Forex Signals Brief November 13: USD to Get Another Boost from Jump in US Inflation
Yesterday was quiet in forex apart from GBP pairs, while today the volatility is expected to kick in, after the US CPI inflation report for October. With limited economic data released yesterday, market activity remained subdued, and the USD held onto its recent gains, albeit at a slower pace.
The UK labor market report was the only key release, showing mixed results but leaning slightly dovish. However, this report had some decent impact on the markets or the Bank of England’s outlook, but leaving the broader economic sentiment largely unaffected. The GBP lost 1.5 cents on the report though.
The New York Fed Survey highlights a continued decline in US inflation expectations. The one-year inflation expectation has dropped to 2.9%, down from 3.0%, marking its lowest point in four years. Similarly, the three-year measure has decreased from 2.7% to 2.5%, and the five-year expectation has slipped from 2.9% to 2.8%.
In Canada, building permits saw a significant rebound in October, rising by 11.5% following a -6.3% drop in the previous month. Total permit levels have now reached their second-highest point since the current data series began in January 2017. However, this increase is driven more by government spending rather than a broader economic upswing.
Today’s Market Expectations
The US CPI inflation is the highlight of the week, to be released later in the US session. the latest data shows a monthly US CPI increase of 0.2%, in line with the previous 0.2%, while the annual figure for September is expected to rise to 2.6%, up from 2.4%. Meanwhile, the core CPI on a monthly basis remained steady at 0.3%, and the annual core CPI is anticipated to stay at 3.3%. Fed Chair Jerome Powell recently emphasized that the Fed foresees some inflationary pressure and that short-term low inflation readings are unlikely to impact the long-term strategy. This suggests that the expected 25 basis point rate cut in December will likely proceed, even with slightly stronger inflation numbers. In the markets, Treasury yields are pointing to inflation risks ahead, reflecting investor concerns.
Yesterday the volatility was low, however there was enough price action for us to pull many forex trades. We opened eight trading signals in total, with six of them closing by the end of the day. We remained short on GOLD and long on USD/JPY which proved to be a good trading strategy since the USD kept pushing higher, and ended up with four winning forex signals and two losing ones.
Gold Falls Below $2.600
Gold, which has risen over 50% from its November 2022 low of $1,600, saw accelerated gains through 2024. However, recent weeks have brought a pullback, with prices falling to $2,610 on Monday after hitting highs, and a doji candlestick on the weekly chart hints at a potential bearish reversal. Gold briefly rallied after the recent U.S. election but failed to hold above $2,700, adding to its current downward momentum. Technically, a break below $2,600 could indicate further declines, especially since the price has dropped below its 50-day SMA, a key support level.
XAU/USD – Daily Chart
EUR/USD Breaks Below the 1st Support
For the AUD/USD pair, the exchange rate has dropped around 4 cents since late September, maintaining a downward trend backed by both technical and fundamental factors. After a brief surge on hopes of Chinese stimulus measures, which were quickly discounted, the AUD/USD slipped back to the 0.65 level. This level remains a key support, and the swift return suggests pressure to break below it. Moving averages on the daily chart have turned downwards, and the pair has fallen an additional two cents since last Friday.
AUD/USD – Daily Chart
Cryptocurrency Update
Bitcoin Heading for 100K
Bitcoin has also shown significant volatility this year despite its overall uptrend. After a summer dip that brought it down from over $70,000 to just above $50,000, Bitcoin rebounded, hitting a new high of $74,000 last Wednesday following the U.S. election. The momentum continued over the weekend, pushing Bitcoin past $80,000 and reaching $88,500 yesterday, moving closer to the symbolic $100,000 level.
BTC/USD – Daily chart
Ethereum Pushes Above $3,000
Ethereum, too, has captured investor interest, trading above $2,700 and breaking its 100-day SMA, signaling bullish momentum. After briefly dipping below $2,500, Ethereum rebounded and moved above the 50-day SMA, with weekend gains pushing it past $3,000, and yesterday it climbed further to $3,380, supported by continued market momentum.
ETH/USD – Daily chart
ABOUT THE AUTHOR
See More
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals
Top Broker