Forex Signals Brief Feb 22: Attention on Manufacturing and Services PMI
Yesterday the economic data releases were limited, there was little significant news for traders to react to. During the day we saw some selling pressure on the US dollar and Japanese yen, leading to gains in currency pairs like EUR/USD and USD/JPY. In the US session, we witnessed an unusually weak auction of 20-year Treasury bonds which resulted in a rally in the US dollar ahead of the FOMC minutes.
Late in the evening, the release of Federal Open Market Committee (FOMC) meeting minutes hinted at hawkish sentiment among FOMC members. However, the lack of a clear message from the minutes resulted in a relaxed market sentiment. Initially, the dollar saw a 20-pip jump in response to the FOMC minutes. However, over the next hour, it reversed these gains, which is common after such releases.
Natural gas continued the bullish momentum yesterday, albeit at a slower pace compared to Tuesday’s surge, but despite significant increases in gas and crude Oil prices, the Canadian dollar didn’t see much appreciation. Despite some movements and events, the forex market had a relatively calm and uneventful day.
Today’s Market Expectations
Today we have a number of services and manufacturing PMI reports from Europe and the US.
Eurozone Services and Manufacturing PMI Expectations
- Manufacturing PMI: Expected to improve from 46.6 to 47.1. This suggests a slight increase in manufacturing activity, although the sector may still be contracting.
- Services PMI: Anticipated to increase from 48.4 to 48.7. This indicates a modest improvement in the services sector, although it may still be experiencing contraction.
- Composite PMI: Expected to drop from 47.9 to 48.5. Despite improvements in both manufacturing and services, the composite PMI is forecasted to decline slightly, possibly due to ongoing challenges in the overall economic environment.
UK Services and Manufacturing PMI Expectations
- Manufacturing PMI: Expected to increase from 47.0 to 47.5. While still below the neutral 50.0 mark, this suggests a slower rate of decline in manufacturing activity compared to the previous month.
- Services PMI: Anticipated to remain stable at 54.3. This indicates that the services sector is expected to maintain its growth momentum, potentially contributing positively to overall economic activity.
In the US session, we have the unemployment claims, with the consensus forecast suggesting an increase to 217K initial jobless claims compared to the previous week’s figure of 212K. This metric indicates the number of individuals filing for unemployment benefits for the first time. There is no consensus forecast available for continuing claims at the moment. In the previous week, continuing claims increased to 1,895,000 from 1,865,000. Continuing claims represent the number of individuals who are continuing to receive unemployment benefits.
Yesterday markets remained quiet, awaiting the FED meeting minutes which offered some volatility at the end of the day, but the price action slowed down pretty soon afterwards. We opened four trading signals with three of them reaching the targets, as the USD flipped up and down after the minutes.
Gold Testes the 50 Daily SMA
Gold experienced a significant drop of forty dollars on Tuesday following the release of the US CPI inflation report. However, it has been on an upward trend for over a week and is currently trading at $2,031. Buyers stepped in to defend the 100-day Simple Moving Average (SMA) on the daily chart last week, pushing prices back above the $2,000 mark. Despite market turbulence, gold has shown resilience, indicating a positive outlook for the precious metal. Yesterday, buyers attempted to push the price above the 50 SMA (yellow), but were unsuccessful. This suggests that there may be some resistance at this level, and further price action will be closely watched to determine the next direction for Gold and yesterday the Gold price retreated from the 50 SMA.
XAU/USD – Daily chart
GBP/USD Consolidating Between MAs
Despite the strength of the USD in January, the GBP/USD exchange rate has held up relatively well so far in 2023, supported by the Bank of England’s stance on monetary policy. However, recent statements from other BOE members indicate their recognition of the challenging economic conditions facing the UK. Despite these challenges, GBP/USD remains stable ahead of today’s release of the FOMC minutes. Investors are likely awaiting insights from the minutes to gauge the future direction of US monetary policy and its potential impact on the currency markets, including the GBP/USD exchange rate.
GBP/USD – Daily Chart
Cryptocurrency Update
Bitcoin Continues to Consolidate Around $52,000
The price of Bitcoin is on the rise again and is approaching the $50,000 mark, fueled by growing consumer confidence in the cryptocurrency. Despite a brief dip below $40,000 following the SEC’s approval of an ETF, Bitcoin quickly bounced back and is now near the $50,000 level once more. Notably, some sellers are liquidating their holdings, leading to an increase in Bitcoin outflows. However, buyers remain firmly in control, pushing the price above its previous peak in January. This indicates a very positive outlook for the Bitcoin market, with investors showing strong confidence in its future potential.
BTC/USD – Daily Chart
Ethereum Retreats Below $3,000 Again
Ethereum has experienced a significant upswing over the past two weeks, with the trade volume is increasing, suggesting that the demand is strong. ETH/USD buyers pushed the price above $3,000 on Tuesday, but yesterday we saw a retreat below this level again. However, the price stayed close to this level so buyers still remain in charge.
Ethereum – Daily Chart
- ETH Buy Signal
- Entry Price: $2,290
- Stop Loss: $2,590
- Take Profit: $1,750
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