yesterday’s market wrap
The big news yesterday was that credit rating agency Fitch downgraded the US credit rating from AAA to AA+. This development led to market de-risking, which resulted in a fall in equity markets and commodity dollars and increased demand for bonds.
In the forex market, the Japanese yen was bought earlier in the day, with the dollar/yen falling from 142.90 to a low of 142.25. However, the pair recovered as the US dollar rose. While the US dollar was relatively stable against European currencies during European trading, the Australian dollar (AUD) and New Zealand dollar (NZD) were under the most selling pressure due to cautious risk sentiment.
AUD/USD, in particular, fell to a two-month low level at 0.6520 seconds after falling below the 0.6600 level during Asian trading as market sentiment became more cautious. After that, all eyes were on how US traders would react to the US ADP jobs report. July’s ADP jobs report showed even stronger gains, with the US dollar rising further, while oil fell despite a large drop in EIA stocks.
Market Expectations Today
The day started with China’s Caixin Services PMI, which also showed a slowdown in the services sector following last month’s contraction in manufacturing. This will weigh further on risk assets and commodity dollars, which have recently turned quite bearish.
After this, the main event, the BOE, will raise interest rates. Given the ongoing inflationary pressures and favorable wages data, the Bank of England (BOE) is likely to raise bank rates by another 25 basis points (bps) at its meeting this week. The rate hike decision is widely expected. But the key question will be how much more central banks need to do to address inflationary pressures in the economy.
Yesterday, volatility picked up again as traders waited for more economic data to be released, while Fitch’s downgrade of the US rating and the release of the US ADP jobs report helped boost market activity. Yesterday we opened 6 trading signals, 3 of which ended in profit and a long term win signal for gold.
See the section below for update details.
Money Break through 200SMA
Over the past two weeks, gold has repeated a bearish pattern with new highs, suggesting that sellers have been in control during this period. Last week the 200 SMA (purple) turned support on the H4 chart and from there saw a $30 rally from $1,942 to $1,972, but the price reversed and fell, with sellers reaching the 200 SMA yesterday. At that point, we saw a further crash to the previous lows. continued to fall again.
XAU/USD – 240 minute chart
Australian dollar/US dollar towards 0.65
The AUD/USD turned lower after the Reserve Bank of Australia (RBA) decided to keep interest rates on hold at 4.10%, but China’s data showed further weakness. This accelerated the decline of this currency pair and I decided to give a forex sell signal here, but eventually closed profitably as sellers took the lead until the end of the day. . Therefore, we are bearish on this pair and are looking to sell the retrace higher.
Cryptocurrency update
Bitcoin Rebound Above $29,000
BTC/USD – daily chart
We decided to open another Bitcoin buy signal on Monday to play range again and buy BTC/USD just above $30,000.
- Admission fee: $28,600
- Stop Loss: $27,000
- Take Profit: $31,300
100-day SMA retention period ethereum
With buyers still in control, Ethereum made a strong rally, surpassing $2,000 earlier this month. Since the beginning of 2023, there have been quite a few long-term Ethereum buy signals as the trend has been bearish and the lows have been falling. Since then, the pressure has been on a downward trend, but Ethereum still shows more resilience than Bitcoin. So, we decided to open the ETH buy signal on the Monday after the exit, so we are betting that the moving averages will act as support and hold the exit. The 100 SMA (green) seems to hold.
ETH/USD – daily chart
- Entrance fee: $1,860
- Stop Loss: $1,740
- Take Profit: $2,020
