Forex Signals Brief August 22: Home Sales and FOMC Speakers Today

This Week’s Market Wrap

The start of the new week saw relatively subdued trading although there was enough price action which offered us some trading opportunities. The US dollar displayed a slightly mixed performance, sliding slightly lower overall, as equities experienced upward movement for most of the day.

Although despite a slight improvement in the sentiment the market lacked enthusiasm, particularly as traders were somewhat disappointed by China’s decision to abstain from rate cuts earlier in the day. This has prompted analysts to further revise down their growth expectations for China, as confidence in the economic outlook remains unsteady.

Although bond yields continued their upward trajectory, European stock markets appeared unfazed mostly. Initially, US futures showed little change, but they gained 0.5%, contributing to mild gains in risk sentiment. The dollar has experienced a slight decline, with EUR/USD edging up by 0.3% to reach 1.0915, influenced by substantial option expiries. Similarly, USD/CAD has also decreased by 0.3% below 1.3500, but crude Oil eventually turned bearish and lost $1.50, which sent this pair around 80 pips higher.

Additionally, the upward movement in yields continues to support USD/JPY, leading the pair to rise by 0.4% above 146. With mixed tones prevailing in the market, there seems to be an impending shift on the horizon. Often, the bond market tends to wield considerable influence in such scenarios.

Today’s Market Expectations

Today the economic calendar is better than yesterday, having started with the Bank of Japan core CPI inflation which confirmed that consumer inflation remains under control. The BRICS summit is getting underway and the enlargement of the Club of Five is expected to be the main topic of discussion as the BRICS nations gather in the city of Johannesburg, South Africa. Several countries are vying to join the group, with more than a few optimistic contenders. It’s not expected to have much effect on the forex market, although it depends on the headlines and rumours, so we’re watching the price action of commodity dollars.

The Existing Home Sales will be released later which will show the shape of the real estate sector in the US. Home sales have been on a slowing trend, although they’re expected to be little changed this month. The Richmond Manufacturing Index is expected to remain negative, while FOMC Members Bowman and Goolsbee will close the day with speeches lat in the US session.

Yesterday the price action wasn’t too hectic, but we did witness a few up-and-down movements, which shows agitation in markets ahead of the BRICS summit and the Jackson Hole Symposium. We had a good day though, opening four trading signals and closing it with three winning signals while one trade remained open for today.

For more detailed updates, please refer to the section below.

Closing Two Winning GOLD Trades

XAU/USD – 240 minute chart 

• XAU/USD Sell Signal
• Entry Price: $1,895.47
• Stop Loss: $1,909.47
• Take Profit: $1,887.47

Remaining Short on EUR/GBP 

EUR/GBP continues to remain bearish since early this year after buyers failed to push the price to 0.90 and continues to decline as a result of differentials in monetary policy as conveyed by central banks. Currently, the EUR/GBP pair is experiencing some consolidation, although it remains bearish on larger charts due to the strength of the GBP (British Pound). Yesterday we saw a decent retrace higher, but buyers encountered resistance from its 100 moving average (MA) on the H1 chart twice and we decided to go short here.

Cryptocurrency Update

 BITCOIN Continues to Trade in the Range Around $26,000

BTC/USD – Daily chart

We’re looking to open another buy Bitcoin signal on Monday, playing the range again, buying BTC/USD around $26,000

ETHEREUM Breaks the 200 Daily SMA