US Inflation Insights and Anticipated RBNZ Rate Cut: Economic Overview

This week, all eyes are on the US Personal Consumption Expenditures (PCE) inflation report, a key economic indicator that could influence future monetary policy. Last week, the focus was on the Non-Farm Payroll (NFP) numbers, which revealed a significant increase in employment during September. The robust performance of the US labor market was further underscored by positive data from the Job Openings and Labor Turnover Survey (JOLTS) and the ADP employment report, both exceeding expectations.

The Unemployment Rate also saw a slight decline to 4.1%, with the unrounded figure hovering around 4.05%. This data aligns with Federal Reserve Chair Jerome Powell's previous comments, suggesting a reduced likelihood of a 50 basis points rate cut during the upcoming November meeting. Consequently, the US Dollar (USD) emerged as the strongest currency last week, with the EUR/USD pair dropping below 1.10 from a previous high of 1.12.

The economic calendar for the first half of this week appears relatively quiet, but it gains momentum on Wednesday with the Reserve Bank of New Zealand's (RBNZ) policy meeting, where a 50 basis points rate cut is anticipated. Later that day, the Federal Open Market Committee (FOMC) minutes from the last meeting will be released, followed by the highly awaited US Consumer Price Index (CPI) report on Thursday.

Economic Events to Watch:

• Monday: Eurozone Retail Sales report, providing insights into consumer spending trends in the Eurozone, a key indicator of economic health.
• Tuesday: Japan's Average Cash Earnings, a crucial measure of wage growth and inflationary pressures, alongside the Reserve Bank of Australia's (RBA) Meeting Minutes, detailing the latest monetary policy decisions.
• Wednesday: RBNZ Policy Decision, where traders will be keenly observing any changes in interest rates and economic outlook, followed by the FOMC Meeting Minutes.
• Thursday: Japan's Producer Price Index (PPI), an indicator of wholesale inflation, alongside the European Central Bank (ECB) Meeting Minutes and the US CPI report, which is critical for assessing inflation trends and potential Fed actions.
• Friday: UK Gross Domestic Product (GDP) report, Canada’s Labour Market Report, US Producer Price Index (PPI), and the University of Michigan Consumer Sentiment index, all of which provide valuable insights into economic performance and consumer confidence.

Last week, the USD reversed its trend, resulting in a favorable win/loss ratio for traders. We maintained long positions on the USD against other major currencies while adopting a dual strategy with Gold, which continued its consolidation phase throughout the week. In total, we executed 47 trading signals, closing 45 trades, with 36 of those being profitable forex signals.

Gold prices have surged in 2024 amid rising political, geopolitical, and economic uncertainties, driving demand for safe-haven assets. Last Thursday, gold peaked at $2,685 but retreated to $2,624 by Monday. Despite this drop, the 50 Simple Moving Average (SMA) on the H4 chart provided robust support, encouraging traders to resume buying. Geopolitical tensions, including Israeli military actions in Lebanon and Iranian missile strikes, briefly pushed XAU/USD higher, although it did not establish a new peak and fell back during the European session.

The EUR/USD pair experienced notable gains in June and July, climbing from below 1.07 to 1.12, indicating strong buyer interest in the Euro. However, after a pullback in August, the pair struggled to maintain its momentum and turned bearish, falling below 1.10 as it faced resistance.

Ethereum has been on a downward trajectory since March, plummeting from $3,830 to below $3,000 by June. Ongoing selling pressure has brought prices down to $2,200, although a temporary rise above the 50-day average was observed. The 100-week SMA now serves as solid support, keeping ETH/USD above $2,500, while the 50-week SMA acts as a resistance level.