Manufacturing data highlight of the week

by | Nov 21, 2022 | Forex Analysis

Growth

Hi everyone,

The big question for us Forex traders is, has inflation peaked in the US, and is the Fed ready to pivot…i.e. are they going to continue to raise interest rates aggressively or not.  We, however, can’t let this stop us from trading so let’s take a look at the week ahead to see where we might be able to benefit.

On Wednesday the S&P Global business surveys for November will be released. Essentially a survey of 190 odd credit risk professionals working in financial services firms around the world to see how their portfolio management processes have been evolving to account for environmental, social, and governance factors (ESG). In recent months, the story has been that inflationary forces are retreating, but could this just be a reduction in demand?….

Also on Wednesday we have the minutes of the latest FOMC meeting. Even though this is outdated, markets tend to find a way to react to any FOMC related news. Especially in current conditions. The December 13-14 FOMC release could be the decider on a major USD trend reversal or not.

For New Zealand, the Reserve Bank will wrap up its meeting early on Wednesday. It’s generally believed that the rate will be raised by 50 or 75 basis points. Most likely priced in already, but you never know.  The Chinese economic slowdown could also impact the NZD in a major way and its also worth noting that the NZ unemployment rate is at record lows.

Inflationary news from the Euro zone on Wednesday will be key. Forecasts point to another decline in these results, which would add to the concerns that both economies (Europe and the UK) are already in recession. Both the government and bank of England have already stated that they expect a prolonged recession.

Let’s have a look at some key charts

DXY CHART
Made the lower lows and lower highs I was looking for. Also broke the 110 area I was looking at and bounced off the 200. I’m expecting a pullback to 110.200 now

Energy & Metal Prices;


Gold;
The slight USD pullback has helped gold. Still looking for the break above 1800 to change my trading bias.

Oil;
Formed a double top at the 200. Looks to be going lower now.

Bitcoin;
The collapse of FTX is still playing out.. Looks very bearish now.

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Red flag news:
Slow news week in terms of quantity, but the news that is due is big news. A rate decision from New Zealand on Wednesday, inflation news from Europe and FOMC meeting minutes (GMT +2 time zone below). Remember, the world is still super sensitive to any inflationary news.

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MAJORS

EUR/USD: Short again from 1.040.  If it breaks higher short from 1.05600

USD/CHF: Too messy now on the daily. I’d focus on parity again. On the smaller timeframes, look at 0.976400 for a short.

GBP/USD: A grade short from 1.2150

AUD/USD: Long from 0.6570 (countertrend). Short from 0.6870

NZD/USD: Short from 0.6250. Long from 0.593

USD/CAD:  A grade long from 1.310

USD/JPY: Long from 134.5. Countertrend short from 143.20

CROSSES

EUR/GBP: I’d look to long on a pullback from 0.86500

EUR/NZD: Long from 1.6800. Short form 1.7400 again.

AUD/NZD: Short again from 1.09400. Long from 1.0800

AUD/CAD: Short from 0.8970

GBP/AUD: Short from 1.8100

GBP/NZD: Short from 1.9400

GBP/CAD: Messy now, but would like to see a break above 1.6050 in order to long.

GBP/CHF: Short from 1.1675

As always, remember correlation! -Especially when taking more than one JPY trade!

We are NOT a “tipping service” our aim is to teach you how to trade for yourself.

Watch the video below for more detailed explanations of this week’s analysis and trade plan (click the 4 arrows bottom right to view full-screen):

 

Regards
Thinus

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