May 8, 2023

Trading Into Treacherous News

Frank Cabibi

The majors are about to experience another wild week of trading. With key inflation data in the US, bank rate decisions across the pond in the UK, and then inflation expectations in New Zealand, investors prepare for a treacherous news week. Here is some other notable events happening in the global markets:

EdgeFinder Analysis

EURJPY is still one of the EdgeFinder's top buy ratings for the week. At +6, the euro beats the yen in almost every category except inflation and unemployment. The Euro-area likely struggles more with inflation due to a more expansive economy than Japan who's central bank is trying to stimulate growth rather than focus on the yen's strength.

More promising news came from COT this week which showed an increase in long positions in the euro. Meanwhile, retail is net short this pair as it looks to be a reversal attempt. Although price is pulling back, smart money does not want to let go of the euro, so price is likely going to attempt a bounce.

Gold on the rise today after a stark sell off in Friday's session. COT showed a confident level in growth in long positions on the Smart Money Tracker after the regionals rebounded from the banking crisis. What looked to be a bearish case for the metal at first is now looking more so like a dip-buying opportunity.

Gold is now the most heavily bought asset by institutions. The metal broke above the $2020s on the 4H and 1D timeframe which suggests bullish pressure going into CPI. Traders could be looking for a retest on the highs of $2060.

GBPJPY is still a +5 on the EdgeFinder as we go into a BOE bank rate decision. Forecasts have put down another expected hike of 25 basis points on Thursday in hopes of driving down the double digit inflation crippling the pound's strength.

Other than inflation and unemployment, GBP has the advantage with a hawkish BOE and expanding economy. The two trend readings point toward more momentum to the upside as the 10-year average seasonality shows historical gains.

Retail Spotlight

The crowd looks heavily biased towards the euro and one pound cross this week. To the short side, it appears that retail is looking to yen strength as GBPJPY, CADJPY, NZDJPY and AUDJPY are at the bottom of the list. Commodities are mixed; oil is mostly long while the gold market is only 40% long.

Smart Money Tracker

Here's a new feature on the Smart Money Tracker page of the EdgeFinder which shows week-to-week activity from institutions. So, you will not only see this week's change in long or short contracts for the current week, but you can also see what they are up to over time. The yellow bars show a net change in long and short contracts to find the net bias. For example, this week's currency pair bias for gold is 13%, or net long of 13%.

Fundamental Spotlight

Something that was mentioned in the livestream today was global inflation. Most notably, inflation in the US, UK, Europe and Japan. UK has the highest levels as well as a stubborn rate path on a 2-and-a-half year chart. With this in mind, it was unanimously agreed that the BOE will need to raise rates this week to help quell the 10% inflation rate.

A1 Edgefinder

Save time looking for setups with the EdgeFinder's watchlist! In a glance, see the EdgeFinder's current top buys and top sells.

Discount code: 'READER'

Access Now


Trading Plan Template
Struggling to build a successful trading plan? Download our template to get started today!
Trading Gold & USD Before NFP

Gold is up nearly half a percent today while USD down a third of one as of 10:18 am EST. As we wait for the upcoming and looming NFP numbers this Friday, we can assess the economic data we already have. EdgeFinder Analysis The stock market sighed in relief after the debt ceiling bill finally […]

Read More
Can The Dollar Break This Pivotal Level?

The dollar flew higher last week as a result of resilient economic news along with a higher PCE than expected. Now the DXY has reached a decision point in price action. This week's NFP will help determine the sentiment around the potential June rate hike. Here is what we are looking at: EdgeFinder Analysis USDCAD […]

Read More
Dovish Banks Could Crash These Currencies

Considerably dovish news from central banks in the US and New Zealand has caused a major stir in the markets. Governor Orr and Vice Chairman Powell both released some reassuring news for the economy in the long term. But what does this mean for USD and NZD? EdgeFinder Analysis GBPNZD is a pair that should […]

Read More
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
homesmartphonelaptop-phonemenu linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram