Forex Signals Brief for September 12: All Eyes on CPI Inflation This Week

Last Week’s Market Wrap

Last week was about central banks, which kept the pace of interest rate hikes, with the Reserve Bank of Australia (RBA) raising rates by 0.50%, while the Bank of Canada and the European Central Bank (ECB) raised them by 0.75%. Although, the respective currencies didn’t really benefit from the hikes and the markets traded the risk sentiment mostly.

The US ISM services showed a decent level of expansion in August, which helped the sentiment for the USD, sending other assets lower, with crude Oil crashing to low $80s before recovering some of the losses. By the end of the week risk sentiment improved and the USD ended the week on the back foot, which might also be a retreat after the recent bullish momentum.

The Data Agenda This Week

This week the attention is on consumer inflation CPI (consumer price index) numbers and the possibility of a negative headline for the annualized number, while the month-on-month number is expected to show a small decline. The FED has essentially pushed it aside as they seem to have made a decision for this month’s meeting, but a low yearly reading could make for a less-hawkish statement. What market participants are wondering about is the balance between the headline and core in CPI. There’s ample reason to expect a headline slowdown in the near term as Oil prices at the pump decline/stagnate but that’s not so clear with core, which is expected to increase by 0.3% next week. How much is that going to have to slow to halt the FED’s advance is to be seen.

Last week the volatility was not high, so our signals lasted longer than in the previous weeks and we closed it with 22 trading signals in total, with 14 winning signals and eight losing ones, giving us a 64/36 win/loss ratio. Oil was quite volatile once again and we opened several Oil signals. Oil and USD/JPY were our two most traded assets last week, since they remained trendy.

Selling WTI Oil 

Crude Oil continues to remain bearish after the crash lower on Wednesday as Joe Biden prepares for more crude Oil releases from the US inventories. We kept selling Oil during the crash, closing them in profit eventually apart from the last one, as the USD turned weaker on Friday, which sent US WTI more than $4 higher.

US Crude Oil – 60 minute chart

Keeping the Bullish Bias in USD/JPY 

This pair resumed the bullish trend again in August and increased around 15 cents until reaching 145 this week. We continue to remain heavily bullish on this pair, despite the threat of intervention by the Bank of Japan. S0 we opened several forex signals in this pair last week, most of which closed in profit.

USD/JPY – 240 minute chart

Cryptocurrency Update

Last week we saw another bearish move in the crypto market and Bitcoin broke below the support zone around $19,000. But, there was no followthrough and the decline stopped. On Friday we saw a bullish reversal in cryptocurrencies which was led by Bitcoin, which showed that buyers are still alive and the trend might as well be reversing.

Booking Profit in BITCOIN

We decided to open a buy Bitcoin signal last week above the support level at $19,000. Soon after that, a decline followed, but the decline ended around $18.500 and on Friday we saw a strong bullish move, which sent BTC/USD above $21,000, where we decided to close our BTC signal.

BTC/USD – H4 chart

 Ethereum Pushing Above the 200 SMA Again

Ethereum was showing decent buying pressure during most of the summer, but went through another decline last month, after briefly climbing above $2,000. The price fell below the 200 SMA (purple) which has turned into resistance at the top and yesterday we saw a decline after the last rejection. Although we closed the signal in profit before the reversal. The decline stalled already and now Ethereum has turned bullish again, pushing above the 200 SMA.

ETH/USD – 240 minute chart

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