A1 Trading Company

November 27, 2023

Traders Wait For More Inflation Data

Frank Cabibi

This week has brought more inflation data with it regarding the USD's PCE and PMI numbers. Powell is also set to speak this Friday about monetary policy going forward. The RBNZ will also release their latest interest rate news tomorrow with expectations of an unchanged rate at 5.5%.

EdgeFinder Analysis

GBPUSD is a bullish bias now on the EdgeFinder after being a strong bearish reading from October. This score flip could indicate further upside for the pair as we approach the end of the year. As we near the last month of the trading year, investors anticipate the end of rate hikes in the US.

The expected interest rate hike to 5.75% never came, and investors are taking this as the end of the rate hike journey. Although rate cuts do not seem to be coming any time soon, the market feels some relief from the Fed as policy looks to keep rates at this level for a while.

Gold is a neutral rating on the scanner, but the upside has recovered from the October head and shoulders pattern. Price has broken above previous resistance around $2011 on the 1D timeframe, but may experience some pullback after this move.

Traders are likely hoping for lower PCE and PMI numbers from the US this week. If price closes above this resistance level, we can look to $2011 as the new support. However, a pullback could take price lower towards the $1990s zone.

UJ is no longer a strong buy on the EdgeFinder. This is due to the recent dollar weakness from lower inflation, better US jobs numbers, and the change in trend. Opposite of gold, lower PCE would likely be bearish for UJ.

With close ties to the 2 year bond note, interest rate expectations are often a major component in the pair's performance. So seeing lower inflationary numbers brings those rate expectations down, thus causing UJ to fall as well.

Retail Spotlight

Retail positioning suggests there could be more upside for UJ, USDCAD and EURUSD. They are also buying into the oil move downward, which the EdgeFinder has scored as a strong bearish reading.

Smart Money Spotlight

This is not current data for COT, it is from two week's ago due to the CFTC's delay in reporting the data.

Fundamental Spotlight

With PMI due this Friday, it's important to take a look at the current score and what needs to happen to see a change. Right now, the PMI score for the GBPUSD pair is +2 suggesting that the pound is stronger than the dollar in this sense. So Friday's numbers need to keep coming in lower in order for the score to remain this way.

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