Forex Signals Brief for August 15: More China Covid Shutdowns and Rate Hikes
Yesterday’s market wrap
Last week, markets were preoccupied with US inflation reports, with CPI (consumer price index) and PPI (producer price index) reports for July due in middle of the week. CPI figures showed a slowdown in consumer prices, while the PPI report showed a pullback last month, suggesting that consumer inflation is also likely to ease in the coming months.
The USD declined as the likelihood of a 75 basis point rate hike by the FED in September also declined. Risk assets rose as sentiment improved, although on Friday the risk trade eventually faded. The UK’s GDP report showed a contraction in June, while leading to a contraction in the second quarter, reinforcing the scenario of a global recession, especially with the new lockdowns in China.
The data agenda today
Speaking of China, the communist government has brought back lockdowns in parts of the country, while the banking sector is melting, the public unable to withdraw deposits and public protests. This will further weigh on global economic sentiment.
The Canadian CPI inflation report is due out Tuesday this week, while the Reserve Bank of New Zealand is expected to offer another 50 basis point rate hike on Wednesday. Core retail sales are also the order of the day towards the end of the week, which will show consumer shape.
Last week, markets were uncertain in the first half as traders awaited US inflation reports. Volatility picked up since Wednesday as the inflation numbers started to come out and we were having some difficulty, although we picked up play and closed several winning signals towards the end of the week, with particular success with the crude oil signals and cryptocurrency signals.
WTI Oil – Sell Signals
Crude Oil continues to remain bearish since reversing in mid-June, despite last week’s bull run, which already ended on Friday and WTI began reversing lower. We continue to hold a bearish bias, opening numerous sell signals for oil, which closed in profit, even during the uptrend as we saw last week.
US Crude Oil – Daily Chart
EUR/USD – Bearish bias
EUR/USD has been bearish since the beginning of the year, as the FED started raising interest rates, while the ECB remained on hold until July. We have kept a bearish bias and will continue to do so, especially as the upside retracement ended last week.
EUR/USD – Daily Chart
Cryptocurrencies remained bullish over the past week as they continued to push higher highs. Ethereum surged above $2,000 while Bitcoin surged above $25,000. In recent days we have seen a small pullback, but it seems small and we are about to buy cryptocurrencies again,
Box Bitcoin Buyers push above the 100 daily SMA?
Bitcoin turned bullish again last week, resuming the uptrend after the previous week’s pullback and the support provided by the 20 SMA (grey). We opened a BTC buy signal which closed in profit when the price broke above $25,000, although the 100 SMA (green) acted as resistance on the daily chart.
BTC/USD – Daily Chart
where should we buy ETHERUM?
Ethereum remains one of the most bullish cryptocurrencies, despite the occasional pullback on the downside. Ethereum bulls pushed the price above $2,000 last week, although we saw some pullback over the weekend. We are following the price action to see where we can buy this digital coin, either at the 50 SMA (yellow) or the 100 SMA (green).
ETH/USD – 240 minute chart