Risk-off pairs jumped to start the week off as risky assets are giving back the majority of the gains made last week. Central banks are working to find that sweet spot between hawkish and dovishness to boost their currencies without hurting the job market too much. However, the 'soft landing' approach is getting further out of reach as these strong forex setups appear.
As prices around the world rise, consumers are discouraged to spend money on things other than necessities. Even oil demand is falling regardless of the supply shortages and the war in Ukraine.
Personal spending dropped to the lowest point this year largely due to the uncontrollably high CPI rates each month. Slower economic growth and spending is carving a dent in the US economy, but this pattern is seen in other countries as well.
Economists fear that the recession could continue to get worse if this pattern continues. Consumer debt is also on the rise. This is closely intertwined with spending behavior as the US debt balance is at a new high.
Because we've seen a steady pattern in both these issues, there is still no light at the end of the tunnel. 70% of the US's GDP is from consumer spending so if it continues to fall, the recession could likely get worse over time.
And this is not limited to the US. Higher consumer debt is increasing in other countries like Canada, Europe, and Australia while consumer confidence is falling on a global scale.
Strong Forex Setups
CAD-yen looks like it's starting to lose strength on the 1D as oil falls over 2% today. The global recession hints toward a declining demand for oil while global suppliers are trying to agree on an increased supply in barrels per day in July. The pair is coming down to support in 102.980s where there is also a rising trend line that price has hit twice in the medium term.
EUR/CHF came back up to resistance on the 1D timeframe before falling lower. Doubts over Europe returning to the 2% inflation target is more present now that the ECB only plans to hike by 25 basis points in July. If price closes below the 0.99455 level in today's session, we could expect lower lows in the future as momentum is still sharply down.
The USD finds strength above riskier assets and takes this pair up to the top of a trend line and a triple top. Investors eye Friday's NFP report while expectations are much lower than last month's actual. Price could break higher as the third test on highs suggests hard bullish momentum especially from today's heavy green candle. If price can close above this channel, the next major level of resistance lies around 1.32000.
On Friday this past week, the United Kingdom’s Office for National Statistics released the latest reports on the UK’s Gross Domestic Product (GDP), a means of measuring economic output. It was revealed that their economy grew by -0.6% month-over-month, and -0.1% quarter-over-quarter, which entails a contraction for both timeframes. Although these numbers are less disastrous […]
This week the public received startling news: on Wednesday morning, month-over-month CPI (a proxy for inflation) in the United States had unexpectedly remained static, clocking in at 0% whereas a moderate 0.2% increase had been forecast. Core CPI (which excludes food and energy prices) likewise came in lower than anticipated at 0.3% month-over-month, while Thursday […]
Next Tuesday, the RBNZ will announce their new official bank rate which is expected to be 3%, a 0.50% rise from July. This hike will make it the highest yielding major currency on the market. Here is why you should consider buying the kiwi before Tuesday's decision as well as some strong NZD long setups. […]
DISCLAIMER: All comments made by TraderNick’s Forex Group, LLC are for educational and informational purposes only. All comments should not be construed as investment advice regarding the purchase or sale of any securities or financial instrument of any kind. Please consult with your financial adviser before making an investment decision regarding any securities or financial instruments mentioned by TraderNick’s Forex Group, LLC. TraderNick’s Forex Group, LLC assumes no responsibility for your trading and investment results. All information on any of the platforms utilized by TraderNick’s Forex Group, LLC was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. TraderNick’s Forex Group, LLC, its employees, representatives, and affiliated individuals may have a position or effect transactions in the securities and financial instruments herein and or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading of any type involves very high risk and may not be suitable for all investors. TraderNick’s Forex Group, LLC, its subsidiaries and all affiliated individuals assume no responsibility for your trading and investment result. Read our full disclaimer here