A1 Trading

Dovish Signals From the Fed

November 6, 2023
Frank Cabibi

After a long string of news last week, investors have had time to interpret what is going on with the Fed and their latest sentiment towards interest rates. Powell is set to speak this Wednesday and Thursday per usual one week after the FOMC decision. We also have new from RBA later today regarding interest rates in Australia. Here is what we are looking at today:

EdgeFinder Analysis

Taking a look at gold's score post FOMC shows us that the down trend could finally be over now that the score has flipped from a strong bear to bullish reading. Despite seasonality pointing to a historically down month, price has completely ignored the signs and pushed above the $2000s zone.

Seeing higher PMI data last week hurt the metal's economy score, but other categories helped carry the bias. NFP was a giant factor in scoring which came out lower, while unemployment rate came in higher. COT is also buying the metal and shorting the dollar according to last Tuesday's activity.

The AU pair has been stuck in a downtrend for some time now, but FOMC helped spark optimism in the risk-on pairs. Price broke above a heavy trend line to the downside and established a new high in the 0.65200s.

Later tonight, Australia's central bank will announce the newest decision on interest rates. Expectations of the RBA hiking by 25 bp could be an additional push to this pair as we look at a less hawkish dollar and increased hawkishness on the Aussie.

USDCHF is now a neutral reading from a strong bullish reading. The past month has looked mixed overall as the pair went from strong bull to neutral score and then repeated the process once again. COT also appears mixed as they sold both assets last week.

After FOMC introduced some dollar weakness, it may suggest that the pair is finally looking to move to the downside. Retail has a strong leans towards the dollar despite the fundamentals that are working against it now. This is one of the few times where COT and retail are in congruence with each other.

Retail Spotlight

Retail positioning shows us that traders are now majority mixed on the USD with a few exceptions. These being USDCHF and USDJPY. Gold reads a mixed score, and so does NZDUSD, GU, EU, and USDCAD.

Smart Money Spotlight

Last week's Smart Money report showed us some telltale signs of a less hawkish market. Speculators are now betting on dollar weakness and currency strength in the risk-on area. EUR, NZD, CAD and AUD all saw positive growth in net bullish positioning. Even gold is getting close to an even score on the positional bias which has reversed from net short to close to 0%.

Fundamental Spotlight

According to interest rate data on AUD, the RBA isn't expecting to cut interest rates until Q3 of next year. Right now, there is a neutral reading for AUD on the interest rate score, but it will change to a positive score if expectations are met or beat of another 25 basis point tick up.

The EdgeFinder

All-in-one Fundamental Dashboard

30 Days Access

Free Telegram

Join for daily analysis and trade setups!

Join Telegram

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

A1 Trading Company

A1 Trading is a leading financial analysis and trading education company dedicated to empowering traders of all levels. Our team combines extensive market knowledge with cutting-edge technology to provide valuable insights and tools for traders worldwide.
2024 All Rights Reserved | A1 Trading Company
There is a significant degree of risk involved in trading securities. With respect to foreign exchange trading, there is considerable risk exposure, including but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or currency pair. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you can afford to take the high risk of losing your money.
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram