MARKET UPDATE:
Prior to important data releases at the end of the week, US stock markets suffered losses once more on Thursday. The Dow fell 1.66%, the S&P 1.85%, and the Nasdaq fell 2.05%, setting the pace. The US government yields remained near to recent high levels, while the dollar continued to trade in very narrow ranges against the major currencies. All of these were driven by growing investor apprehensions about a future rate hike from the Fed.
As we get closer to the important Non-Farm Payroll data release tonight in the New York trading session, investor fears continue at a high level. US markets had a significant sell-off due to concerns that this month could bring us another harsh figure like January’s unexpected 517k print. The weekly jobless claims increased last night, giving the bulls some hope that perhaps rate hikes are beginning to affect the labour market. Nevertheless, this is an outlier in the recent data, and today’s NFP result will have a far bigger impact Anything below the expected gain of 205k will cause markets to move, and something like January’s number will send the dollar rocketing and send stocks further downward.
But today’s news isn’t just about non-farms; during the Asian session, the Bank of Japan released its most recent rate decision and related announcements. As usual, no specific time has been designated for the announcement, but traders should be ready at the terminals by noon in Tokyo. We have important GDP data for the UK coming out in the London session, with a 0.1% m/m increase expected. After that, there will undoubtedly be a major event in the American session, however Cad traders are aware that Canadian job data will also be released at the same time.
How did the US session go?
DXY retreated, following higher-than-expected Unemployment Claims (211k vs forecast 195k), from Tuesday’s rally underpinned by Fed Chair Powell’s hawkish testimony. The S&P 500 saw a significant drop due to risk aversion ahead of the US NFP.
What does it mean for the Asian Session?
The session’s highlight is the BOJ’s monetary policy decision, although the market does not expect any changes. The recent decline in USD/JPY may mask underlying expectations for potential hawkish surprises from Governor Kuroda’s final meeting.
The Australian Dollar (AUD)
Key news events today
No major news events.
What can we expect from AUD today?
Amid a lack of AUD-specific data releases, RBA Governor Lowe’s recent comments may influence AUD’s price. He discussed halting interest rate hikes due to more restrictive monetary policy but also emphasized the need for further tightening to achieve the inflation target.
Central Bank Notes:
- The cash rate was raised by 25 basis points to 3.60%.
- The board prioritizes returning inflation to target, with a likely need for further monetary policy tightening.
- Board to closely monitor the global economy, household spending trends, inflation, and labor market outlook when assessing interest rate increases.
- Next meeting on 4 April 2023
Next 24 Hours Bias
Weak Bearish
The Japanese Yen (JPY)
Key news events today
No major news events.
What can we expect from JPY today?
The BOJ is expected to announce no significant changes to its monetary policy decision at Governor Kuroda’s last policy meeting. Kazuo Ueda has been approved as the next governor. The new leadership can potentially affect the yen’s value and the country’s economic outlook.
Central Bank Notes:
- The cash rate stands at -0.1%
- Expanded range for 10-year JGB yield fluctuations to 0.5%
- The next meeting is on 8 March 2023
Next 24 Hours Bias
Mixed
The Euro (EUR)
Key news events today
No major news events.
What can we expect from EUR today?
German CPI m/m is forecast to rise 0.8% (previous 0.8%); meeting forecast could suggest stable inflation in Eurozone’s largest economy, supporting EUR. Moreover, French Trade Balance is expected to show a €14.0B deficit (previous €14.9B); meeting the forecast could indicate improving French exports, generally positive for EUR.
Central Bank Notes:
- Main Refinancing Rate is currently at 3.00%
- ECB Governing Council to continue raising interest rates and reducing holdings of securities
- Future policy decisions to be data-dependent
- Next meeting on 16 March 2023
Next 24 Hours Bias
Bullish
Global Markets:
Asian Stock Markets: Nikkei down 1.67%, Shanghai Composite down 0.94%, Hang Seng down 2.20%, ASX down 2.28%
European equities, the DAX futures up 0.01%, CAC 40 down 0.12%, FTSE down at 0.63%.
US Stock Market: Dow jones down 1.66%, S&P 500 down at 1.85%, Nasdaq 100 down at 2.05%.
Commodities: Gold at $1831.71 (+0.13%), Silver at $20.02 (-0.19%), Brent Oil at $81.20 (-0.48%), WTI Oil at $75.19 (-0.69%)
News & Data:
- (USD) Unemployment Rate (Feb) Forecast 3.4%, Previous 3.4% at 19:00
- (USD) Nonfarm Payrolls (Feb) Forecast 205K, Previous 517K at 19:00
- (EUR) ECB President Lagarde Speaks at 20:30
- (JPY) BoJ Press Conference at 10:30
- (CAD) Employment Change (Feb) Forecast 10.0K, Previous 150.0K at 19:00
Technical Outlook
GBPUSD
Price is currently overlapping our first barrier at 1.1917; if it were to break through this level, it would then move towards our second resistance at 1.2144.
Our first support level, which is overlap support, is at 1.1764, and the second support level is at 1.1632.
EURUSD
The EURUSD is showing bullish divergence vs. RSI and has neatly retraced from our intermediate support around 1.0535. The first resistance level for the price might be reached at 1.0697, which is just below the 38.2% Fibonacci retracement.
The first significant support, strong overlap support, is located at 1.0485. If this level were to be broken, the price may fall much deeper, reaching our second support at 1.0354.
AUDUSD
Price is nearing our first support at 0.6535, which is an overlap support, after reversing from our first resistance at 0.6640, a strong Overlap Resistance. The next significant support level, which is also an overlap support, would be at 0.6379 if the price were to depart from this one.
The first barrier is at 0.6696, which is a temporary pullback resistance level, and the second obstacle is at 0.640, which is a strong overlap resistance.
USDJPY
A rising support line is providing support for the price. The first resistance at 138.04, a significant overlap resistance, may be pressed further. Price might move up to the second resistance level at 139.64 if it were to break through that barrier.
DAX 40
Price is currently falling towards our first support at 15234, which is overlap support. If price were to break, it would then fall to our second level at 14969. Price has reversed from major swing high resistance at 15654, which is a swing high resistance.
BRENT CRUDE OIL
Brent Crude Oil USD’s structure is quite disorganized. Fibonacci retracements of 61.8% and 78.6%, respectively, serve as our first and second supports, which are both visible at 80.33 and 78.88, respectively.
In terms of resistance, we can see an overlap resistance at 82.22 – if the price were to break that resistance, the next closest resistance is all the way up at 86.10 which is a major swing high resistance.
SILVER
Our first overlap support level, at 20.05, is being tested by the price. Price might drop back down to the second support level in 19.59, which is a significant overlap support, if it were to break through this level.
Our first resistance level, which is an overlap resistance, is at 20.61, and our second resistance level, which is also an overlap resistance, is in 21.00, which coincides with the 38.2% Fibonacci retracement.
ETHEREUM
Price is falling to our first support level at 1348; if it reverses from here, it might go up to our first resistance level at 1463, which is an overlap resistance, and the second resistance is 1539.
