likely to remain stable at 2.3%. Overall, CPI YoY is projected at 1.8%, down from the previous 2.0%. BoC Governor Macklem has suggested that deeper cuts may be on the table if economic growth and inflation weaken further. While weaker Canadian CPI data initially increased expectations for a 50 basis point cut, this outlook was adjusted after stronger U.S. NFP figures, GDP growth, and robust Canadian retail sales data. However, the probability of a 50 bps cut has since resurfaced with recent data releases.
The quarterly figure for New Zealand’s inflation is 0.7%, up from the previous 0.4%, while the year-over-year CPI for Q3 is forecasted to drop to 2.3%, down from 3.3%. Despite core inflation recently landing within the Reserve Bank of New Zealand’s (RBNZ) 1-3% target range, the unemployment rate has reached its highest level since 2021, and high-frequency indicators continue to signal economic weakness. This context led the RBNZ to cut rates by 50 basis points at its latest meeting. Looking ahead, the market expects a total of 152 basis points of rate cuts by the end of 2025, with an additional 50 basis point reduction anticipated at the upcoming November meeting.
Yesterday most markets were slow and the price action was predictable, with the USD and stock markets advancing higher while everything else was retreating. The volatility was low, so we ended the day with 5 closed trading signal, out of 9 trades issued during the day. Four of them were winning forex signals, and just a losing trade.
Gold Trading the Triangle Again
Early last week, gold briefly dipped below a triangular pattern but quickly rebounded, bouncing off the 20-day SMA. This suggests that gold traders remain optimistic and are still aiming for new record highs. However, the triangle chart pattern persists, with the highs declining, indicating that buyers may be waiting for another catalyst to trigger the next bullish rally.
XAU/USD – Daily Chart
The 200 Weekly SMA Keeping GBP/USD Supported at 1.30
In the currency markets, after a sharp reversal above 1.34 in October, the GBP/USD pair dropped by four cents. Yet, for the third consecutive week, the pair has found solid support above the 1.30 mark—a key psychological level. The 200 SMA, which had been resistance on the weekly chart, is now acting as support. Although the GBP/USD gained about eight cents in August and September, there are signs that the trend is shifting from bullish to bearish. A break below the 200 SMA on the weekly chart would confirm this reversal.
GBP/USD – Weekly Chart
Cryptocurrency Update
Bitcoin Rallies Above $65K Again
Meanwhile, Bitcoin has seen a steady decline from approximately $70,000 in April to under $50,000 by August, driven largely by global economic concerns. This downtrend has been reinforced by a series of lower highs and lows. Earlier today, Bitcoin briefly crossed the $60,000 mark following the Fed’s 50 basis point rate cut in September, but it failed to maintain its momentum. Hwever, the start of this week is looking promising as BTC climbs above $65,000 again.
BTC/USD – Daily chart
Ethereum Remains Subdued by MAs
Ethereum has also faced selling pressure since March. Although ETH/USD managed a partial recovery around the 50-day SMA by June, it remains near the $2,200 level. Currently, the 100-week SMA is offering solid support above $2,500, while the 50-week SMA is acting as resistance. As broader economic uncertainties weigh on Ethereum, it appears to remain range-bound, struggling to surpass the 50 SMA.
ETH/USD – Daily chart
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