Forex Signals Brief December 7: Unemployment Claims After 2 Soft Employment Reports
The economic data yesterday was mostly disappointing, starting with the Q3 GDP numbers from Australia, which showed a 0.2% growth against the 0.5% expected. The negative data continued in the European session, with the German industrial orders and UK construction output posting a decline for November, while the Eurozone retail sales slowed further to just 0.1%. Although the market reaction was mixed, with risk assets such as stocks going up, while risk currencies declined.
Unemployment claims expected to remain little changed
In the US session, we had the ADP employment report, which came at 103K, versus the predicted 130K. That’s the second soft jobs report after the JOLTs job vacancies yesterday showed a bigger-than-expected slowdown more. Although the USD continued to push higher after a small dip, with the report showing a soft landing and no recession.
Later on, the Bank of Canada held its monthly meeting and kept interest rates unchanged at 5.0%, as predicted. However, they maintained their willingness to raise rates further if necessary, although I don’t think the market expects anything else from them. Fresh data show that the Canadian economy is no longer experiencing surplus demand, while indicators show that its monetary policy is effectively slowing spending, which is contributing to the economy’s slowdown. So, the CAD ended up lower yesterday, but that was mostly coming from the USD strength.
Today’s Market Expectations
The Tokyo core CPI inflation numbers were released early tonight, and they were expected to show a slowdown to 2.4% in November from 2.7%. The headline inflation reached 3.3% in October, up from 2.8% in the previous month and exceeding expectations. Analysts at CapEco predict that the November figure will decline to 2.9%, resuming the year’s downward trend.
The weekly release of US Jobless Claims which is expected to be released latrer in the US session is a more immediate indicator of the status of the labor market and it garners importance today after two softer employment reports earlier this week, coming before the NFP release tomorrow as well. Initial Claims remain low, indicating that layoffs have not yet increased significantly, but Continuing Claims are rapidly rising, indicating that people are finding it more difficult to find another job after being laid off. The consensus for Initial Claims is close to last week’s number.
Yesterday there was enough volatility for us to open several forex signals, although most assets traded in a reasonable range, so only three trading signals reached the targets, two of which hit the TP target. The USD continued the price action of previous days, pushing higher, so once again, we remained mostly long on the USD, apart from USD/JPY.
The 20 Daily SMA Continues to Hold, Keeping Gold Above $2,000
Right after markets opened on Monday, Gold surged higher, breaking the previous high at $2,070 and reaching a new record high of around $2,145, bolstered by the escalation of tensions in the Middle East and Powell’s statements on Friday, which traders took as paving the way for a rate cut, driving the US dollar and Treasury yields to fall. However, Gold prices fell to $2,012 on Wednesday, indicating that the market’s aggressive pricing of US Federal Reserve rate cuts may have gone too far. But the 20 SMA continues to hold as support.
XAU/USD – Daily chart
- Gold Sell Signal
- Entry Price: $2,022.64
- Stop Loss: $2,036.64
- Take Profit: $2,014.64
GBP/USD Unable to Keep Gains Above 1.10
GBP/USD resumed the bullish momentum that began in late September last year following the Bank of England’s intervention and pushed to 1.2730s in November. However, buyers failed to break above the 200 SMA on the weekly chart, and the price reversed downward, losing 150 pips since late last week. Yesterday’s construction PMI report posted a decline in the UK for November, which is not helping the GBP as the economy deteriorates further.
GBP/USD – 240 minute chart
Cryptocurrency Update
BITCOIN Takes A Beathe Above $44,000
The crypto market and bitcoin are becoming more popular as risk trades increase and interest rates are expected to fall. The sector appears to have cleaned itself up following the Binance fines and the FTX incident. Bitcoin advanced further last week, reaching $39,577. The establishment of a US ETF, which looks to be a given conclusion, is the major motivation for bitcoin bulls. The only obstacle appears to be the timing, which may occur as early as the first week of January. Buyers returned over the weekend, bringing the price above $44,000. Although yesterday BTC just consolidated and held all the gains.
BTC/USD – 240 minute chart
ETHEREUM Approaching our TP Target
Following some fantastic news for the digital market, Ethereum surged more than $300 and crossed $1,800 thanks to the cryptocurrency company’s positive attitude. It’s astonishing how the $1,700 support zone and the 50 SMA (yellow) have become resistance. ETH/USD crossed $2,000 earlier this month, indicating that buyers had taken control and that our previous Ethereum tip should have paid off. ETH/USD topped $2,200 over the weekend, where it closed the week. The positive momentum continues, as ETH recently broke above $2,300.
Ethereum – 60 minute chart
- ETH Buy Signal
- Entry Price: $1,947.38
- Stop Loss: $1,490
- Take Profit: $2,500
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