The US Dollar is having another tough day at the office today. But, it might all turn upside down as we await the US CPI report to be released shortly. Yesterday the PPI numbers sent the Buck tumbling, so it’s likely that today’s CPI numbers will take us places.
Let’s see where real inflation is going today
CPI After PPI
Yesterday the USD took a beating after the US PPI report was released. The picture was looking pretty bright for the Buck until then; it had reversed from the lows and it was pushing higher against most majors.
But, the PPI (producer price index) report came out negative and everything went downhill for the USD. It started falling fast, losing about 100 pips in the afternoon. The fall has continued today as well. So, the Buck is under heavy selling pressure.
The US CPI (consumer price index) is about to be released shortly though. As we mentioned above, the CPI report is much more important than the PPI report. It shows inflation at real time, while the PPI numbers are just an indicator of where the prices might be heading in the near future.
The headline CPI number is expected to decline from 90.4% to 0.1%. But the number to watch is the core CPI which is expected pick up by a point form 0.1% to 0.2%.
The retail sales report will be released at the same time. They are expected to be mixed bag as well, but overall, positive.
The market is poised for some bad numbers, especially from the CPI report, given the soft PPI report yesterday. So, the risk is to the upside actually. If the numbers come as expected or better then yesterday’s report will be written off and the Buck will catch a break.
Is the Reverse Happening in Cryptocurrecnies?
Yesterday ended up being a really bearish day for cryptocurrencies. The previous day’s candlestick looked pretty bullish for most altcoins. But the Korean lawmakers are planning to ban cryto trading in Korean exchanges and that sent the crypto market tumbling.
Today the picture doesn’t seem that gloomy though. Cryptocurrencies are fighting their way back and the traffic has been only one way.
Ethereum hs climbed back above the 20 SMA on the daily chart. Although, we’re not really concerned about Ethereum since it has been surging lately and we don’t have an open signal there.
We do have a live buy signal in Bitcoin though, so we care about Bitcoin. The picture in daily chart of this altcoin is much better than yesterday. The price has been only moving higher, so the pressure is on the upside today.
But, Bitcoin has to overcome a few obstacles though. The 50 SMA (yellow) is the big line in the sand and the buyers have taken the price above it now. So, one obstacle out of the way, although the daily candle has to close above it, otherwise it will be forming a resistance.
The next obstacle is the 20 SMA (grey) and yesterday’s candlestick. We should move above the 20 SMA and above the opening price of that candlestick in order for the uptrend to resume. But, there’s still time for that. Let’s see first if today closes above the 50 SMA.
Bitcoin is the 50 SMA once again
Trades in Sight
- The uptrend is bullish
- Stochastic is almost oversold
- The 50 SMA is providing support
The retrace looks complete on this timeframe chart
Commodity Dollars have been in demand for quite some time. Although, this morning we have seen them retrace lower and AUD/USD has reached the 50 SMA on the H1 chart. Now it seems as the retrace is over since stochastic is almost oversold and the 50 SM is providing support.
Hang on tight for the US CPI and retail sales reports folks. They will surely shake the markets if the numbers deviate from expectations. So, despite the bullish chart setup in this pair, we are not opening the AUD/USD signal yet. Perhaps after the economic data from the US is released.