Yesterday’s Market Wrap
After the US producer inflation PPI report on Wednesday which came above expectations, traders were preparing for the consumer inflation CPI report which was released yesterday. The report was stronger than expected, with the headline CPI YoY coming at 8.2% against 8.1% expected, down from 8.3% in August, while core CPI increased to 6.5% from 6.4% We saw a decent jump in the USD and a decline in all other assets for about an hour after the report was released.
The initial market reaction was swift and precise as you would expect: The dollar surged and equities crumbled. But then markets suddenly revered and risk sentiment picked up, while the USD dived lower. S0, yesterday had it all but not a proper explanation for the market moves. It was one of those days we were seing in 2008 or 2020 when sudden massive moves would go against the trend. Certainly, traders were covering shorts ahead of the inflation report so that might be a reason.
Today’s Market Expectations
Today the Chinese CPI and PPI reports were released, showing that inflation remains under control there. The most important report today though will be the US retail sales which might get markets going again. The core number is expected to show a 0.1% decline in September after the 0.3% fall in August, which means that higher inflation is eroding the buying power.
Yesterday the volatility picked up again, as the CPI inflation report sent markets down and then higher. Although we didn’t get caught this time and opened five trading signals, four of which forex signals and one Gold signal. All of them closed in profit, so we had another positive day.
Gold has been bearish for about a week, with moving averages acting as resistance at the top and we have had some good Gold signals selling retraces higher during this time. Yesterday we saw a strong reversal higher after the crash post CPI report and my colleague opened a buy Gold signal which closed in profit.
XAU/USD – 60 minute chart
Remaining Short on EUR/USD
EUR/USD turned bearish again as the USD decline came to an end. Yesterday the pressure was to the downside initially after the US inflation report, sending this pair around 120 pips lower. But a stronger reversal followed which pushed the price up to the 200 SMA on the H1 chart, although we managed to open a sell EUR/USD signal during the decline, which closed in profit.
EUR/USD – H1 chart
Cryptocurrencies continue to trade in a range, bouncing up and down without any direction. They are waiting for further development regarding the war on cryptocurrencies and the legal battle between the SEC and Ripple Labs, which will be an industry-defining case.
Buying BITCOIN Above $18,000
Bitcoin was slowly moving lower in recent days falling to $19,000 from above $20,000, although that support zone was broken yesterday as we see a quick fall to $18,000 lows after the US inflation numbers. But the reversal higher was just as quick. We decided to open a buy BTC signal near the lows, so we’re in profit with that trade.
BTC/USD – H4 chart
The 200 SMA Still Holding for XRP/USD
Ripple has been bullish since the middle of last month, surging above $0.50 last week, as the lawsuit against the SEC saw some developments. The price has retreated, so the bullish momentum slowed, but the 200 SMA (purple) held as support on the H4 chart and we saw a bounce off that moving average yesterday, which means that buyers are still active.