Forex Signals Brief Sept 19: Will We Get A BOE Rate Cut Today?

Yesterday all the attention was on the FOMC policy meeting, with odds balanced between a 25 bps and a 50 bps rate cut. However, there were other releases beforehand, with the headline UK CPI consumer inflation jumping by 3 points which helped get GBP/USD around 1 cent higher even before the FED meeting. In the US, we had the Building Permits and Housing Starts which came above expectations.

In the evening, the FED kicked off its easing cycle with a 50 basis point rate cut, bringing the federal funds rate down to a range of 4.75-5.00%. The central bank signaled further reductions, aiming to lower the rate to 4.4% by 2024, indicating an additional 50 basis point cut over the next two meetings.

Despite stable employment, inflation remains the Fed’s primary focus, guiding its decision to reduce interest rates. Although this move was perceived as a “hawkish cut”—indicating that while the Fed is easing, it’s not signaling an economic downturn—the market responded by initially pushing the USD lower. However, as doubts grew and technical levels in the FX market were not met, the flow of capital reversed course, boosting the USD once again. The Fed’s decision highlights its cautious approach: easing restrictions without signaling a crisis, maintaining focus on inflation control while keeping an eye on employment stability.

Today’s Market Expectations

Early this morning we had the New Zealand’s GDP, which contracted by -0.2% in Q2, however this was a better outcome than the expected -0.4% decline. This follows a modest growth of 0.1% in the previous quarter. Year-on-year, the economy shrank by -0.5%, which was in line with market expectations. This also represents a notable shift from the 0.1% annual growth recorded in the previous quarter. Several key sectors contributed to the economic slowdown, including retail trade and accommodation, agriculture, forestry, and fishing, and wholesale trade. These sectors showed clear signs of deceleration, impacting overall economic activity.

The Australian labor market data is forecasted to show 30,000 jobs added in August, down from 58,200 in July, with the unemployment rate holding steady at 4.2%. Market expectations suggest the Reserve Bank of Australia (RBA) will implement its first interest rate cut in February 2025, but weaker-than-expected data in the coming months could bring this forward to December 2024.

Meanwhile, the Bank of England (BoE) is expected to leave interest rates unchanged at 5.00%. This outlook is supported by a mix of favorable data, including strong PMI readings in expansion territory, gradually declining inflation, and a falling unemployment rate. The market predicts the BoE will reduce rates by 25 basis points in both November and December.

In the U.S., Initial Jobless Claims have remained within the 220,000-230,000 range since 2022, suggesting stable layoffs, while Continuing Claims have been gradually rising—although they’ve shown some improvement recently. This signals that layoffs remain low, but hiring has moderated. This week’s Initial Claims are forecasted at 230,000, with no clear consensus on Continuing Claims, despite the last report showing a rise to 1.850 million.

Yesterday markets wobbled after the US FOMC policy meeting, sending the USD lower initially which triggered some of the targets for our trading signals, then we saw a strong reversal higher. So, it was a difficult day to trade and we had many signals. We opened 11 trading signals, with 6 forex signals closing in profit while five signals ended up in loss.

Gold Touches $2,600 After the FOMC and Falls $50

Gold continues its impressive rally, reaching record highs fueled by expectations of a Federal Reserve rate cut. Last week, gold hit an all-time high of $2,589 and is up another 0.3% today. As the Federal Reserve meeting approaches, gold is expected to maintain its upward momentum, especially as a safe-haven asset, with the U.S. dollar weakening amid anticipated rate cuts. However, the market pulled back slightly yesterday in anticipation of today’s major event.

XAU/USD – Daily chart

AUD/USD Retest the Resistance

Australian dollar (AUD) saw a strong rally in August but struggled to hold above the 0.68 resistance level, leading to sellers taking control. A sharp bearish reversal occurred in early September, pushing the price down to 0.66 lows yesterday. Despite some recent bullish momentum, expectations of a 25 to 50 basis point rate cut by the Fed have balanced market sentiment, encouraging USD buyers to return. The AUD/USD pair is now consolidating around the 20-day SMA on the daily chart.

AUD/USD – Daily Chart

Cryptocurrency Update

Bitcoin Keeps Banging at the 100 SMA

BTC/USD – Daily chart

MAs Hold As Support in Ethereum 

Ethereum has been on a downward trajectory since March. After plunging from $3,830 to under $3,000 in June, it briefly rose above the 50-day moving average, only to face significant selling pressure and fall below $2,200. Despite this, Ethereum found solid support around this level and recently bounced off the 100-week SMA, forming a bullish candlestick pattern. This suggests renewed buying interest and the possibility of a reversal in Ethereum’s bearish trend.

ETH/USD – Weekly chart