Being a trader is not an easy job because you need to learn all the strategies necessary to help you make the right decisions on every trading day. One of these is knowing how to predict market turning points. Although the market can shift quickly, predictions will give you a better chance of getting good results for your trade as opposed to going in blind.

A moving average is the superimposed line over a stock’s price action that you see on a line chart. It represents the total closing prices of a security in a specific number of periods divided by the total number of periods. When you’re in trending markets, moving averages can be used as an area of value. 

There are two types of moving averages: Simple Moving Average (SMA) and Exponential Moving Average (EMA). 

Here’s what you need to know about the moving average and how a trader can use it for predicting market turning points:

What is a trend? 

If you want to use moving averages successfully, you need to understand trends first. A trend is essentially the direction in which a price is going. It could be an uptrend, downtrend, or sideways trend, but remember that these prices rarely continue in a straight line due to constant market shifts. This is why you need the moving average to help determine the exact direction where a trend is going.

How do you calculate a moving average?

To calculate a moving average, you need to define a specified period, the most popular of which is the 50-day moving average. Here, you’ll need to add the closing prices for the last 50 days and then divide it by the number of periods, which is 50. If you want to use the same method over the next few trading days, replace the oldest number with the most recent closing price and follow the same calculations.

You can also use the same calculation for weekly prices, monthly prices, intraday prices, and opening prices. This will depend on what you think will guide you in predicting market shifts, so you’ll also know when to buy, hold off, or sell.

How do you use a moving average as entry or exit?

A moving average is a powerful tool for predicting market turning points, which will help you plan your entry and exit strategy wisely. One of the easiest methods traders use is crossing two or more moving averages with a short- and long-term calculation. For instance, if a short-term moving average crosses below or above a long-term moving average, that could be a signal that a trend is gaining strength or if it’s about to reverse.

In most cases, a short position is determined when a short-term average crosses below the long-term average, while a long position is determined when the short-term average crosses above the long-term average.

Finally, there’s support and resistance, which you probably know by now as the downward or upward direction of a trend. How does this relate to the moving average? When you calculate a moving average and plot it on a chart, it could be an early determining factor of a support or resistance level. This will help you decide if you should buy, sell, or sit it out until the market is more favourable to your goals. 

Moving averages can help you make proper trading decisions if you know how to use them right. 

So, learn how to maximize this strategy and other methods for trading with the help of experts, like VT Markets, in a community where you can get useful trading insights.

U.S. equities retreated throughout yesterday’s trading. The Dow Jones Industrial Average lost 0.14% to close at 30273.87. The S&P 500 lost 0.2% to close at 3783.28. The Nasdaq composite slipped 0.25% to close at 11148.64. 

U.S. ADP nonfarm employment change printed 208K, beating estimates of 185K. The ISM non-manufacturing PMI came in at 56.7, lower than market estimates of 56.9. OPEC+ has also announced that it plans to cut oil production by 2 million barrels per day to shore up prices. The weaker-than-expected economic data sparked a sharp drop among equities, but it also limited stock losses as market participants bank on the Fed to slow the pace of tightening.

However, oil production reduced by OPEC+ could make reining in inflation a further challenge.

U.S. 10-year treasury yield climbed back above 3.7%– yields were last seen trading at 3.751%.

Federal Reserve bank of Atlanta president Raphael Bostic said on Wednesday he favoured raising interest rates to 4.5% by the end of the year, implying 125 basis points of tightening. Market participants betting on a dovish pivot from the Fed could be disappointed as current interest rates are rather not considered restrictive, yet, by the Fed.

On the economic docket, the ECB is set to announce its monetary policy meeting minutes during today’s European trading session. The U.S. will release initial jobless claims figures during today’s American trading session.

Main Pairs Movement

The Dollar index surged 1.39% throughout yesterday’s trading. The U.S. Greenback gained traction as economic data came in better than expected. ADP nonfarm employment change showed an upside shock to 208K—indicating a robust private sector; meanwhile, the non-manufacturing PMI printed 56.7, lower than the market consensus of 56.9. Both economic data supported the Dollar.

EURUSD lost 1.05% throughout yesterday’s trading as the Dollar surged. The shared currency fared worse against the Dollar as economic data from the U.S. shows a healthier economy than that of the E.U.

Cable lost 1.28% throughout yesterday’s trading. British PMI came in at 49.1, lower than the market consensus of 49.6.

The Dollar denominated Gold lost 0.58% throughout yesterday’s trading. The precious metal snapped a 6-day winning streak as market mood soured. 

Technical Analysis

EURUSD (4-Hour Chart)

The EUR/USD pair tumbled on Wednesday, coming under renewed selling pressure and dropped to a daily low below the 0.9850 mark as speculations of a Fed pivot towards a dovish stance faded. The pair is now trading at 0.9873, posting a 1.13% loss daily. EUR/USD stays in the negative territory amid renewed US dollar strength, as the upbeat US economic data revealed during the day has provided support to the greenback and dragged the EUR/USD pair down. The data published by Automatic Data Processing (ADP) showed on Wednesday that private sector employment in the US rose by 208K in September, which came in better than the market expectation of 200K and showed that the US economy stayed resilient amidst an aggressive tightening cycle by the Fed. For the Euro, the shared currency remained under pressure amid discouraging EU data, as the Services PMIs for the EU and the German both dipped into contraction territory.

For the technical aspect, the RSI indicator is 52 as of writing, suggesting the pair’s bearish outlook in the near term as the RSI retreated sharply from an overbought level. As for the Bollinger Bands, the price witnessed selling pressure and dropped to the moving average, therefore the downside traction should persist. In conclusion, we think the market will be bearish as the pair is heading to test the 0.9816 support. The falling RSI also reflects bear signals.

Resistance:  0.9986, 1.0035, 1.0155

Support: 0.9816, 0.9765, 0.9664

GBPUSD (4-Hour Chart)

The GBPUSD has lost its traction and declined to the level below 1.1300 as of writing after a dramatic rebound since last Tuesday. The souring market mood helps the dollar regather its strength and weighs on the pair ahead of key macroeconomic data releases from the US. The selling pressure surrounding the dollar and the UK government’s decision to step back on massive tax cuts fueled the cable’s rally earlier this week. However, the escalating geopolitical tensions drove investors to seek refuge early Wednesday and the US dollar index managed to earn a portion of Tuesday’s losses. Russia’s ambassador to the US said that the danger of a direct clash between Russia and the west had escalated after the White House’s decision to provide additional military aid to Ukraine. Looking to the future, investors need to keep eye on the ADP Employment Change data, which is forecast to rebound to 200K in September from 132K in August. Fed policymakers are willing to stay on the aggressive tightening path until they see convincing signs of the labour conditions loosening.

From the technical perspective, the RSI indicator figures 50 at the time of writing, indicating a sign of the pairs would wander in a range from 1.1200  to 1.1400.  As for the Bollinger Bands, the price suffered heavy selling pressure around 200-period SMA on the four-hour chart and dropped to the middle area, we think the bearish momentum will extend if breaks through the 100-period SMA, 1.1200 level.

Resistance: 1.1400, 1.1720

Support: 1.1090, 1.1200

XAUUSD (4-Hour Chart)

The XAUUSD plunged on Wednesday, falling to $1707 marks as of writing following a six consecutive day growth. At the moment of writing, gold has tumbled with 1.08% losses for the day, as the US dollar is seeing a sweeping demand amid a risk-off market profile. Hopes for aggressive Fed rate are back on the table after the hawkish RBNZ 50 bps rate increase, fuelling a fresh upswing in the US Treasury yields across the curve, which weighed on the non-yielding yellow metal. Apart from that, escalating geopolitical tensions between Russia and the West are doing little to offer any respite to XAU bulls, as risk-off flows and the dollar demand dominate across the financial market. Investors now await the top-tier US economic releases and Fedspeak for fresh hints on the next Fed rate policy decision.

From the technical perspective, the RSI indicator is below 70 figures as of writing, implying bullish momentum turned weak to a consolidated phase. The bearish 50-Daily Moving Average (DMA) at $1,724 has tempered the gold price rally. A sustained break above the 50 DMA is needed to challenge the September high at $1,735, above which the $1,750 psychological level will come into play. On the other side, the previous critical resistance now supported at $1700 could offer reprieve to buyers, below which the last day’s low of $1,695 could be revisited.

Resistance: 1725, 1735, 1750

Support: 1661, 1694, 1700

Economic Data

Sydney, Australia, October 5, 2022 – VT Markets, an international multi-asset broker, announced today that they have won 4 awards from World Business Stars Magazine. 

VT Markets won in 4 categories namely Best Growing Broker Asia 2022, Best Forex Education Platform Asia 2022, Best Forex Customer Service Europe 2022, and Best Forex Mobile App Global 2022 – VT Markets Mobile App. 

The UK-based financial and business publication, World Business Stars Magazine, aims to give recognition to and honour the leaders in the banking, finance, insurance, leadership, technology, telecommunication, transportation, and healthcare industries across the globe.

“We have always been committed to providing the best customer service, education and support to our clients. This year’s awards are a reflection of our massive efforts to stay on top of our game while providing excellent products and services to traders across different continents,” said Christopher Nelson-Smith, Director of VT Markets.

“Over the past few months, we have noticed a huge spike in downloads and daily active users on the VT Markets App. Our clients can trade multiple asset classes with ultra-low spreads, and access timely market news on our mobile app. Our team continues to work relentlessly to improve the user experience and empower our traders with easier access to global markets anywhere, anytime,” added Nelson-Smith.

As a globally recognised broker and a multi-awarded company, every award and recognition makes VT Markets more committed to its goal of providing a better service to its clientele. 

For more information, please visit https://www.vtmarkets.com/.

About the company:

VT Markets is a regulated multi-asset broker with a presence in over 160 countries. The broker has won multiple international accolades including Best Customer Service and Best Affiliate Program. They aim to make trading an easy, accessible, and seamless experience for everyone.

Website: https://www.vtmarkets.com/

The U.S. stocks market rose for a second straight session on Tuesday as investors hoped that the Federal Reserve may ease its aggressive tightening stance in response to employment data. The S&P 500 climbed 112 points (+2.90%) to 3,790, while the Nasdaq 100 surged 352 points (+2.93%) to 11,582 and the Dow Jones Industrial Average surged 825 points (+2.62%) to 30,316.

In August, the U.S. Department of Labor’s Job Openings and Labor Turnover Survey (JOLTS) reported 10,053 million job openings, a 14-month low and significantly below the projected 11,1 million. In August, factory orders remained unchanged from the previous month, despite a projected 0.3% decline. The yield on the 10-year Treasury bond decreased by 0.4 basis points to 3.635%.

Twitter (TWTR), the social networking platform, surged 22.24% to $52 as Elon Musk plans to proceed with his acquisition of Twitter for the original proposed share price of $54.20. Meanwhile, Tesla (TSLA), the electric-vehicle maker, rose 2.9% to $249.44.

Main Pairs Movement

The Dollar Index dropped 1.27 per cent during yesterday’s session. Tuesday saw the dollar decline versus most major currencies as the yield on the benchmark 10-year U.S. Treasury declined.

During yesterday’s trading, the EURUSD appreciated 1.67 per cent and closed at a new weekly high. As the Euro continues to capitalise on the weaker Dollar, parity is nearly attained.

Cable increased 1.33 per cent during yesterday’s session. The British Pound has extended its winning streak to five days.

XAUUSD finished higher at approximately $1724 per ounce as the yield on the benchmark 10-year U.S. Treasury note decreased and weakened the Dollar.

Technical Analysis

EURUSD (4-Hour Chart)

The EUR/USD pair advanced on Tuesday, gathering recovery momentum and refreshing its daily high near the parity level. EUR/USD stays in the positive territory amid a weaker US dollar across the board, as the recent pullback in the US Treasury bond yields from a multi-year peak has weighed on the safe-haven greenback for the second day of the week.

For the technical aspect, the Stochastic indicator is at an overbought level as of writing, suggesting that slower bulls are potentially in movement as the indicator is starting to bend lower. As for the Bollinger Bands, the price rebounded towards the upper band from the moving average, therefore the upside traction should persist. In conclusion, we think the market will be bullish as the pair is testing the parity level of 1.000 as its resistance level.

Resistance:  1.0000, 1.0015, 1.0040

Support: 0.9955, 0.9925, 0.9880

GBPUSD (4-Hour Chart)

The GBP/USD pair surged on Tuesday, preserving its upside momentum and extending its daily rally towards a fresh 10-day high above 1.14 in the second half of the day amid the UK government’s U-turn on the fiscal plan. At the time of writing, the cable stays in positive territory with a 1.02% gain for the day. For the British pound, reports suggested that British Prime Minister Liz Truss and Finance Minister Kwasi Kwarteng would reverse a cut to the 45% rate of income tax for the highest earners, which provided a strong boost to the British pound. UK Finance Minister also confirmed later that they will not go ahead with that fiscal plan.

For the technical aspect, the Stochastic indicator is at the overbought level as of writing, suggesting that slower bulls are potentially in movement as the indicator is starting to bend lower. As for the Bollinger Bands, the price rebounded towards the upper band from the moving average, therefore the upside traction should persist. In conclusion, we think the market will be bullish as the pair is heading to test the 1.1475 resistance. A steeper rebound could be expected if the ongoing rally extends above the aforementioned resistance.

Resistance: 1.1475, 1.1535

Support: 1.1410, 1.1350, 1.1290

XAUUSD (4-Hour Chart)

As the US dollar came under bearish pressure amid the retreating US bond yields in early the week, the pair XAU/USD regained upside momentum and extended its rally to fresh multi-week highs above the $1,729 level during the US trading session. XAU/USD is trading at $1,720 at the time of writing, rising 1.60% daily. The sharp decline witnessed in the US Treasury bond yields is acting as a tailwind for the precious metal, as the US Dollar Index is down 1,27% on the day. Meanwhile, the probability of one more 75 basis points Fed rate hike in November has declined toward 50% while investors now waiting for the key US labour market report, which will play a key role in influencing Fed rate hike expectations and provide a fresh directional impetus to gold.

For the technical aspect, Stochastic inside the overbought level with a potential of bending lower, suggesting the pair’s bullish outlook in the near term will continue with a short-term lower movement. For the Bollinger Bands, the price witnessed fresh buying and moved out of the upper band and then back in, therefore a strong continuation of the upside trend could be expected to be slower. In conclusion, we think the market will be bullish as the pair is testing the 1730 resistance. A sustained strength above that level might favour the bull and open the door for additional gains.

Resistance: 1730, 1740, 1750

Support: 1705, 1690

Economic Data

Dear Client,

Corresponding to the high volatility in the US Shares market recently, VT Markets will modify the trading setting of US Shares on 10th October 2022:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

Friendly reminders:
1. All specifications of US Shares stay the same except leverage.

If you’d like more information, please don’t hesitate to contact [email protected].

U.S. stocks rallied on the first trading day of the month. The Dow Jones Industrial Average rose 765.38 points to close at 29,490.89. The S&P 500 gained 2.6% to close at 3678.43. The Nasdaq Composite rose 2.3% to close at 10,815.43. The benchmark U.S. 10-year treasury yield fell below 3.7% and was last seen trading at 3.67%. The receding treasury yield allowed a rare day of gains for equities; furthermore, after a month of losses, equities entered a revival rally over the 3^rd. Among the S&P 500 index, the energy sector gained the most as utility stocks benefit from the falling bond yield.

Shares of Credit Suisse took a plunge of as much as 10% on Monday as reports have surfaced that the bank has tremendous exposure to credit default swaps that were previously undisclosed. Internal memos from Credit Suisse management have surfaced that the bank is looking to raise capital in order to cover CDS exposure. Similar to the 2008 credit crisis, Credit Suisse now faces a challenge to raise funds under tight money market conditions; however, other banks have reiterated their credit health and pointed out that Credit Suisse stands alone in this turmoil. Talks of asset sales and potential divestitures have been brought to the table.

Main Pairs Movement

The Dollar Index fell 0.46% over the course of yesterday’s trading. The Greenback fell amid falling bond yields; furthermore, the rallying equity market has attracted cash flow from market participants.

EURUSD climbed 0.25% over the course of yesterday’s trading and closed at a fresh weekly high. Parity is now fully in play as the Euro continues to take advantage of the weaker Dollar.

Cable rose 1.48% over the course of yesterday’s trading. The British Pound has extended its four-day winning streak as the downbeat U.S. PMI data dragged the Dollar lower.

XAUUSD closed at around the $1,700 per ounce price level as the Dollar denominated asset attracted bidding while bond yields retreated. The lower-than-expected PMI release from the U.S. has decreased market bets on a super-sized interest rate hike by the Fed.

Technical Analysis

EURUSD (4-Hour Chart)

The EUR/USD pair advanced on Monday, gathering recovery momentum and refreshing its daily high above the 0.980 mark after the release of the disappointing ISM Manufacturing PMI from the US. The pair is now trading at 0.9829, posting a 0.28% gain on a daily basis. EUR/USD stays in the positive territory amid a weaker US dollar across the board, as the recent pullback in the US Treasury bond yields from a multi-year peak has weighed on the safe-haven greenback on the first day of a new week. The US ISM Manufacturing PMI declines to 50.9 in September, which was weaker than the market expectation and pointed to a loss of momentum in the manufacturing sector’s growth. For the Euro, the German Manufacturing PMI came at 47.8 in September, which came lower than expected.

For the technical aspect, the RSI indicator is 59 as of writing, suggesting that the bulls are in control of the pair as the RSI climbed sharply towards 60. As for the Bollinger Bands, the price rebounded towards the upper band from the moving average, therefore the upside traction should persist. In conclusion, we think the market will be bullish as the pair is testing the 0.9836 resistance line. A break above that level could open the road for near-term gains.

Resistance:  0.9836, 0.9880, 0.9969

Support: 0.9755, 0.9664, 0.9551

GBPUSD (4-Hour Chart)

The GBP/USD pair surged on Monday, preserving its upside momentum and extending its daily rally towards a fresh 10-day high above 1.1270 in the second half of the day amid the UK government’s U-turn on the fiscal plan. At the time of writing, the cable stays in positive territory with a 1.02% gain for the day. The downbeat US ISM Manufacturing PMI exerted bearish pressure on the US dollar and provide some support to the GBP/USD pair. For the British pound, reports suggested that British Prime Minister Liz Truss and Finance Minister Kwasi Kwarteng would reverse a cut to the 45% rate of income tax for the highest earners, which provided a strong boost to the British pound. UK Finance Minister also confirmed later that they will not go ahead with that fiscal plan.

For the technical aspect, the RSI indicator is 47 as of writing, suggesting that the pair is preserving bullish strength as the RSI keeps moving north. As for the Bollinger Bands, the price preserved its upside traction and climbed to the moving average, therefore a continuation of the bullish momentum can be expected. In conclusion, we think the market will be bullish as the pair is heading to test the 1.1333 resistance. A steeper rebound could be expected if the ongoing rally extends above the aforementioned resistance.

Resistance: 1.1333, 1.1432, 1.1566

Support: 1.1086, 1.0797, 1.0392

XAUUSD (4-Hour Chart)

As the US dollar came under bearish pressure amid the retreating US bond yields on Monday, the pair XAU/USD regained upside momentum and extended its rally to fresh multi-week highs above the $1,690 level during US trading session. XAU/USD is trading at $1,689.39 at the time of writing, rising 1.72% on a daily basis. The sharp decline witnessed in the US Treasury bond yields is acting as a tailwind for the precious metal, as the US Dollar Index is down 0.25% on the day. Meanwhile, the probability of one more 75 basis points Fed rate hike in November has declined toward 50% after the release of the disappointing ISM Manufacturing PMI data. Investors now waiting for the key US labour market report, which will play a key role in influencing Fed rate hike expectations and provide a fresh directional impetus to gold.

For the technical aspect, the RSI indicator is 69 as of writing, suggesting the pair’s bullish outlook in the near term as the RSI indicator has reached near 70. For the Bollinger Bands, the price witnessed fresh buying and moved out of the upper band, therefore a strong continuation of the upside trend could be expected. In conclusion, we think the market will be bullish as the pair is testing the $1,681 resistance. A sustained strength above that level might favour the bull and open the door for additional gains.

Resistance: 1681, 1705, 1725

Support: 1660, 1644, 1620

Economic Data

U.S. equities have continued to edge lower on the last trading day of the week. The benchmark U.S. 10-year treasury yield recovered above 3.8% as short-term interest rate expectations continue to rise. The Dow Jones Industrial Average lost 1.71%, the S&P 500 slid 1.51%, and the Nasdaq composite lost 1.51%. U.S. equities have suffered their worst monthly performance since March of 2020 after the initial impact of Covid-19; however, the market is set to head lower as the Fed gears up for further interest rate hikes before the end of the year. U.S. PCE price index came in at 0.6%, compared to market expectations of 0.1%, signals a continued upward trend in personal consumption goods.

The cryptocurrency market has been ravaged by the series of interest rate hikes by the Fed and the resulting surge of the Dollar. Bitcoin briefly edged past the $20,000 price level on Friday, but remarks from Federal Reserve vice chair Lael Brainard triggered another drop amid another hawkish signal.

WTI has edged below $80 a barrel by Friday’s close. The Dollar denominated energy commodity has struggled to attract demand as the global economic outlook continues to worsen. Brent crude is last seen trading at around $85 a barrel.

Main Pairs Movement

The Dollar index posted weekly losses for the first time since the first week of September. The downward trending U.S. Greenback has allowed breathing room for most foreign pairs against the Dollar. EURUSD rose 1.17 % over toverweek, GBPUSD rose 2.81% over toverweek, and Gold rose 1.04% over toverweek. However, with at least two more interest rate hikes planned before the end of the year, the Federal Reserve’s hawkish tone is not to be challenged and so is the strength of the Dollar.

USDJPY witnessed a 0.99% gain over the previous week, despite a broadly weaker Dollar. The Japanese Yen has continued to devalue against the Dollar, as there seems to be no immediate plan for the Japanese central bank to intervene in its exchange rate. However, with Japan opening its borders in October, tourism and higher passenger pass-through rates are expected to stimulate organic growth in Japan.

Technical Analysis

EURUSD (4-Hour Chart)

EURUSD lost 0.15% over the last trading day of the week. Despite a broadly weaker Dollar on the 30th, the Euro still fell against the Greenback as market participants continued to sell the Euro. European region CPI came in at 10%, which is much higher than the market consensus of 9.1%. The higher CPI in the EU confirms fears over the ECB’s ability to rein in inflation. However, German unemployment change did come in market estimates at 14K. On the economic docket, the ECB is set to announce its interest rate decision during the European trading session on the 6^th.

On the technical side, EURUSD has continued to consolidate around our previously estimated support level of 0.98. Despite a 0.7% loss throughout the week’s trading, EURUSD has continued to head upwards towards parity. RSI for the pair sits at 48.3, as of writing. On the four-hour chart, EURUSD currently trades above its 50-day SMA but below its 100 and 200-day SMA.

Resistance:  1.0011, 1.0055

Support: 0.98, 0.96

GBPUSD (4-Hour Chart)

Cable extended its recovery throughout Friday’s trading. The broad-based sell-off of the Dollar has aided the Pounds recovery during Friday’s trading. After Wednesday’s decision by the BoE to intervene in the Gilt market, on top of the Sterling’s freefall, GBPUSD has recovered more than 4% to trade above 1.116. On the economic docket, the U.S. is set to release its ADP nonfarm employment change and non-manufacturing PMI on the 5^th, while Britain will release its manufacturing PMI on the 3^rd. On Friday, the U.S. will release its monthly unemployment rate figure.

On the technical side, GBPUSD has found new resistance at our previously estimated resistance level of 1.12. The short-term support level for the pair remains firm at 1.08. Long-term resistance for Cable stands at around the 1.1371 price level. RSI for this pair sits at 30.67, as of writing. On the four-hour chart, GBPUSD currently trades above its 50-day SMA but below its 100 and 200-day SMA.

Resistance: 1.1561, 1.1854

Support: 1.08, 1.053

XAUUSD (4-Hour Chart)

The Dollar denominated gold traded mostly sideways over the last trading day of the week. The non-yielding metal, however, gained over 1% over the previous week amid the Dollar’s cool-off. Russia’s escalation of actions towards Ukraine and the mysterious sabotage of the Nord Stream 1 pipeline have both exacerbated market volatility and the demand for Gold. While Gold has not been performing well under current interest rate conditions, uncertainty and rising risk due to geopolitical confrontations have supported the recent recovery rally of the Dollar-denominated Gold.

On the technical side, XAUUSD has met short-term resistance above the $1,670 per ounce price region and has resumed trading at our previously estimated support level for the pair at $1660 per ounce. RSI for this pair sits at 38.32, as of writing. On the four-hour chart, XAUUSD currently trades above its 50-day SMA but below its 100 and 200-day SMA.

Resistance: 1695, 1724

Support: 1660, 1640

Economic Data

This week will bring several major economic indicators to watch out for, including the release of the US Non-Farm Employment Change, Unemployment Rate, and Average Hourly Earnings. 

The US JOLTS report for August and ISM Manufacturing PMI and ISM Services PMI will also be released.

Other crucial data releases include Switzerland’s Consumer Price Index and Canada’s Employment figures.

• Swiss Consumer Price Index data (3 October)

The Consumer Price Index in Switzerland increased 0.30% in August 2022 over the previous month. Economists are predicting that the index will increase by 0.2% in September.

• US ISM Manufacturing PMI (3 October)

The ISM Manufacturing PMI, a gauge of the health of the manufacturing sector in the US, held steady in August of 2022 at 52.8—the same level it registered in July. It is expected to remain around the same level in September at 52.8.

• RBA Rate Statement (4 October)

The Reserve Bank of Australia (RBA) has raised the cash rate by 50bps to its highest level since January 2015. It was the board’s fourth consecutive rate hike since May, with analysts predicting another increase this month. The move is aimed at bringing inflation down to the 2-3% range while keeping the economy stable. Analysts anticipate that the RBA will raise its benchmark interest rate by another 50bps at this month’s meeting.

• US JOLTS report (4 October)

The US Department of Labor and Statistics report on Job Openings and Labor Turnover Survey (JOLTS) stated that job openings increased by 199,000 to 11.2 million in July 2022. Analysts expect that job openings will remain at around the same level as forecasted.

• OPEC Meetings (5 October)

Oil prices have fallen since June 2022, and OPEC countries have been seeking ways to raise the cost. This month, talks on supply cuts will be a key topic at the organisation’s meetings.

• RBNZ Rate Statement (5 October)

In its August meeting, the Reserve Bank of New Zealand increased its official cash rate to 3.0%, which marks the highest level in seven years. The decision was based on forecasts that inflation would fall as fuel prices stabilised, with the bank estimating that inflation will only return to the target range by mid-2024 at the earliest. It also noted that monetary tightening would be necessary. Analysts are forecasting another 50bps interest rate hike.

• US ADP Non-farm Employment Change (5 October)

The US ADP Non-Farm Employment Change came in at 132,000 for August, down from 268,000 in July. Analysts expect the ADP Non-Farm Employment Change to rise by 135,000 for September.

• US ISM Services PMI (5 October)

The Institute for Supply Management’s Services Purchasing Managers’ Index unexpectedly jumped to 56.9 in August of 2022 from 56.7 in July, indicating a revival in services activity in the US. Analysts expect the ISM Services PMI to be around 56.5 this month.

• Canada Employment Data (7 October)

Canada’s unemployment rate increased to 5.4% in August of 2022 from the record-low of 4.9%, as the economy lost 39,700 jobs in the month. According to analysts’ forecasts, another 15,000 jobs will be lost in September, bringing the unemployment rate to 5.3%.

• US Non-farm Employment Change (7 October)

US average hourly earnings rose 0.3% in August, adding 315,000 jobs and increasing the unemployment rate to 3.7%, its highest level since February. According to the latest projections, this month’s average hourly earnings will rise by 0.3%, with 250,000 additional jobs and a 3.7% unemployment rate.

Dear Client,

Please note the adjustment on the following products due to the international holiday in October:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact [email protected].

US stocks tumbled on Thursday, suffering from heavy daily losses and plunged to the lowest since November 2020 as another group of Federal Reserve officials struck a hawkish tone on policy tightening. Federal Reserve (Fed) Bank of Cleveland President Loretta Mester cited on Thursday that they are not yet at a point where they could start thinking about stopping interest rate hikes, meanwhile San Francisco Fed President Mary Daly also said the central bank should curb inflation in a manner that avoids a difficult downturn. On the economic data side, US Real GDP contracted by 0.6% in Q2 and remained in line with the estimates.

In the Eurozone, tensions between the Union and Moscow over gas deliveries escalated after the suspected sabotage of the Nord Stream pipelines, which result in Germany’s relief package in response to higher gas and electricity prices. On top of that, today’s German Retail Sales data, which is expected to decline firmly by 5.1%, which be closely watched by traders as European Central Bank President Christine Lagarde is looking to hike interest rates by 125 basis points in the coming monetary policy meetings.

The benchmarks, S&P 500 and Dow Jones Industrial Average both declined on Thursday as the S&P 500 fell as much as 2.9% during Thursday’s session but trimmed losses as markets closed. The S&P 500 was down 2.1% on a dailyDow Jones Industrial Average also dropped lower with a 1.5% loss for the day. All eleven sectors in S&P 500 stayed in negative territory as the Utility sector and the Consumer Discretionary sector is the worst performing among all groups, losing 4.07% and 3.38%, respectively. The Nasdaq 100 meanwhile dropped the most with a 2.9% loss on Thursday and the MSCI World index was up 1.1% for the day.

Main Pairs Movement

The US dollar declined lower on Thursday, extending its downside momentum and remained under pressure near the 112 area despite Wall Street resuming its slump and trimming all Wednesday’s gains. The falling US Treasury bond yields were acting as a headwind for the safe-haven greenback. However, the fact that US central bank officials reiterated the need for higher rates should limit the losses for the US dollar.

GBP/USD surged on Thursday with a 2.09% gain after the cable refreshed its daily high above the 1.110 mark as a slight improvement in sentiment keeps most G8 currencies higher against the greenback. On the UK front, Prime Minister Liz Truss said that she was willing to take controversial decisions, doubling down on the economic plan. Meanwhile, EUR/USD also advanced for the second consecutive day and refreshed its daily high above 0.980 level amid US dollar weakness. The pair was up almost 0.80% for the day.

Gold was nearly unchanged with a 0.03% gain for the day after rebounding from a daily low that was touched during the European session, as the precious metal cheered the softer US dollar but failed to respect the market’s grim conditions. Meanwhile, WTI Oil retreated lower with a 0.37% loss for the day after retreating from the weekly top surrounding $82.50 the previous day.

Technical Analysis

EURUSD (4-Hour Chart)

EURUSD has continued to rise for the second straight day as the Dollar continues to retreat. However, the recent upward correction of the Euro is not due to a change in fundamental economic reasons, rather the Euro was able to advance due to fatigue from buying the Dollar. Economic data released from Europe has continued to paint a harsh outlook. The German consumer price index rose at an annual pace of 10.9%, and the EU economic sentiment indicator printed 93.7 in September, missing the 95 market expectation. U.S. GDP for Q2 came in in line with market expectations at -0.6%.

On the technical side, EURUSD has continued to move towards our previously estimated support level of 0.98. Consolidation should happen around this level as the EURUSD eyes recover above parity. RSI for the pair sits at 44.09, as of writing. On the four-hour chart, EURUSD currently trades above its 50-day SMA but below its 100 and 200-day SMA.

Resistance:  1.0011, 1.0055

Support: 0.98, 0.96

GBPUSD (4-Hour Chart)

Cable has continued to rise on the back of the upward momentum of the previous trading day. The British Pound was saved by the BoE’s announcement that it would begin purchasing long-dated Gilts at stable exchange rates. After falling to historical lows on the 26th, Cable has recovered more than 6.5%. The weaker Dollar over the past two days has also acted as a tailwind for the British Pound. However, the long-term economic outlook for Britain grows worse by the day due to, previously mentioned, the widening fiscal deficit and price impacts from its European neighbours. Long-term credit risk could cause financial turmoil in the U.K. should the BoE play its cards wrong.

On the technical side, GBPUSD has found support at our previously estimated support level of 1.053 and is heading towards the next level of support for the pair at 1.12. RSI for the pair sits at 62.48, as of writing. On the four-hour chart, GBPUSD currently trades above its 50-day SMA but below its 100 and 200-day SMA.

Resistance: 1.1561, 1.1854

Support: 1.08, 1.053

XAUUSD (4-Hour Chart)

The Dollar denominated gold rose more than 1.8% over the previous trading day. The non-yielding metal continues to find bidding as the Dollar weakens. Global markets continue to be extremely risk-averse as equity indices around the globe struggle. Geopolitical events happening around the globe have also acted as tailwinds for the precious metal. The U.S. 10-year treasury yield has fallen for the second straight day and is last seen trading at 3.72%. Much of the rise in Gold prices, however, should be attributed to the weakened Dollar. The non-yielding metal, despite being a traditional inflation hedge asset, has been proven to underperform under a rising interest rate environment; in fact, the idea of Gold being an inflation hedge tool only becomes true over a 50-plus year horizon.

On the technical side, XAUUSD has rebounded strongly off of our previously estimated support level of $1640 per ounce and is heading towards the next level of support at $1,660 per ounce. RSI for the pair sits at 41.4, as of writing. On the four-hour chart, XAUUSD currently trades above its 50-day SMA but below its 100 and 200-day SMA.

Resistance: 1695, 1724

Support: 1660, 1640

Economic Data