Manufacturing Slows Around the World, According to Forex Signals for August 1

A Review of Yesterday’s Markets

After rate increases from the European Central Bank and the Federal Reserve and increased volatility, we began the week yesterday anticipating a similar move by two other major central banks. Markets were watching China’s Caixin Services PMI for stimulus action from the Politburo this week after PMI surveys showed a little increase in manufacturing activity but a downturn in non-manufacturing. The Politburo should be more willing to launch the stimulus to assist domestic demand after yesterday’s setback. Since the slowing miss brought them down, that’s terrible news for commodity dollars, but excellent news for the stimulus.

The Eurozone’s core inflation rate has been holding steady at 5.5%, according to the latest inflation report, leaving Euro traders uncertain which way to trade during the European session. The Dallas Fed manufacturing index remained negative at -20.0 points, but there were no other noteworthy reports on the North American economic calendar. The number was still negative (-23.8 points), although it showed signs of recovery from the previous month. Goolsbee, a member of the Federal Open Market Committee, spoke during Fed Chair Powell’s press conference after the Fed decided to raise interest rates by 25 basis points last week.

What the Current Market expectations

China’s Caixin Manufacturing PMI dropped into contraction this morning, further evidence that things are not going well in China and prompting calls for Chinese officials to do more. The Australian dollar fell further on the news, but as we’ve mentioned, when Chinese data is bad, speculation about extra stimulus increases.

That helped to stabilise the AUD, but the RBA’s decision to keep interest rates at 4.10% despite hopes for an increase to 4.35% at their meeting sent the currency plunging 50 pips lower. It is largely believed that the PMI data for European manufacturing will indicate another decline into recession later Wednesday, while the ISM manufacturing data for the United States is expected to show improvement. However, after falling below the 10 million level in June, it is anticipated that the JOLTS job opportunities will decline again in July.

The Latest Forex Signals

With three major central banks having meetings and several hiking interest rates, last week’s volatility led us to open more than 30 trade signals, and it continues this week. While markets were waiting for the huge events to show up yesterday, volatility was low, therefore we only opened two signals, one of which closed in profit and the other in loss. Please see the section below for further updates.

Gold Price Continues to Set New Lows

Gold’s value plummeted last Thursday as the US dollar gained strength on the back of strong economic statistics. A $40 loss caused the price to go below three moving averages on the H4 time frame. The purple 200-period SMA, however, functioned as support and stopped the price from falling any further. On Friday, gold climbed back above $1,960, erasing more than half of its earlier losses.

However, the 50-period simple moving average (SMA) in yellow behaved as a resistance level, preventing the rising trend from continuing. Since yesterday, when my coworker Arslan opened a sell Gold signal near the 50 SMA, gold has been trading within the range between these two moving averages (the 200 SMA and the 50 SMA) on the H4 chart.