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Forex News Timeline

Wednesday, March 3, 2021

Economist at UOB Group Lee Sue Ann checks out the latest RBA event (Tuesday). Key Quotes “The Reserve Bank of Australia (RBA), as expected, decided to

Economist at UOB Group Lee Sue Ann checks out the latest RBA event (Tuesday). Key Quotes “The Reserve Bank of Australia (RBA), as expected, decided to maintain the current policy settings at its March meeting, including the targets of 10 basis points for the cash rate and the yield on the 3-year Australian Government bond, as well as the parameters of the Term Funding Facility and the government bond purchase program.” “The economy is expected to continue improving, though the recovery will be slow and uneven. Hence, exceptionally easy policy is warranted. The RBA’s rhetoric continues to reinforce our view that it will hold off bringing the policy rate into negative territory (for now). We thus look for the OCR to remain unchanged at 0.10% for the rest of this year.”

EUR/USD fades Tuesday’s decent advance and shift its focus back to the downside and to a potential re-test of the 1.2000 neighbourhood. Despite the on

EUR/USD resumes the downside after surpassing 1.2100.A deeper pullback could reach the 2021 low at 1.1952.EUR/USD fades Tuesday’s decent advance and shift its focus back to the downside and to a potential re-test of the 1.2000 neighbourhood. Despite the ongoing weakness is seen as temporary, it could extend further and attempt to revisit the YTD lows in the mid-1.1900s (recorded in early February) if 1.2000 is breached in a sustainable fashion. Below yearly lows the selling pressure is expected to pick up pace, exposing the next target at the Fibo level at 1.1887. On the broader picture, the constructive stance in EUR/USD remains unchanged while above the critical 200-day SMA, today at 1.1799. Looking at the monthly chart, the (solid) breakout of the 2008-2020 line is a big bullish event and should underpin the continuation of the current trend in the longer run. EUR/USD daily chart  

The Institute of Supply Management (ISM) will release the Non-Manufacturing Purchasing Managers' Index (PMI) - also known as the ISM Services PMI at 1

US ISM Non-Manufacturing PMI Overview The Institute of Supply Management (ISM) will release the Non-Manufacturing Purchasing Managers' Index (PMI) - also known as the ISM Services PMI at 15:00 GMT this Wednesday. The gauge is expected to hold steady at 58.7 in February and the New Orders Index is projected to fall to 55.4 from 61.8 in the previous month. The employment sub-component is also expected to have fallen to 51.7 from 55.2 in January. Meanwhile, Joseph Trevisani, Senior Analyst at FXStreet is upbeat about the recovery in the services sector and explains: "The unexpected optimism of manufacturing executives could carry over into the much larger services sector as the US exits the pandemic era, and the economy revs into recovery despite the dour outlook from analysts." How could it affect EUR/USD? Ahead of the key data, a sudden pick up in the US Treasury bond yields underpinned the US dollar demand and prompted some fresh selling around the EUR/USD pair. An upbeat reading will reinforce the narrative of a relatively faster US economic recovery and further benefit the greenback. Conversely, the market reaction to a weaker reading is likely to remain muted amid expectations that a massive US fiscal spending plan would spur growth. Hence, the path of least resistance for the pair seems to be on the downside. Valeria Bednarik, Chief Analyst at FXStreet offered a brief technical outlook and important technical levels to trade the major: "The EUR/USD pair trades in the 1.2050 price zone, poised to extend its decline. The 4-hour chart shows that it met sellers around its 100 and 200 SMA, now back below a bearish 20 SMA. Technical indicators turned south and are back within negative levels indicating increased bearish interest. Further declines are to be expected on a break below 1.2015, the immediate support." Key Notes   •  US ISM Services PMI February Preview: Expect more than expected   •  EUR/USD Forecast: Dollar picks up as Treasury yields resume advance   •  EUR/USD Forecast: End to calm? Dollar set to storm the board with new shots in the arm About the US ISM Services PMI The ISM Non-Manufacturing Index released by the Institute for Supply Management (ISM) shows business conditions in the US non-manufacturing sector. It is worth noting that services constitute the largest sector of the US economy and result above 50 should be seen as supportive for the USD.

Jens Weidmann, European Central Bank (ECB) Governing Council member and Bundesbank President, said on Wednesday that the ECB's Pandemic Emergency Purc

Jens Weidmann, European Central Bank (ECB) Governing Council member and Bundesbank President, said on Wednesday that the ECB's Pandemic Emergency Purchase Programme (PEPP) is flexible. Additional takeaways "Deposit rate cut is one of ECB's tools." "The size of the yield moves is not particularly worrisome." "ECB looking at conditions beyond government bond yields." Market reaction The shared currency remains on the back foot following these comments and continues to weaken against its major rivals. As of writing, the EUR/USD pair was down 0.32% on the day at 1.2050.

Money markets are pricing a 10 basis points rate increase by the Bank of England (BoE) by September 2022 following British Finance Minister Rish Sunak

Money markets are pricing a 10 basis points rate increase by the Bank of England (BoE) by September 2022 following British Finance Minister Rish Sunak's budget statement, as reported by Reuters. Sunak said that the underlying debt would rise indefinitely without corrective action and noted that they cannot ignore the problem of borrowing. Last week, money markets were expecting the BoE to lower its policy rate into the negative territory in early 2022. Market reaction The GBP/USD pair clings to modest daily gains around 1.3970 after these comments despite the broad-based USD strength.

The USD/CAD pair rallied over 60 pips from weekly lows and jumped to fresh daily tops, beyond mid-1.2600s during the early North American session. The

USD/CAD staged a solid intraday bounce from sub-1.2600 levels, or weekly lows.Surging US bond yields benefitted the USD and remained supportive of the move.Bullish oil prices underpinned the loonie and kept a lid on any meaningful gains.The USD/CAD pair rallied over 60 pips from weekly lows and jumped to fresh daily tops, beyond mid-1.2600s during the early North American session. The pair showed some resilience below the 1.2600 round-figure mark and witnessed a dramatic intraday turnaround amid resurgent US dollar demand. A sudden pickup in the US Treasury bond yields provided a strong lift to the greenback, which, in turn, was seen as a key factor that prompted some short-covering around the USD/CAD pair. A violent selloff in the US Treasuries took its toll on the global risk sentiment. This was evident from a steep fall in the equity markets, which provided an additional boost to the safe-haven greenback. The USD bulls seemed unaffected, rather shrugged off the disappointing release of the ADP report for February. In fact, private-sector employers added 117K jobs during the reported month, fewer than 177K expected and the previous month's upwardly revised reading of 195K. The data pointed to a sluggish recovery in the labour market, though investors remained optimistic amid the progress on a massive US fiscal spending plan. That said, bullish sentiment around crude oil prices, now up over 1.5% for the day, underpinned the commodity-linked loonie and capped gains for the USD/CAD pair. This makes it prudent to wait for a sustained move beyond the 1.2660 region before positioning for an extension of the recent bounce from multi-year lows. Wednesday's US economic docket also features the release of the ISM Services PMI. This, along with the US bond yields and the broader market risk sentiment, will influence the USD. Traders might further take cues from oil prices dynamics to grab some meaningful opportunities. Technical levels to watch  

Senior Economist Julia Goh and Economist Loke Siew Ting at UOB Group evaluate the Malaysian export sector. Key Quotes “Since US-China trade tensions a

Senior Economist Julia Goh and Economist Loke Siew Ting at UOB Group evaluate the Malaysian export sector. Key Quotes “Since US-China trade tensions and the ongoing COVID-19 pandemic started, this has prompted global investors to rethink their supply chain resilience and diversify trade. We noted that trade tensions and pandemic has benefited Malaysia’s exports to its top three trade partners (China, Singapore, and US) whereby export shipments to these countries have consistently risen across three specific periods (pre and during US-China trade tension, and COVID-19 pandemic).” “Malaysia’s export gains to China were the most notable as exports to China rose by MYR60bn (or 9.3% compounded annual growth) between 2016-2020, while exports to the US grew MYR28.6bn (or 8.1%) and exports to Singapore expanded by MYR27.7bn (or 5.6%). Malaysia’s key export products that rose markedly include electrical & electronics (E&E), mineral fuels, machinery & transport equipment, optical & scientific, and rubber products.” “Going forward, challenges remain to strengthen Malaysia’s investments and trade linkages particularly to attract high quality investments. Malaysia’s approved investments signal higher FDI interest (particularly from China and US). Global macro conditions will be the prime driver of actualised investments over the next 2-3 years. Policies should also be aligned to shifting global trends and ensure Malaysia remains a competitive investment destination. A holistic investment plan that engages investors to understand the issues hindering investments, improve investor services, and enhance the administration of investment incentives would help improve the investment climate.”

DXY failed to move further north of the 91.00 mark on a more serious note on Wednesday, retreating to the negative territory after clinching multi-wee

DXY regains some attention following Tuesday’s pullback.Bullish attempts stay limited around 2021 highs near 91.60.DXY failed to move further north of the 91.00 mark on a more serious note on Wednesday, retreating to the negative territory after clinching multi-week peaks in the 91.35/40 band. A surpass of the latter, ideally in the near-term, carries the potential to spark a visit to the 2021 tops in the 91.60 zone (February 5), where the index is expected to meet a tough barrier. In spite of the strong rebound, the current spike in DXY is deemed as corrective only, as the broader bearish view still weighs on the dollar. If the 91.60 region is surpassed, then the next focus of attention should shift to the Fibo level (of the 2020-2021 drop) at 92.46. In the longer run, as long as DXY trades below the 200-day SMA (93.00), the negative stance is expected to persist. DXY daily chart  

A sudden pickup in the USD demand dragged the GBP/USD pair to the lower end of its daily trading range, around the 1.3940 region during the early Nort

GBP/USD struggled to preserve intraday gains and once again faced rejection near the 1.4000 mark.A strong pickup in the US bond yields underpinned the USD and exerted some pressure on the pair.The GBP bulls seemed unimpressed by the UK budget statement and disappointing US ADP report.A sudden pickup in the USD demand dragged the GBP/USD pair to the lower end of its daily trading range, around the 1.3940 region during the early North American session, though lacked any follow-through selling. The pair failed to capitalize on its intraday positive move and once again faced rejection near the key 1.4000 psychological mark. Following an early dip, the US dollar regained positive traction amid a sharp rise in the US Treasury bond yields. This, in turn, was seen as a key factor that prompted some fresh selling around the GBP/USD pair. The US bond market continued reacting strongly to the prospects for a relatively faster US economic recovery amid the progress on COVID-19 vaccinations and a massive US fiscal spending plan. The reflation trade forced investors to price in an uptick in inflation and raised doubts that the Fed would retail ultra-low interest rates for a longer period. Apart from this, a modest pullback in the equity markets extended some additional support to the safe-haven USD, which seemed unaffected by a rather disappointing ADP report. According to the data released this Wednesday, the US private-sector employers added 117K new jobs in February, fewer than 177K expected and the previous month's upwardly revised 194K. On the other hand, the British pound had a rather muted reaction to the UK finance minister Rishi Sunak's budget statement. Sunak extended the furlough scheme to the end of September and the stamp duty holiday for homebuyers until June 30. Sunak also introduced a new recovery loan scheme for businesses and announced UK corporate tax rate will increase to 25% from 19% in 2023. The measures were seen as providing a boost to the UK economy, albeit the lack of any major surprises failed to impress bulls. Meanwhile, the GBP/USD pair's inability to attract any meaningful buying suggests that positive developments are fully priced in the market and supports prospects for an extension of the recent pullback from near three-year tops. Next on tap will be the release of the US ISM Services PMI. This, along with the US bond yields, will influence the USD price dynamics. Apart from this, the broader market risk sentiment should provide some impetus to the GBP/USD pair and assist traders to grab short-term opportunities. Technical levels to watch  

Canada Building Permits (MoM) above expectations (3.5%) in January: Actual (8.2%)

Having soared through the 1.40 level in the latter half of last month the GBP/USD pair has suffered a setback. Jane Foley, Senior FX Strategist at Rab

Having soared through the 1.40 level in the latter half of last month the GBP/USD pair has suffered a setback. Jane Foley, Senior FX Strategist at Rabobank, expects the cable to take a breather and trade below the 1.42 mark through the spring. See – GBP/USD: Economic recovery as vaccination continues supports cable's momentum – CIBC Key quotes “We would expect the pound to become more sensitive to UK data in the coming months with the build-up in GBP long positions suggesting scope for corrections on bad news.” “The market appears to be sensing that the Fed may not toe the line with its current guidance regarding the timing of the first Fed rate hike. The reflation theme is heavily tied to the US and the huge Biden stimulus package, which Democrats hope to enact by March 14. This backdrop could lead to a more resilient tone in the USD than the market has been expecting. This would imply that further upside potential for GBP/USD in the coming months could prove to be more difficult to achieve.” “We expect the Fed to repeat its dovish outlook which suggests the potential for choppy conditions in the dollar crosses including cable.” “We retain our view that cable may hold below 1.42 through the spring.”  

Employment in the US' private sector increased by 117,000 in February, the monthly data published by the Automatic Data Processing (ADP) Research Inst

Private sector employment in US rose at a softer pace than expected in February.US Dollar Index clings to modest daily gains around 91.00 after the data.Employment in the US' private sector increased by 117,000 in February, the monthly data published by the Automatic Data Processing (ADP) Research Institue revealed on Wednesday. This reading fell short of the market expectation of 177,000. On a positive note, however, January's reading got revised up to 195,000 from 174,000. Commenting on the data, “the labor market continues to post a sluggish recovery across the board,” said Nela Richardson, chief economist, ADP. "We’re seeing large-sized companies increasingly feeling the effects of COVID-19, while job growth in the goods-producing sector pauses," Richardson added. "With the pandemic still in the driver’s seat, the service sector remains well below its pre-pandemic levels; however, this sector is one that will likely benefit the most over time with reopenings and increased consumer confidence." Market reaction The US Dollar Index showed no immediate reaction to this report and was last seen gaining 0.25% on the day at 91.01.

United States ADP Employment Change registered at 117K, below expectations (177K) in February

British finance minister Rishi Sunak is delivering his budget statement to parliament on Wednesday. Key takeaways as summarized by Reuters "Will not r

British finance minister Rishi Sunak is delivering his budget statement to parliament on Wednesday. Key takeaways as summarized by Reuters "Will not raise rates of income tax, national insurance or VAT." "Will freeze income tax thresholds." "Freeze in income tax thresholds will continue until April 2026." "Will keep inheritance tax and pensions lifetime allowance thresholds until April 2026." "In 2023, the rate of corporation tax will increase to 25%." "UK will still have lowest corporation tax rate in G7." "New higher rate of corporation tax will not apply to businesses with profits under 50,000 pounds." "Only 10% of companies will pay the full higher rate of corporation tax." Market reaction The UK's FTSE 100 Index edged slightly lower after these remarks and was last seen gaining 0.6% on the day at 6,653.

The USD/CHF pair caught some fresh bids on Wednesday and has now moved back closer to near four-month tops touched in the previous session. A fresh le

USD/CHF attracted some dip-buying on Wednesday near the very important 200-day SMA.Slightly overbought RSI on the daily chart warrants caution before placing fresh bullish bets.Any meaningful slide towards the 0.9140-30 region could be seen as a buying opportunity.The USD/CHF pair caught some fresh bids on Wednesday and has now moved back closer to near four-month tops touched in the previous session. A fresh leg up in the US Treasury bond yields helped revived the US dollar demand. Apart from this, the prevalent risk-on mood undermined demand for the safe-haven Swiss franc and provided a goodish lift to the USD/CHF pair. From a technical perspective, the overnight pullback from the vicinity of the 0.9200 mark, or a resistance marked by the 38.2% Fibonacci level of the 0.9902-0.8758 downfall, stalled near the very important 200-day SMA. The emergence of some dip-buying and acceptance above a technically significant moving average supports prospects for additional gains. That said, slightly overbought RSI on the daily chart warrants some caution for bullish traders. This makes it prudent to wait for some near-term consolidation before positioning for an extension of a near two-month-old uptrend. Alternatively, bulls might wait for a sustained move beyond the 0.9200 mark before placing fresh bets. On the flip side, the 0.9140-30 region (200-DMA) might continue to protect the immediate downside. Any subsequent fall might still be seen as a buying opportunity and remain limited near the 0.9100-0.9090 horizontal support. This is followed by the 23.6% Fibo. level, around the 0.9040-35 region, which if broken will negate any near-term bullish bias. The USD/CHF pair might then slide below the key 0.9000 psychological mark and test 0.8965-60 support zone. USD/CHF daily chart Technical levels to watch  

British finance minister Rishi Sunak is delivering his budget statement to parliament on Wednesday. Key takeaways as summarized by Reuters "This budge

British finance minister Rishi Sunak is delivering his budget statement to parliament on Wednesday. Key takeaways as summarized by Reuters "This budget announces an extra 65 billion sterling of COVID measures." "Total covid measures for this year and next is 352 billion sterling." "Total fiscal support over this year and next amounts to 407 billion sterling." "We are using the full measure of fiscal firepower to protect jobs." "Without corrective action, underlying debt would rise indefinitely." "Markets in recent weeks have shown sovereign bond yields rising fast." "In normal times state should not borrow to fund everyday public spending." "Sensible to take advantage of lower interest rates to fund long-term investment." Market reaction The GBP/USD pair largely ignored those comments and was last seen gaining 0.06% on the day at 1.3960.

British finance minister Rishi Sunak is delivering his budget statement to parliament on Wednesday. Key takeaways as summarized by Reuters "I will do

British finance minister Rishi Sunak is delivering his budget statement to parliament on Wednesday. Key takeaways as summarized by Reuters "I will do whatever it takes." "Damage covid has done to the economy has been acute." "Our borrowing is highest it has been outside wartime." "The UK and the world will take a long time to recover." "Will project jobs and livelihoods in the UK." "When we are on way to recovery we will need to begin fixing public finances." "OBR sees a swifter and more sustained recovery than in November." "We will provide a new restart grant for businesses in April." "Retailers will receive up to 6,000 pounds per premises." "Hospitality venues will receive up to 18,000 pounds per premises." "Total direct cash support for businesses will rise to 25 billion sterling." "Will introduce new recovery loan scheme to replace bounce back loans." "Businesses can apply for loans of 25,000 to 10 million pounds." Market reaction These comments don't seem to be having a significant impact on market sentiment. As of writing, the UK's FTSE 100 Index was up 0.8% on the day at 6,665.

The S&P 500 Index remains capped at its near-term downtrend at 3910/15 and further consolidation should be allowed for ahead of a resumption of the co

The S&P 500 Index remains capped at its near-term downtrend at 3910/15 and further consolidation should be allowed for ahead of a resumption of the core bull trend, with support at 3792/74 expected to remain a solid floor, the Credit Suisse analyst team reports. See – S&P 500 Index: Rising rates indicates a serious shift in market outlook – Morgan Stanley Key quotes “S&P 500 stays sidelined near-term as looked for, holding key flagged support at 3792/74 – the early February price gap and rising 63-day average – but capped at its near-term downtrend, seen today at 3910 and our core outlook remains unchanged. We continue to see scope for a lengthier high-level consolidation phase, but with our broader outlook bullish and we look for a resumption of the core uptrend in due course.”  “Resistance moves to 3886/87 initially, with a break above 3910/15 needed to see the near-term downtrend break to suggest the core uptrend may have already resumed for a test next of the 3929/34 highs of last week. Above here in due course can see a move back to the 3950/51 record highs, with 4070/75 our next core upside objective.”  “Support remains seen at 3861 initially, then the upper end of the price gap from Monday morning at 3843, which we look to try and hold. Below would warn of a retest of 3792/74, but with this expected to hold again and we maintain our tactical bullish bias whilst above here.”  

Gold maintained its offered tone through the mid-European session and refreshed daily lows, around the $1721 region in the last hour. The XAU/USD came

A combination of factors prompted some fresh selling around gold on Wednesday.The risk-on mood was seen as a key factor weighing on the safe-haven commodity.An uptick in the US bond yields underpinned the USD and added to the selling bias.Gold maintained its offered tone through the mid-European session and refreshed daily lows, around the $1721 region in the last hour. The XAU/USD came under some renewed selling pressure on Wednesday and erased the previous day's modest recovery gains from the lowest level in over eight months. The safe-haven precious metal was weighed down by the underlying bullish tone in the financial markets, bolstered by the optimism about a strong global economic recovery. Apart from this, a sudden pick up in the US Treasury bond yields exerted additional downward pressure on the non-yielding yellow metal. The US bond market has been reacting to the reflation trade, which has been fueling speculations for an uptick in inflation and doubts that the Fed would retain ultra-low rates for a longer period. Meanwhile, a fresh leg up in the US bond yields assisted the US dollar to regain positive traction. The greenback was further supported by the upbeat US economic outlook amid the progress on COVID-19 vaccinations and a massive US fiscal spending plan. This was seen as another factor driving flows away from the dollar-denominated commodity. It will now be interesting to see if the XAU/USD is able to attract any buying interest or bearish traders aim to challenge the $1700 mark as the focus now shifts to the US macro data. Wednesday's US economic docket highlights the releases of the ADP report on private-sector employment and ISM Services PMI for February. The data, along with the US bond yields, would influence the USD price dynamics. Apart from this, the broader market risk sentiment will further contribute to produce some short-term trading opportunities around the XAU/USD. Technical levels to watch  

The recent rise in real rates may have a negative impact on inflation and growth, European Central Bank (ECB) Governing Council member Pablo Hernandez

The recent rise in real rates may have a negative impact on inflation and growth, European Central Bank (ECB) Governing Council member Pablo Hernandez de Cos said on Wednesday, as reported by Reuters. Additional takeaways "Must avoid a premature rise in nominal rates." "Drop in real rates would make a greater contribution to recovery given low inflation expectations." "Need to maintain very favourable financing conditions as the eurozone is a long way from inflation aim." "Contraction in some eurozone countries or sectors cannot be ruled out if additional health crisis containment measures endure." "Long-term interest rates developments must also be analysed alongside developments in rest of yield curve." "Must monitor exchange rates even as upward pressure on euro has eased." "ECB should set a new inflation target at 2% with symmetry." Market reaction The EUR/USD pair continues to edge lower following these remarks and was last seen trading at 1.2063, losing 0.21% on a daily basis.

EUR/JPY adds to the recent recovery and briefly tested weekly highs in the mid-129.00s, just to shed some ground afterwards. If bulls remain in contro

EUR/JPY’s weekly recovery regains the 129.00 yardstick on Wednesday.Immediately to the upside emerges the YTD high near 130.00.EUR/JPY adds to the recent recovery and briefly tested weekly highs in the mid-129.00s, just to shed some ground afterwards. If bulls remain in control, then the next target will emerge at the 2021 highs just below 130.00 (February 25). Further north of this area comes in 130.14 (November 7 2018) ahead of the summer 2018 high at 131.98 (July 17). Reinforcing the idea of extra gains, EUR/JPY keeps trading above the immediate support line (off November 19 2020 low) near 126.90, where also converges the 50-day SMA. Looking at the broader picture, while above the 200-day SMA at 124.41 the outlook for the cross should remain constructive. EUR/JPY daily chart  

The AUD/USD pair spent the Asian session trading in a narrow band and came under modest bearish pressure ahead of the American session on Wednesday. A

AUD/USD is trading in a relatively tight range on Wednesday.Data from Australia showed that the GDP expanded by 3.1% in Q4.Focus shifts to private sector employment and Services PMI data from US.The AUD/USD pair spent the Asian session trading in a narrow band and came under modest bearish pressure ahead of the American session on Wednesday. As of writing, the pair was down 0.09% on a daily basis at 0.7810. Earlier in the day, the data published by the Australian Bureau of Statistics revealed that the Gross Domestic Product (GDP) in the fourth quarter expanded by 3.1% on a quarterly basis. Although this reading came in better than the market expectation of 2.5%, it failed to provide a boost to the AUD. USD gathers strength on the back of rising T-bond yields On the other hand, the US Dollar Index (DXY), which lost 0.3% on Tuesday, started to edge higher on the back of rising US Treasury bond yields during the European trading hours and forced AUD/USD to lose its traction. At the moment, the DXY is up 0.18% on the day at 90.95 and the 10-year US T-bond yield is rising 3.7%. Later in the day, the ADP Employment Change data from the US will be watched closely by market participants. Additionally, the IHS Markit and the ISM will be both releasing the February Services PMI reports. Finally, the Federal Reserve will release its Beige Book in the late American session.  On Thursday, January Trade Balance and Retail Sales figures will be featured in the Australian economic docket.  Technical levels to watch for  

The USD/JPY pair shot to fresh multi-month tops during the mid-European session, with bulls now looking to build on the momentum further beyond the 10

USD/JPY continued scaling higher through the mid-European session and refreshed multi-month tops.The risk-on mood, an uptick in the US bond yields, pickup in the USD demand remained supportive.Slightly overbought conditions warrant some consolidation before the next leg of a positive move.The USD/JPY pair shot to fresh multi-month tops during the mid-European session, with bulls now looking to build on the momentum further beyond the 107.00 mark. Following the previous day's modest pullback of around 30 pips, the pair caught some fresh bids on Wednesday and was supported by a combination of factors. The optimism over a strong global economic recovery remained supportive of the underlying bullish tone in the financial markets. This was seen as a key factor that undermined the safe-haven Japanese yen and assisted the USD/JPY pair to regain traction. Bulls traders further took cues from a sudden pickup in the US Treasury bond yields, which helped revive the US dollar and provided an additional boost to the USD/JPY pair. The US bond market has been reacting strongly to the reflation trade, which has been fueling expectations for a possible uptick in inflationary pressure and raised doubts that the Fed would retain ultra-low interest rates for a longer period. Apart from this, investors remain optimistic about a relatively faster US economic recovery from the pandemic amid the progress on COVID-19 vaccinations and a massive US fiscal spending plan. In fact, the US Congress seems set to pass the US President Joe Biden's $1.9 trillion relief package to support growth, which further underpinned the greenback and remained supportive of the bid tone surrounding the USD/JPY pair. The pair has now rallied over 200 pips from levels beyond the key 105.00 psychological mark and inched closer to the top boundary of a two-month-old ascending channel. With technical indicators on the daily chart gradually moving into the overbought zone, bulls are likely to take a brief pause near the mentioned barrier. Market participants now look forward to the US economic docket, highlighting the releases of the ADP report on private-sector employment and ISM Services PMI. Apart from this, the US bond yields might influence the USD. Traders will further take cues from the broader market risk sentiment to grab some short-term opportunities. Technical levels to watch  

Brazil Gross Domestic Product (QoQ) came in at 3.2%, above expectations (2.8%) in 4Q

Brazil Gross Domestic Product (YoY) came in at -1.1%, above expectations (-1.6%) in 4Q

United States MBA Mortgage Applications rose from previous -11.4% to 0.5% in February 26

GBP/USD has been advancing to 1.40 amid a calmer market mood. UK Chancellor Sunak's budget and progress on US stimulus hold the keys to the next moves

GBP/USD has been advancing to 1.40 amid a calmer market mood. UK Chancellor Sunak's budget and progress on US stimulus hold the keys to the next moves, Yohay Elam, an Analyst at FXStreet, reports.  Key quotes “UK Chancellor of the Exchequer Rishi Sunak is set to extend the government's successful furlough scheme through September, in a step that would boost the economy and is already helping sterling. However, corporation tax rises remain a mystery. If Britain hikes levees on companies, sterling's upside move could stall, while leaving a hole in the budget would allow for further gains” “The Senate is set to begin debating President Joe Biden's $1.9 covid relief package on Wednesday, and lawmakers are set to strip out or water down some of the measures. If Democrats unite around most parts of the legislation, the dollar could resume its gains, but if the scope falls toward $1 trillion, the greenback could cool down.” “The ADP jobs report is set to show an increase of 177,000 private-sector positions in February, a moderate increase that would be in line with expectations for Friday's Nonfarm Payrolls. The ISM Services PMI is set to show rapid growth in America's largest sector – and its employment component is also critical for the NFP. The manufacturing PMI smashed estimates.” “Momentum on the 4-hour chart has turned to the upside, providing ammunition for the bulls, which have also pushed above the 100 Simple Moving Average. On the other hand, the psychological cap of 1.40 looms, and so does the 50 SMA.”   

UOB Group’s Head of Research Suan Teck Kin, CFA, and Senior Economist Alvin Liew assess the US outlook. Key Quotes “The recent US Treasury yields surg

UOB Group’s Head of Research Suan Teck Kin, CFA, and Senior Economist Alvin Liew assess the US outlook. Key Quotes “The recent US Treasury yields surge was attributed to the vaccine-driven reflation expectations, US to “go big” on fiscal stimulus, and inflation fears that could lead to earlier than expected monetary policy tightening.” “Even though latest US inflation outcomes remained benign, they are lagging indicators and the crux of the issue is expectations of higher inflation have been building up, reflected in the jump in TIPS as well as consumer expectations.” “The key supporting factors to US inflation in 2021 include the acceleration in growth of personal consumption. capital spending, housing, and inventory builds of which these sectors had been the main contributors to the US’ recovery process last year. The US savings rate is expected to normalise as US consumers resume their social and travel activities and increase spending. If the consumer spending surge is formidable, then so will be the inflation risk. The key downside for prices is the significant slack in the labour market.” “We see US inflation rate to be trending higher, not yet at the “overheating” stage but the balance of risks is increasingly tilted to the upside. Our US 2021 growth forecast remains at 4.5% but risks are for even higher growth, potentially due to the upside on successful vaccine rollouts and more fiscal stimulus into the US economy. We now expect headline inflation forecast to average 1.7% in 2021 (from previous projection of 1.2%), with the risks also biased to the upside.” “Our end 2021 forecast for 10Y UST and SGS yields have both been revised higher from 1.20% to 1.65%, based on positive progress in COVID-19 vaccinations and the benign reaction by policy makers to the uplift in yields thus far.”  

The European Union's budget rules should remain suspended in 2022 but they could be reinstated in 2023, the European Commission said on Wednesday, as

The European Union's budget rules should remain suspended in 2022 but they could be reinstated in 2023, the European Commission said on Wednesday, as reported by Reuters. "Overall fiscal impulse, stemming from national budgets and the EU recovery fund, needs to remain supportive in 2021 and 2022," the statement read. "Beyond 2022, EU fiscal policies should continue to take into account the strength of the recovery, degree of economic uncertainty and fiscal sustainability considerations." Market reaction The EUR/USD pair showed no immediate reaction to these comments and was last seen trading at 1.2085, losing 0.05% on a daily basis.

British finance minister Rishi Sunak told ministers that they are borrowing on an extraordinary scale, British Prime Minister Boris Johnson's spokesma

British finance minister Rishi Sunak told ministers that they are borrowing on an extraordinary scale, British Prime Minister Boris Johnson's spokesman told reporters on Wednesday, per Reuters. "As a conservative government, we know that we cannot ignore this problem of borrowing," Sunak added. Market reaction These comments don't seem to be having a significant impact on market sentiment. As of writing, the UK's FTSE 100 Index was up 0.92% on a daily basis at 6,674. Meanwhile, the GBP/USD pair is up 0.18% at 1.3978.

Gold (XAU/USD) has sold off to the 55-month moving average at $1707, between here and the $1653 uptrend, the yellow metal should stabilise, in the vie

Gold (XAU/USD) has sold off to the 55-month moving average at $1707, between here and the $1653 uptrend, the yellow metal should stabilise, in the view of Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank. See – Gold Price Analysis: Rising real yields raise the prospect of a serious XAU/USD fall – Credit Suisse Key quotes “Gold has sold off to the 55-month ma at $1707 and currently we cannot rule out further slippage towards the $1653 2019-2021 uptrend. If seen, we would expect this to hold the downside.”  “Rallies will need to regain not only $1760/$1765.61, which is the May high and previous 50% retracement, but also the short-term downtrend at $1794 in order to alleviate downside pressure and signal recovery to the 200-day ma at $1861.”  “Above the 200-day ma at $1861 lies $1906, the 21st December high, and the top of the channel at $1918. This guards the November and September highs at $1965.84/$1973.8 and the 78.6% retracement at 2006.”  

The NZD/USD pair closed the first two days of the week in the positive territory and edged higher to a daily top of 0.7305 on Wednesday. However, the

NZD/USD lost its traction after rising above 0.7300.US Dollar Index stays below 91.00 ahead of US data.Rising US T-bond yields help USD stay resilient.The NZD/USD pair closed the first two days of the week in the positive territory and edged higher to a daily top of 0.7305 on Wednesday. However, the pair seems to be having a tough time preserving its bullish momentum and was last seen trading flat on the day at 0.7286. Focus shifts to US data Earlier in the day, the data from China showed that the Caixin Services PMI in February declined to 51.5 from 52 in January but this report was largely ignored by the market participants. Meanwhile, the upbeat market mood is helping the risk-sensitive NZD find demand on Wednesday. Reflecting the risk-on market environment, major European equity indexes rise around 1% and the S&P 500 Futures are up 0.55%.  On the other hand, a 4% increase seen in the benchmark 10-year US Treasury bond yield is providing a boost to the USD and limiting NZD/USD's upside. At the moment, the US Dollar Index is a little changed on the day at 90.79. Later in the session, the ADP Employment Change and the ISM Services PMI data from the US will be watched closely by the market participants. Additionally, the Federal Reserve will release its Beige Book at 1900 GMT.  Technical levels to watch for  

The USD/JPY consolidates its latest gains, trading near this year high at 106.95 and poised to break higher as better market mood provides support, Va

The USD/JPY consolidates its latest gains, trading near this year high at 106.95 and poised to break higher as better market mood provides support, Valeria Bednarik, Chief Analyst at FXStreet, reports. Key quotes “Japan published the February Jibun Bank Services PMI, which improved to 46.3 from 46.1. After the US opening, Markit will release the final reading of the US Services PMI, foreseen at 58.9, while the country will publish the official ISM index, expected at 58.7.” “The USD/JPY pair retains its bullish stance in the near-term and seems poised to extend gains above the 107.00 figure.”  

The USD/CAD pair momentarily dropped below the 1.2600 mark and refreshed weekly lows during the first half of the European session. Against the backdr

A combination of factors underpinned the loonie and prompted fresh selling around USD/CAD.The price action between two converging trend-line constitutes the formation of a falling wedge.Neutral technical indicators warrant some caution before placing any aggressive directional bets.The USD/CAD pair momentarily dropped below the 1.2600 mark and refreshed weekly lows during the first half of the European session. Against the backdrop of Tuesday's upbeat Canadian Q4 GDP print, a modest uptick in crude oil prices continued underpinning the commodity-linked loonie. This, along with the emergence of some fresh selling around the US dollar, exerted some pressure on the USD/CAD pair. From a technical perspective, the intraday slide found some support near a downward sloping trend-line. This, along with another descending trend-line, seemed to constitute the formation of a falling wedge pattern on intraday charts and favours bullish traders. The constructive set-up, however, is not confirmed until the USD/CAD pair decisively breaks through the resistance marked by the top boundary of the wedge. The mentioned hurdle is pegged near the 1.2655-60 area and should act as a key pivotal point for traders. Meanwhile, technical indicators on 4-hourly/daily charts – though have been recovering from the negative territory – are yet to confirm a bullish bias. This further makes it prudent to wait for a sustained move beyond the mentioned barrier before placing fresh bets. On the flip side, some follow-through selling below the daily swing lows, around the 1.2595-90 region will negate prospects for any meaningful recovery. This would turn the USD/CAD pair vulnerable to accelerate the slide further towards the key 1.2500 psychological mark. USD/CAD 1-hourly chart Technical levels to watch  

The EUR/CHF pair maintains a major base after the recent breakout above 1.0916/15 and analysts at Credit Suisse look for a break above 1.1098/1111 to

The EUR/CHF pair maintains a major base after the recent breakout above 1.0916/15 and analysts at Credit Suisse look for a break above 1.1098/1111 to open up 1.1255/65 next. See – EUR/CHF to hover around the 1.09 mark by mid-year – CIBC Key quotes “We see scope for further upside, with resistance seen initially at 1.1070, removal of which would expose the pivotal cluster at 1.1098/1.1111 – the recent high and 61.8% retracement of the 2019/2020 fall – where we would expect to see a first attempt to cap.”  “Above the 1.1098/1.1111 region, EUR/CHF could subsequently see an acceleration of upside momentum with resistance seen initially at the July 2019 high at 1.1172, with scope for 1.1255 over the longer-term.”  “Support moves initially to 1.1026, then 1.1004/00, beneath which would see a small intraday top completed to suggest a move back to 1.0963/56, where we would expect to see another attempt to hold.”  

The European currency manages to leave behind the recent weakness and pushes EUR/USD back to the proximity of the 1.2100 neighbourhood on Wednesday. E

EUR/USD looks to add to Tuesday’s gains above 1.2100.German/EMU final February Services PMI remain depressed.ECB-speak, US ADP report and ISM Non-Manufacturing next on tap.The European currency manages to leave behind the recent weakness and pushes EUR/USD back to the proximity of the 1.2100 neighbourhood on Wednesday. EUR/USD retakes 1.2100 on ECB EUR/USD advances further and clinch the area just above 1.2100 the figure on Wednesday, extending the bounce off Tuesday’s lows in the 1.1990 zone. The rebound in the pair comes in tandem with rising European yields, all after the ECB said there is no need to implement a drastic action to curb bond yields in the Old Continent. Looking at the macro scenario, the vaccine/reflation trade keeps dominating the investors’ sentiment along with prospects of a solid bounce in the economic activity in the region in HS 2021. Earlier in the euro docket, final Services PMIs in Germany and Euroland showed mixed results although both remain still in the contraction territory (<50). Additionally, EMU’s Producer Prices rose 1.4% MoM in January, while ECB’s Board members F.Panetta, L. De Guindos and I.Schnabel are all due to speak later in the session. Across the pond, the ADP report and the ISM Non-Manufacturing will be in the limelight along with speeches by FOMC’s Harker, Bostic and Evans. What to look for around EUR EUR/USD bounces off recent sub-1.2000 lows and trades back in the 1.2100 neighbourhood. The underlying bullish sentiment in the euro remains under pressure for the time being amidst investors’ adjustment to potential US inflation and the subsequent increase in yields and the demand for the dollar. Looking at the medium/longer-run, the outlook for the pair remains constructive on the back of prospects of extra fiscal stimulus in the US, real interest rates favouring Europe vs. the US and hopes of a solid economic rebound in the next months.Key events in Euroland this week: EMU’s Retail Sales, Unemployment Rate (Thursday).Eminent issues on the back boiler: EUR appreciation could trigger ECB verbal intervention, always amidst the current (and future) context of subdued inflation. Potential political effervescence around the EU Recovery Fund. Huge long positions in the speculative community. EUR/USD levels to watch At the moment, the index is gaining 0.10% at 1.2102 and a breakout of 1.2139 (50-day SMA) would target 1.2243 (weekly high Dec.17) en route to 1.2349 (2021 high Jan.6). On the flip side, the next up barrier comes in at 1.1991 (weekly low Mar.2) followed by 1.1976 (50% Fibo of the November-January rally) and finally 1.1952 (2021 low Feb.5).

Inflation in Germany is now seen "just somewhat" higher than Bundesbank's December forecast of 1.8%, Jens Weidmann, European Central Bank (ECB) Govern

Inflation in Germany is now seen "just somewhat" higher than Bundesbank's December forecast of 1.8%, Jens Weidmann, European Central Bank (ECB) Governing Council member and Bundesbank President, said on Wednesday, per Reuters. Additional takeaways " If vaccines are successful, the German economy will see a lasting recovery." "German HICP to exceed 3% by year-end but only temporarily." "Bundesbank expects marked decline in aggregate economic activity in Germany for the current quarter." "Bundesbank raises provisions on rising interest rate risk and default risk; won't distribute profit." Market reaction The EUR/USD pair showed no immediate reaction to these remarks and was last seen posting small daily gains at 1.2094.

European Monetary Union Producer Price Index (MoM) registered at 1.4% above expectations (1.2%) in January

European Monetary Union Producer Price Index (YoY) came in at 0%, above expectations (-0.4%) in January

The GBP/USD pair refreshed weekly tops during the early European session, with bulls now awaiting a sustained move beyond the key 1.4000 psychological

GBP/USD built on the previous day’s solid rebound from one-and-half-week lows.Expectations for additional measures from the UK budget benefitted the sterling.A softer USD provided an additional boost and remained supportive of the uptick.The GBP/USD pair refreshed weekly tops during the early European session, with bulls now awaiting a sustained move beyond the key 1.4000 psychological mark. The pair gained traction through the first half of the trading action on Wednesday and has now rallied nearly 150 pips from one-and-half-week lows, around the 1.3860-55 region touched in the previous day. The British pound was supported by expectations that UK finance minister Rishi Sunak will announce measures to safeguard businesses and jobs. Hence, the focus will remain on the UK budget presentation, at around 12:30 GMT. Apart from this, a softer tone surrounding the US dollar provided an additional boost to the GBP/USD pair and remained supportive of the uptick. However, a combination of factors could help limit any meaningful slide for the USD and keep a lid on any runaway rally for the GBP/USD pair. This, in turn, warrants some caution for aggressive bullish traders and before positioning for any further near-term appreciating move. Investors remain optimistic about a relatively faster US economic recovery from the pandemic amid the progress in COVID-19 vaccinations and a massive US fiscal spending plan. The reflation trade has been fueling expectations for an uptick in inflation and doubts that the Fed would retain low rates for a longer period. This, along with a fresh leg up in the US Treasury bond yields, should continue to underpin the greenback. Hence, it remains to be seen if the GBP/USD pair is able to capitalize on the move or meets with some fresh supply at higher levels. Rejection at higher levels will set the stage for an extension of the recent sharp pullback from the vicinity of mid-1.4200s, or near three-year tops set February 24. Traders on Wednesday will further take cues from the US economic docket, highlighting the release of the ADP report on private-sector employment and ISM Services PMI. Apart from this, the US bond yields might influence the USD price dynamics and further assist traders to grab some short-term opportunities around the GBP/USD pair. Technical levels to watch  

According to strategists at Credit Suisse, rising real yields should put further pressure on gold. XAU/USD has already seen an important break of supp

According to strategists at Credit Suisse, rising real yields should put further pressure on gold. XAU/USD has already seen an important break of support at $1765 to mark a top and a more serious fall. See – Gold Price Analysis: Difficult to ignore bearish trend in XAU/USD – OCBC Key quotes “Gold has finally bowed to rising yields and the strengthening USD and key support at $1761 has been finally removed for the completion of a top. Although the 38.2% retracement of the 2018/2020 bull trend at $1726 is essentially holding for now we look for a clear break in due course for a fall to $1670 next, then $1620/15.” “Resistance at $1816 capping can keep the immediate risk lower.”  

ECB said to see no need for drastic action to curb bond yields – Bloomberg developing story ....

ECB said to see no need for drastic action to curb bond yields – Bloomberg  developing story ....

The UK services sector activity fell short of expectations in February, the final report from IHS Markit confirmed this Wednesday. The seasonally adju

UK Final Services PMI sees upward revision to 39.5 in February.GBP/USD holds firmer just below 1.4000 on the UK data.Eyes on US ADP, ISM Services PMI amid a broadly subdued US dollar. The UK services sector activity fell short of expectations in February, the final report from IHS Markit confirmed this Wednesday.  The seasonally adjusted IHS Markit/CIPS UK Services Purchasing Managers’ Index (PMI) was revised higher to 49.5 in February versus 49.7 expected and a 49.7 – last month’s flash reading.   more to come ....

United Kingdom Markit Services PMI below forecasts (49.7) in February: Actual (49.5)

The AUD/USD pair held on to its modest gains through the early European session and was last seen hovering near weekly tops, around the 0.7830 region.

Upbeat Australian GDP report assisted AUD/USD to gain some traction on Wednesday.An uptick in the US bond yields underpinned the USD and capped gains for the major.Investors now look forward to the US economic docket for some trading opportunities.The AUD/USD pair held on to its modest gains through the early European session and was last seen hovering near weekly tops, around the 0.7830 region. The pair edged higher during the early part of the trading action on Wednesday and was supported by a better-than-expected Australian Q4 GDP report. In fact, the economy expanded by 3.1% during the October-December period and the previous quarter's reading was also revised higher to 3.4% from 3.3% estimated previously. Adding to this, the underlying bullish tone in the equity markets extended some additional support to the perceived riskier aussie. However, a modest US dollar uptick – amid a fresh leg up in the US Treasury bond yields – held bulls from placing aggressive bets and kept a lid on any further gains for the AUD/USD pair. The US Treasury bond yields have been a key focal point in the financial markets amid the upbeat US economic outlook. The impressive pace of coronavirus vaccinations and the progress on a massive US fiscal spending plan has been fueling expectations for a relatively stronger US economic recovery from the pandemic. The reflation trade further forced investors to price in a possible uptick in inflation and raised doubts that the Fed would retain ultra-low interest rates for a longer period. This extended some additional support to the greenback and warrants some caution before positioning for any further gains for the AUD/USD pair. Market participants now look forward to the releases of the ADP report on private-sector employment and ISM Services PMI from the US. This, along with the US bond yields, might influence the USD price dynamics. Apart from this, the broader market risk sentiment might further contribute to produce some trading opportunities around the AUD/USD pair. Technical levels to watch  

Several OPEC+ members reportedly in favor of keeping output unchanged – Reuters more to come ...

Several OPEC and its allies (OPEC+) members support the idea of keeping the output unchanged in April, Reuters reports, citing three sources with knowledge of the matter. OPEC+ has oil production roll over among options for meeting on Thursday, the sources added.  more to come ...

The US-based ratings agency, Fitch Ratings, announced upward revisions to its gold price forecast for 2021 and 2022, in its updated outlook. Key takea

The US-based ratings agency, Fitch Ratings, announced upward revisions to its gold price forecast for 2021 and 2022, in its updated outlook. Key takeaways "Fitch Ratings has revised some of its metals and mining price assumptions as prices for many commodities will benefit in the short term from returning demand while the supply response remains slow and inventories are running low.” “Fitch has increased its price forecast for 2021 from $1,400 to $1,600 an ounce.“ “Sees further gold weakness in the next few years, projecting $1,400 for 2022 and $1,200 for 2023.” "We have raised gold price assumptions for 2021 and 2022 on increased demand due to investment flows and central bank purchases. We believe that prices will moderate in the medium term to an equilibrium of USD1,200/oz.” Related readsGold Price Analysis: XAU/USD slides below $1730 level, erases Tuesday’s modest gainsGold Price Analysis: Near-term bias still seems tilted in favour of XAU/USD bears

FX Strategists at UOB Group noted USD/CNH faces further upside while above the 6.4900 level in the short-term horizon. Key Quotes 24-hour view: “USD t

FX Strategists at UOB Group noted USD/CNH faces further upside while above the 6.4900 level in the short-term horizon. Key Quotes 24-hour view: “USD traded between 6.4635 and 6.4836 yesterday, higher than our expected sideway-trading range of 6.4580/6.4800. Momentum indicators are mostly ‘neutral’ and we continue to expect USD to trade sideways, likely between 6.4600 and 6.4830.” Next 1-3 weeks: “We have held a positive view in USD for two weeks now. In our latest narrative from last Friday, we highlighted that ‘upward momentum has been boosted’ and ‘there is room for USD to move towards 6.5150’. However, since then, USD has not been able to make much headway on the upside as it traded in a quiet manner after retreating from 6.5080. Upward momentum is beginning to wane and in order to rejuvenate the flagging momentum, USD has to move and stay above 6.4900 or the prospect for further USD strength would diminish quickly. Conversely, a break of 6.4400 (no change in ‘strong support level) would indicate that the positive phase has run its course.”

NZD/USD has performed strongly in the first two months of the year, extending a strong finish to the previous year and now to levels last seen in 2018

NZD/USD has performed strongly in the first two months of the year, extending a strong finish to the previous year and now to levels last seen in 2018. Patrick Bennett from CIBC Capital Markets expects to see further gains as activity recovers and forecast the kiwi at 0.75 in the coming months. Key quotes “We see NZD continuing tracking to stronger levels as the economy rebound continues and global reflation pricing supports commodity prices, though we doubt the same pace of gains seen to date will be repeated over the next quarter.” “RBNZ, as other central banks have done, has reconfirmed its commitment to keep policy accommodative for some extended time. The recent backing up in global yields sees NZ bond yields near the highest in G10, and we expect that fact to attract portfolio flows and support the NZD.” “We doubt there are tools available to change the NZD outcome over more than the short-term. We forecast gains for the NZD against the USD and JPY, and some underperformance against the AUD.”  

The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main competitors, manage to regain come buying interest and advance to the 9

DXY leaves behind Tuesday’s drop and regain some composure.US Inflation expectations remain on the rise and support the dollar.The ADP report, ISM Non-Manufacturing next on tap in the docket.The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main competitors, manage to regain come buying interest and advance to the 90.90 region. US Dollar Index looks to yields, data Following a move to fresh 4-week highs in the 91.40 region on turnaround Tuesday, the index ended the session with moderate losses on the back of the dovish message from FOMC’s L.Brainard and the retracement in US yields. The dollar, in the meantime, keeps navigating in the current context where the US economic recovery is seen outperforming its G10 peers, the vaccine rollout keeps gathering traction and inflation expectations remain on the rise. On Wednesday’s docket, MBA will publish its weekly figures for Mortgage Applications followed by the ADP report on the job creation in the US private sector, Markit’s final Services PMI for the month of February, the ISM Non-Manufacturing during the same period and the Fed will release its Beige Book. In addition, Philly Fed P.Harker (2023 voter, hawkish) is due to speak along with Atlanta Fed R.Bostic (voter, centrist) and Chicago Fed C.Evans (voter, centrist). What to look for around USD The index came under some correction following multi-week tops beyond the 91.00 mark earlier in the week. The reversion of the recent weakness in the dollar came in tandem with the strong bounce of yields to levels last recorded a year ago. While the reflation/vaccine trade continues to keep bullish attempts in the buck contained, bouts of concerns regarding a pick-up in inflation (and inflation expectations) stemming from the expected extra fiscal stimulus plus the expected outperformance of the US economy against economies overseas could provide some pockets of strength in the dollar for the time being. Against this, occasional upside in the buck should remain short-lived amidst the broad-based bearish outlook for the currency in the medium/longer-term. This, in turn, is propped up by the reinforced mega-accommodative stance from the Fed until “substantial further progress” is seen, persistent chatter of extra fiscal stimulus and prospects of a strong recovery in the global economy, which are all seen underpinning the better sentiment in the risk complex.Key events in the US this week: ADP Report, ISM Non-Manufacturing, Fed’s Beige Book (Wednesday) – Initial Claims, Powell’s speech (Thursday) - Nonfarm Payrolls (Friday).Eminent issues on the back boiler: US-China trade conflict under the Biden’s administration. Tapering speculation vs. economic recovery. US real interest rates vs. Europe. Could US fiscal stimulus lead to overheating? Future of the Republican party post-Trump acquittal. US Dollar Index relevant levels At the moment, the index is gaining 0.05% at 90.83 and a breakout of 91.39 (weekly high Mar.2) would open the door to 91.60 (2021 high Feb.5) and finally 92.46 (23.6% Fibo of the 2020-2021 drop). On the other hand, the next support emerges at 89.68 (weekly low Feb.25) seconded by 89.20 (2021 low Jan.6) and then 88.94 (monthly low March 2018).

European Monetary Union Markit PMI Composite came in at 48.8, above expectations (48.1) in February

European Monetary Union Markit Services PMI registered at 45.7 above expectations (44.7) in February

Italy Gross Domestic Product (QoQ) came in at -1.9%, above expectations (-2%) in 4Q

Italy Gross Domestic Product (YoY) in line with expectations (-6.6%) in 4Q

Germany Markit Services PMI came in at 45.7, below expectations (45.9) in February

Germany Markit PMI Composite came in at 51.1, below expectations (51.3) in February

Gold witnessed some selling during the early European session and refreshed daily lows, around the $1727 region in the last hour. The precious metal f

A combination of factors prompted some fresh selling around gold on Wednesday.The underlying bullish tone was seen as a key factor weighing on the safe-haven metal.An uptick in the US bond yields underpinned the USD and added to the intraday selling.Gold witnessed some selling during the early European session and refreshed daily lows, around the $1727 region in the last hour. The precious metal failed to capitalize on the previous day's goodish rebound from multi-month lows, instead met with some fresh supply on Wednesday and was pressured by a combination of factors. The upbeat global economic outlook remained supportive of the underlying bullish tone in the financial market. This was evident from a fresh leg up in the equity markets, which undermined demand for the safe-haven XAU/USD. Investors remain optimistic amid the impressive pace of COVID-19 vaccinations and the progress on US President Joe Biden's $1.9 trillion pandemic relief package. The reflation trade has been fueling expectations for a possible uptick in inflation and raised doubts that the Fed would retain ultra-low interest rates for a longer period. This was seen as another factor that exerted some pressure on the non-yielding yellow metal. Meanwhile, a modest uptick in the US Treasury bond yields extended some support to the US dollar, which further contributed to the offered tone surrounding the dollar-denominated commodity. It will now be interesting to see if the XAU/USD is able to attract any buying at lower levels or the emergence of some fresh selling on Wednesday supports prospects for an extension of the recent/well-established bearish trend. Market participants now look forward to the US economic docket, highlighting the release of the ADP report on private-sector employment and ISM Services PMI. This, along with the US bond yields, might influence the USD price dynamics. Traders might further take cues from the broader market risk sentiment to grab some short-term opportunities. Technical levels to watch  

France Markit PMI Composite above forecasts (45.2) in February: Actual (47)

France Markit Services PMI came in at 45.6, above forecasts (43.6) in February

Italy Markit Services PMI above expectations (46) in February: Actual (48.8)

Hong Kong SAR Retail Sales came in at -13.6%, below expectations (-8.4%) in January

USD/JPY keeps the constructive stance unchanged and could extend the upside momentum above the 107.00 level in the next weeks, noted FX Strategists at

USD/JPY keeps the constructive stance unchanged and could extend the upside momentum above the 107.00 level in the next weeks, noted FX Strategists at UOB Group. Key Quotes 24-hour view: “We highlighted yesterday that ‘upward momentum remains lackluster and while USD could edge above the major resistance at 107.00 from here, it is unlikely able to maintain a foothold above this level’. Our expectation did not materialize as USD eased off after touching 106.94. Upward momentum has dissipated and for today, USD is likely to trade sideways between 106.50 and 106.95.” Next 1-3 weeks: “We turned positive USD last Thursday, 25 Feb when it was trading at 105.90. In our latest narrative from yesterday, we highlighted that ‘further USD strength is not ruled out’ and that ‘the next resistance is at 107.00’. USD subsequently rose to 106.88 and from here; a breach of 107.00 would not be surprising. That said, lackluster shorter-term momentum suggests the pace of any further advance is likely to be slow and the next resistance at 107.35 may not come into the picture so soon. Overall, the current positive outlook for USD is deemed intact as long as 106.00 (‘strong support’ level previously at 105.65) is not taken out.”

Brent Crude Oil stays on course for the 2020 high at $71.75, despite the current pullback, strategists at Credit Suisse appraise. Key quotes “Brent Cr

Brent Crude Oil stays on course for the 2020 high at $71.75, despite the current pullback, strategists at Credit Suisse appraise. Key quotes “Brent Crude is seeing a near-term pause but with a bull ‘flag’ continuation pattern in place, this is seen as a temporary and healthy breather ahead of further strength to the $71.75 high from last year. Whilst a fresh pullback below here will be looked for, a break can see next resistance at $79.10, the ‘measured flag objective’.”  “Support is seen at $62.09 initially, below which can see a minor top for a fall back to $57.42, potentially $54.60/48, which we look to hold.”  

Silver reversed a modest intraday dip and climbed to the top end of its daily trading range, around the $26.75-80 area during the early European sessi

Silver seemed struggling to capitalize on the overnight bounce from over one-month lows.The set-up seems tilted in favour of bearish traders and supports prospects for a further slide.A sustained move beyond the $27.00 mark is needed to negate the near-term bearish outlook.Silver reversed a modest intraday dip and climbed to the top end of its daily trading range, around the $26.75-80 area during the early European session, albeit lacked follow-through. The mentioned region coincides with a confluence support breakpoint that comprised of 200-period SMA on the 4-hourly chart and a short-term ascending trend-line extending from mid-January. This, in turn, should now act as a key pivotal point for short-term traders. Meanwhile, technical indicators on the 1-hourly chart have been gaining traction but are yet to confirm a bullish bias on 4-hourly/daily charts. This makes it prudent to wait for some follow-through buying beyond the support-turned-resistance before placing bullish bets. Any subsequent move beyond might confront a strong barrier near the $27.00 area. That said, a convincing breakthrough will negate the near-term bearish bias and push the XAG/USD back towards the $28.00 mark with some intermediate resistance near the $27.60-65 region. On the flip side, immediate support is pegged near mid-$26.00s. Sustained weakness below will be seen as a fresh trigger for bearish traders and set the stage for an extension of the white metal's recent sharp pullback from the key $30.00 psychological mark. The XAG/USD might then accelerate the fall towards the $26.00 mark before eventually dropping to the $25.45-35 congestion zone. The downfall could further get extended towards the $25.00 level en-route the $24.75-70 area and YTD lows, around the $24.00 mark. XAG/USD 4-hourly chart Technical levels to watch  

USD depreciation is set to resume as the global economic recovery gains momentum in the view of economists at CIBC Capital Markets who forecast the US

USD depreciation is set to resume as the global economic recovery gains momentum in the view of economists at CIBC Capital Markets who forecast the US Dollar Index at 88.20 by the end of the second quarter. Key quotes “So far this calendar year, the trade-weighted greenback has been a sleepy story. We expect that to continue in the near-term as the market is still quite short USD. Additional tailwinds could also come from the recent rally in longer-dated Treasury yields, but we expect these to have a marginal effect on the USD given the current pace of the Fed’s QE buying and that the costs to hedge for foreign asset managers are still quite considerable.  “What could reawaken the USD bears is the influx of liquidity that’s expected to come as Congress passes the upcoming relief bill. That should increase reserve balances on the Fed’s balance sheet and pressure short-term rates lower by extension. From prior experience, we know that this can materially dent the USD against other currencies.”  “Other long-term headwinds to the USD include the Fed’s average-inflation framework, the diversification of foreign flows away from UST, and upcoming talks on digital taxes. While incoming data should be supportive, we expect the Fed to look past this in the near-term and for the USD to continue to trade defensively.”  “We’ll need to wait until H2 2022 before we start to see the USD materially outperform against overseas majors on a sustained basis. That’s tied to our view that the Fed will start tightening in 2023.”  

Spain Markit Services PMI above forecasts (43) in February: Actual (43.1)

Although a shift to higher interest rates is noteworthy, historically, rising rates coupled with rising inflation may actually suggest better performa

Although a shift to higher interest rates is noteworthy, historically, rising rates coupled with rising inflation may actually suggest better performance for some risk assets, per Morgan Stanley. See – S&P 500 Index: Rising rates indicates a serious shift in market outlook – Morgan Stanley Key quotes “There have been multiple episodes – during 1997-1999, 2004-2006 and 2016-2018 –  when real yields went up and so did equities. Historical equity and credit performance have been better when rates are rising than when rates were falling, especially when rates are rising along with inflation expectations, as they are doing right now.” “In multiple recent episodes of higher rates when risk assets fell sharply, they were all in the context of actual or feared policy tightening and/or they were late in the economic cycle. In contrast, we are clearly in the early part of the economic cycle.” “The credit market performance in the face of higher rates, particularly higher real rates, is interesting. Excess returns tend to underperform in investment-grade credit with higher real rates while outperforming in high yield credit. That syncs up very well with the views of our credit strategists, who remain comfortable with a down in quality view, with high yield credit benefiting from low duration exposure and higher spread cushions.” “Higher real yields with declining inflation expectations would be associated with weaker performance of risk assets, as would spikes in real yields driven by fears about the removal of Fed accommodation. To be clear, nothing in our expectations of economic recovery or the Fed policy suggest any such outcomes. Therefore, our conviction remains that real yields are set to rise, but only gradually, leaving the reflation trade largely intact.”  

The USD/CHF pair is breaking higher and further corrective upside is likely towards the 0.9296/0.9322 region, economists at Credit Suisse inform. Key

The USD/CHF pair is breaking higher and further corrective upside is likely towards the 0.9296/0.9322 region, economists at Credit Suisse inform. Key quotes “We see resistance initially at 0.9195/0.9208 – the November high and the 38.2% retracement of the 2020 fall. Next resistance thereafter is seen at 0.9296/0.9322, which is the 38.2% retracement of the entire fall from 2019, where we now expect to see a more concerted effort to cap and ideally see a resumption of the core bear trend later in the year.” “Post a deeper correction and possibly an extensive period of sideways ranging, we still eventually look for a resumption of weakness with support seen initially at 0.9046/27, below which would turn the risks back lower for a move to the current YTD low at 0.8758, removal of which would see 2014 low at 0.8699 exposed. Beyond here would see an eventual move to the 61.8% retracement at 0.8528.”  

FX option expiries for Mar 3 NY cut at 10:00 Eastern Time, via DTCC, can be found below. - EUR/USD: EUR amounts 1.1900 1.0b 1.2000 1.4b 1.2150 863m -

FX option expiries for Mar 3 NY cut at 10:00 Eastern Time, via DTCC, can be found below. - EUR/USD: EUR amounts1.1900 1.0b1.2000 1.4b1.2150 863m - USD/JPY: USD amounts         105.50/60 1.8b106.00 358m 106.70 395m - USD/CHF: USD amounts         0.9300 515m - AUD/USD: AUD amounts 0.7800 385m - USD/CAD: USD amounts         1.2550 450m 1.2600 330m - NZD/USD: NZD amounts0.7300 1.4b- EUR/GBP: EUR amounts0.8600 1.9bn0.8650 767m

EUR/USD has been recovering amid temporary market calm. But, expected strong US figures, stimulus progress and America's vaccine ramp-up are set to bo

EUR/USD has been recovering amid temporary market calm. But, expected strong US figures, stimulus progress and America's vaccine ramp-up are set to boost the greenback, Yohay Elam, an Analyst at FXStreet, reports. See: EUR/USD to strengthen with vaccine rollout in the second quarter – CIBC Key quotes “Economists expect the ISM Services Purchasing Managers' Index to print 58.7 points in February – prolonged growth in America's largest sector. The Manufacturing PMI smashed estimates earlier in the week with 60.8. Ahead of ISM's release, ADP's employment figures are forecast to show an increase of 177,000 private-sector jobs.” “While the old continent is struggling to get people to take the AstraZeneca jab, the US is ramping up the rollout and also production. Merck agreed to produce Johnson and Johnson's single-shot inoculations and President Joe Biden stated that every American could be offered a vaccine by the end of May.” “The Senate will begin debating Biden's $1.9 trillion covid relief package on Wednesday. While the president urged lawmakers to leave as much as possible unchanged, some elements such as the minimum wage hike will likely fall out of the legislation passed by the House. Nevertheless, advancing stimulus will likely add propping up the greenback.”  “Euro/dollar continues suffering from downside momentum on the 4-hour chart and trades below the 50, 100 and 200 Simple Moving Averages – which are all converging around the 1.2110 level. That critical confluence is a make or break point for the pair.”  

WTI (futures on NYMEX) has turned positive for the first time in four days on Wednesday, as the corrective pullback from yearly highs of $63.71 seems

WTI recaptures the 21-DMA, helped by the risk-on mood.  Rising US crude stocks, OPEC+ uncertainty to keep sellers hopeful. All eyes remain on the EIA crude inventories, US macro news.WTI (futures on NYMEX) has turned positive for the first time in four days on Wednesday, as the corrective pullback from yearly highs of $63.71 seems to have stalled. The risk-on market profile is boding well for the higher-yielding oil, helping it recoup some of this week’s losses. Expectations of a quick global economic turnaround, amid rapid rollout of the covid vaccines, boost the investors’ sentiment. Although the bulls remain wary amid an unexpected build in the US crude stockpiles, as reported by the American Petroleum Institute (API) late Tuesday. The API data showed that the US crude stocks rose by 7.4 million barrels in the week to Feb. 26 vs. expectations for a draw of 928,000 barrels. At the time of writing, the US oil trades at $59.98, adding 0.40% on the day. Looking at the daily chart for the WTI barrel, the bulls are defending the critical short-term support of the 21-daily moving average (DMA) at $59.64. A daily closing below that level could negate the uptrend in the near-term, calling for a continuation of the corrective declines. The next relevant support is seen at the February 21 low of $57.32. The 14-day Relative Strength Index (RSI) has turned higher while holding above the midline, suggesting that a bounce towards the $61 mark could be in the offing. The next direction in the prices hinges on the US crude stocks change data due to be published by the Energy Information Administration (EIA) later this Wednesday.  Also, the US ADP jobs and ISM Services PMI could have some bearing on the USD-sensitive oil. The main event risk for this week remains the OPEC and its allies (OPEC+) meeting due on Thursday, with tensions mounting, as markets expect the alliance to announce an increase in the oil output amid improving global economic outlook. WTI daily chart WTI additional levels  

France Budget: €-21.856B (January) vs €-178.1B

Since the independent Danish interest rate hike in March 2020, EUR/DKK has moved from above 7.470 to the current level around 7.436. In February the D

Since the independent Danish interest rate hike in March 2020, EUR/DKK has moved from above 7.470 to the current level around 7.436. In February the Danish central bank sold DKK0.4 B in the currency market to counter strengthening of the krone against the euro. This is the first time in almost four years that the bank has tried to force EUR/DKK higher. More intervention is expected in the coming months, economists at Nordea brief. Key quotes “As usual the central bank has not revealed the exact EUR/DKK level where it intervened in February. However, judging from the development in EUR/DKK during the month it seems like at level slightly above 7.435 marks the lower tolerance level for the central bank at the current juncture.” “The key reason for the downward pressure on EUR/DKK is the very low excess liquidity that spills over to a very large spread between money market rates in Denmark and the euro area.” “According to our estimates, the amount of excess liquidity in the Danish money market will be squeezed even further towards the end of March. This will most likely trigger more intervention from the central bank and probably also on a larger scale compared to February. Despite this we do not expect the intervention to trigger an independent Danish rate cut.”  “We expect the central bank to keep its certificate of deposit rate unchanged at -0.60% at least until end-2022.”  

The USD/CAD pair edged lower during the early North American session on Wednesday and dropped to the 1.2600 neighbourhood, or weekly lows set on Tuesd

USD/CAD pair witnessed some selling for the third consecutive session on Wednesday.Retreating US bond yields and the risk-on mood kept the USD bulls on the defensive.An uptick in crude oil prices underpinned the loonie and contributed to the selling bias.The USD/CAD pair edged lower during the early North American session on Wednesday and dropped to the 1.2600 neighbourhood, or weekly lows set on Tuesday. Following the previous day's good two-way price swings, the pair met with some fresh supply and traded with a negative bias for the third consecutive session. A combination of factors continued benefitting the Canadian dollar, which, along with a subdued US dollar price action, exerted some pressure on the USD/CAD pair through the first half of the trading action. Statistics Canada reported on Tuesday that the domestic economy grew at a 9.6% annualized pace during the fourth quarter of 2020. Adding to this, a flash estimate showed that the GDP rose 0.5% in January, defying expectations for a contraction at the start of the year. Apart from this, bullish crude oil prices continued underpinning the commodity-linked currency – loonie. On the other hand, a fresh leg up in the equity markets and a softer tone surrounding the US Treasury bond yields kept the USD bulls on the defensive. This was seen as another factor that prompted some selling around the USD/CAD pair. That said, the upbeat US economic outlook might extend some support to the USD and help limit any further downside for the major. Investors remain optimistic about a relatively strong US economic recovery from the pandemic amid the progress in COVID-19 vaccinations and a massive US fiscal stimulus plan. Moreover, the reflation trade seemed to have forced investors to price in a possible uptick in inflation and raised doubts that the Fed would retain ultra-low interest rates for a longer period. It will now be interesting to see if the USD/CAD pair is able to attract any buying at lower levels or breaks below the 1.2600 round-figure mark and resume its prior/well-established bearish trend. Market participants now look forward to the release of the US ADP report on private-sector employment and the US ISM Services PMI for some meaningful trading opportunities. Technical levels to watch  

The Brazilian real remains increasingly a domestic story, and fiscal uncertainty leaves us looking for a retest of the 5.8076 30 October 2020 highs in

The Brazilian real remains increasingly a domestic story, and fiscal uncertainty leaves us looking for a retest of the 5.8076 30 October 2020 highs in the USD/BRL pair. Key quotes “Our bias is to expect the BCB to deliver in line with the aggressive tightening expectations priced in, for now, and at least as long as the fiscal side of things remains highly uncertain. A different outcome in fact, with e.g. the BCB hiking less than 50bp on 17 Mar, would prove negative for BRL and ultimately self-defeating for the inflation mandate.” “The approval of the Emergency Bill for Constitutional Amendment (PEC) bill is key: the bill allows for the disbursal of a new round of aid while at the same introducing measures to automatically curb spending in other areas. Markets have been focused on the risk that these two key components of the bill might be disentangled and voted separately. The situation remains highly fluid, and it appears that the two measures will not be voted separately. This remains a live issue, and as long as it is unresolved, we suspect that BRL stability might be elusive.” “We see now risks of USD/BRL retesting the 5.8076 high from 30 October 2020: in the event of a break higher, the 5.90 area last seen in May 2020 would become a valid target zone.”  

Switzerland Consumer Price Index (YoY) came in at -0.5%, below expectations (-0.3%) in February

Switzerland Consumer Price Index (MoM) registered at 0.2%, below expectations (0.4%) in February

The AUD/USD pair takes rounds to 0.7830 after bouncing from the 55-day moving average at 0.7715. However, the latter remains exposed, according to Kar

The AUD/USD pair takes rounds to 0.7830 after bouncing from the 55-day moving average at 0.7715. However, the latter remains exposed, according to Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank. Key quotes “AUD/USD is managing a small bounce from its 55-day ma at 0.7715, this should remain fairly tepid as the market charted a key week reversal last week.”  “Below the 55-day ma at 0.7715 and Fridays low at 0.7690 should trigger losses to the 0.7564 February low.”  “Below 0.7564 will trigger a slide to 0.7463 December 21 low and also the 0.7413 September high and the 0.7340 November 9 high.” “Intraday Elliott wave counts are implying that rallies to the 0.7840 region are likely to fail.”  

Gold staged a goodish rebound from eight-month lows touched earlier on Tuesday and finally settled with modest gains for the first time in six session

Gold staged a goodish rebound from eight-month lows touched earlier on Tuesday and finally settled with modest gains for the first time in six sessions. XAU/USD remains at the mercy of US bond yields/USD price dynamics, FXStreet’s Haresh Menghani reports. See – Gold Price Analysis: Difficult to ignore bearish trend in XAU/USD – OCBC Key quotes “Wednesday's US economic docket – featuring the releases of the ADP report on private-sector employment and ISM Services PMI – will be looked upon for some impetus later during the early North American session. Traders might further take cues from the broader market risk sentiment; the US bond yields and the US price dynamics in order to grab some meaningful opportunities.” “Any further recovery might be seen as a selling opportunity and remain capped near the $1960-65 region. That said, a sustained strength beyond will negate the bearish outlook and trigger a fresh wave of the short-covering move. The commodity might then aim back to reclaim the $1800 mark before eventually darting towards the 200-day EMA strong barrier near the $1815-16 supply zone.” “The $1725-23 region now seems to protect the immediate downside and is followed by support near the overnight swing lows, around the $1707 area. Failure to defend the mentioned support levels might turn the commodity vulnerable to break below the $1700 mark and accelerate the downfall towards the $1675-70 congestion zone.”  

German Chancellor Angela Merkel is expected to agree on a gradual lifting of the coronavirus curbs when she meets with the regional leaders later on W

German Chancellor Angela Merkel is expected to agree on a gradual lifting of the coronavirus curbs when she meets with the regional leaders later on Wednesday, Reuters reports, citing draft plans. The German leader, however, will say that the restrictions could be tightened again if infections jump, per Reuters. Additional details “The draft plans say that from March 8 a maximum of five people from two households, excluding children younger than 14, will be allowed to meet.” “Flower shops and book stores, garden centers, tattoo and nail parlors as well as massage salons will also be allowed to reopen on March 8, the draft shows. Hairdressers and some schools have reopened in recent days.” “The latest draft plans obtained by Reuters provide for a tighter lockdown to be re-imposed if the number of cases rises above 100 per 100,000.”

The USD/JPY pair held on its intraday gains through the early European session on Wednesday and was last seen trading near daily tops, around the 106.

A combination of factors assisted the USD/JPY to regain positive traction on Wednesday.The upbeat economic outlook weighed on the safe-haven JPY and extended some support.A modest uptick in the USD provided an additional boost ahead of the US macro releases.The USD/JPY pair held on its intraday gains through the early European session on Wednesday and was last seen trading near daily tops, around the 106.85 region. Following the previous day's pullback from the vicinity of the 107.00 mark, or over six-month tops, the pair caught fresh bids and was supported by a combination of factors. A fresh leg up in the equity markets undermined the safe-haven Japanese yen. Apart from this, a modest US dollar uptick assisted the USD/JPY pair to regain positive traction. The global risk sentiment remained well supported by optimism that a massive US fiscal spending plan will energise the global economic recovery. This, along with the impressive pace of coronavirus vaccinations, continued boosting investors' confidence and remained supportive of the underlying bullish tone in the financial markets. Meanwhile, the reflation trade forced investors to price in a possible uptick in inflation and raised doubts that the Fed would retain ultra-low interest rates for a longer period. Adding to this, expectations for a relatively faster US economic recovery from the pandemic underpinned the USD and extended some additional support to the USD/JPY pair. However, retreating US Treasury bond yields might hold bullish traders from placing fresh bets and cap gains for the USD/JPY pair amid slightly overbought conditions. Hence, it remains to be seen if bulls are able to capitalize on the move or struggle to conquer the 107.00 mark as the focus now shifts to the US macro releases for a fresh impetus. Wednesday's US economic docket highlights the releases of the ADP report on private-sector employment and ISM Services PMI. The data, along with the US bond yields, will play a key role in influencing the USD price dynamics. Traders might further take cues from the broader market risk sentiment in order to grab some meaningful opportunities. Technical levels to watch  

Norway Current Account: 9.28B (4Q) vs previous 9.91B

Turkey Producer Price Index (MoM) down to 1.22% in February from previous 2.66%

Turkey Producer Price Index (YoY) rose from previous 26.16% to 27.09% in February

Turkey Consumer Price Index (MoM) registered at 0.91% above expectations (0.7%) in February

Turkey Consumer Price Index (YoY) came in at 15.61%, above forecasts (15.39%) in February

Here is what you need to know on Wednesday, March 3: Markets are relatively calm on Wednesday after the dollar was on the back foot on Tuesday, a resu

Here is what you need to know on Wednesday, March 3: Markets are relatively calm on Wednesday after the dollar was on the back foot on Tuesday, a result of stable US yields. The US ADP NFP, ISM Services PMI, additional speeches by Fed officials and the UK budget promise a busy day, which also includes stimulus reaching the US Senate. Calm: S&P 500 futures are on the rise, the dollar remains down and gold is consolidating its recovery early on Wednesday, as US ten-year Treasuries cling to 1.40%.Fed: Lael Brainard, Governor at the Federal Reserve, said that the speed of the move in bond markets "caught my eye" – a first statement of concern about the sell-off in debt from the central bank. Her colleague Mary Daly repeated the message that the move reflects optimism about growth. The Fed releases its "Beige Book" including anecdotal evidence on the economy later on Wednesday, and Chicago Fed President Charles Evans also speaks. NFP hints: ADP's labor market report is set to show an increase of 177,000 private-sector jobs in February, a hint toward the official Nonfarm Payrolls figures on Friday. The ISM Services Purchasing Managers' Index is forecast to hold up at 58.7 but show a slowdown in hiring. ISM's Manufacturing PMI beat estimates, with the inflation component standing out with a surge.  See:  US ADP Employment Change February Preview: How soon will the small business sector bounce? US ISM Services PMI February Preview: Expect more than expectedStimulus: President Joe Biden urged the Senate to approve his $1.9 trillion bill without making significant changes. Democrats already abandoned including a minimum wage hike, and face pressures to limit the scope of checks to individuals.UK budget: Chancellor of the Exchequer Rishi Sunak is set to present a new budget for Britain, which will likely include an extension of the furlough scheme through September. The government already spent £300 billion on coronavirus relief. Plans to plug the hole in government coffers may consist of tax hikes.EU: European Central Bank members continued warning about the rise in sovereign bond yields, vowing to act if necessary. German states are set to agree on extending current restrictions until late March while Italy is mulling imposing new limits until early April. Europe's vaccination campaign remains sluggish. Markit's final Services PMIs are eyed. Vaccine: Biden announced a deal in which Merck will produce Johnson and Johnson's shots in something akin to a "wartime effort." The White House intends to offer COVID-19 jabs to all Americans by the end of May. Bitcoin has been extending its recovery, topping $49,000 after a period of consolidation. Ethereum is changing hands above $1,500 and XRP tops $0.40. WTI Crude Oil is hovering above $60 as tensions mount toward Thursday's OPEC+ meeting.  Where next for the dollar as the Fed refocuses, bonds bring action, jobs set to cause jitters  

Gold (XAU/USD) has returned to the red zone, as the US dollar appears to have found its feet after Tuesday’s corrective decline. The US dollar is atte

XAU/USD spots symmetrical triangle breakdown on the 1H chart.RSI point south, within the bearish zone, allowing more declines.Downside more compelling amid a bunch of healthy resistance levels.Gold (XAU/USD) has returned to the red zone, as the US dollar appears to have found its feet after Tuesday’s corrective decline. The US dollar is attempting a rebound despite the 0.50% advance in the S&P 500 futures, which reflects the risk-on market mood. Gold traders await the key US ADP jobs and ISM Services PMI data for fresh directives. In the meantime, the yellow metal could likely remain at the mercy of the dollar dynamics. From a short-term technical perspective, the bearish 21-simple moving average (SMA) at $1736 on the four-hour chart is capping the recovery attempts, at the moment. The Relative Strength Index (RSI) has turned lower, suggesting that the recovery momentum could be losing steam. Therefore, the eight-month lows of $1707 is back on the sellers’ radars. Gold Price Chart: Four-hour  If the buyers manage to find acceptance above the 21-SMA barrier, the psychological $1750 level could be put to test. Further up, the downward-sloping 50-SMA at $1771 would then challenge the bullish commitments. Gold Additional levels  

In light of advanced prints from CME Group for natural gas futures markets, open interest increased for the second consecutive session on Tuesday, thi

In light of advanced prints from CME Group for natural gas futures markets, open interest increased for the second consecutive session on Tuesday, this time by around 2.2K contracts. In the same line, volume went up by more than 55K contracts, partially reversing the previous drop. Natural Gas approaches $3.00/MMBtuNatural gas prices extended the weekly recovery on Tuesday on the back of rising open interest. The commodity is now flirting with the minor resistance near $2.90 per MMBtu, where sits the 20-day SMA, and re-targets the psychological $3.00 mark in the short-term.    

NZD/USD is now seen navigating within the 0.7230-0.7360 for the time being, suggested FX Strategists at UOB Group. Key Quotes 24-hour view: “We expect

NZD/USD is now seen navigating within the 0.7230-0.7360 for the time being, suggested FX Strategists at UOB Group. Key Quotes 24-hour view: “We expected NZD to ‘trade sideways between 0.7230 and 0.7300’ yesterday. NZD subsequently dropped to 0.7210 before rebounding strongly to an overnight high of 0.7303. The rebound has room to test 0.7320 first before easing. The next resistance at 0.7360 is unlikely to come into the picture. Support is at 0.7275 followed by 0.7230.” Next 1-3 weeks: “On Monday (01 Mar, spot at 0.7270), we held the view that NZD ‘is under pressure but the support at 0.7200 may not come into the picture so soon’. We did not quite anticipate the short-lived drop to 0.7210 yesterday and the subsequent sharp rebound. Downward momentum has more or less dissipated and NZD is likely to trade between 0.7230 and 0.7360 for now.”

CME Group’s preliminary readings for crude oil futures markets noted open interest went down by nearly 25.5K contracts on Tuesday. On the other direct

CME Group’s preliminary readings for crude oil futures markets noted open interest went down by nearly 25.5K contracts on Tuesday. On the other direction, volume rose for the second straight session, now by around 46.2K contracts. WTI focused on 2021 highs and the OPEC+ Prices of the WTI seem to have met some contention in the vicinity of the $59.00 mark for the time being. Tuesday’s pullback was amidst shrinking open interest, indicative that the downside momentum could be waning. Against this, while crude oil price could re-shift the attention to another visit to the 2021 highs near $64.00, a more immediate concern will be the OPEC+ meeting on Thursday.  

The European Union (EU) aims to increase the COVID-19 vaccine production capacity to two to three billion doses per year by the end-2021, the bloc’s I

The European Union (EU) aims to increase the COVID-19 vaccine production capacity to two to three billion doses per year by the end-2021, the bloc’s Internal Market Commissioner Thierry Breton said on Wednesday.   more to come ....

FX Strategists at UOB Group suggested Cable could now move into a consolidative phase between 1.3860 and 1.4070 in the next weeks. Key Quotes 24-hour

FX Strategists at UOB Group suggested Cable could now move into a consolidative phase between 1.3860 and 1.4070 in the next weeks. Key Quotes 24-hour view: “We highlighted yesterday that GBP ‘could edge below last week’s low at 1.3890’. We added, ‘in view of the lackluster momentum, any further decline is unlikely to threaten the major support at 1.3850’. Our view was not wrong as GBP subsequently dropped to 1.3860. That said, we did not anticipate the sharp bounce from the low (overnight high of 1.3975). The rebound has scope to extend but any further advance is likely limited to a test of 1.3995. The next resistance at 1.4035 is unlikely to come into the picture. Support is at 1.3925 followed by 1.3890.” Next 1-3 weeks: “On Monday (01 Mar, spot at 1.3975), we held the view that GBP ‘is in a corrective pullback’ and ‘any weakness is likely limited to 1.3850’. While GBP declined as expected, it rebounded strongly after touching 1.3860 yesterday. Downward momentum has more or less dissipated and GBP could trade between 1.3860 and 1.4070 for now.”

Traders added nearly 1.5K contracts to their open interest positions in gold futures markets on Tuesday, reversing at the same time three consecutive

Traders added nearly 1.5K contracts to their open interest positions in gold futures markets on Tuesday, reversing at the same time three consecutive daily drops according to flash data from CME Group. Volume, instead, shrunk for the second session in a row, this time by around 3.3K contracts. Gold now looks to $1,800/ozGold prices managed to rebound from new yearly lows just above the $1,700 per ounce on Tuesday. The bounce was on the back of rising open interest, which could be indicative that further upside remains on the cards in the very near-term. That said, the next level of note for the precious metal now emerges at the $1,800 per ounce troy.  

In opinion of UOB Group’s FX Strategists, further retracements in EUR/USD appears to have lost some traction in the near-term. Key Quotes 24-hour view

In opinion of UOB Group’s FX Strategists, further retracements in EUR/USD appears to have lost some traction in the near-term. Key Quotes 24-hour view: “Yesterday, we highlighted that ‘there is scope for EUR to dip below 1.2020 first before a recovery can be expected’. We added, ‘the next support at 1.1985 is unlikely to come under threat’. While our view was not wrong as EUR dropped to 1.1990, we did not anticipate the swift and sharp rebound from the low (overnight high of 1.2094). The recovery could extend but any advance is likely limited to a test of 1.2110. The strong resistance at 1.2135 is unlikely to come into the picture. Support is at 1.2060 followed by 1.2030.” Next 1-3 weeks: “On Monday (01 Mar, spot at 1.2085), we highlighted that ‘downside risk has increased and EUR could drop to 1.2020’. EUR subsequently dropped to 1.2026 and we noted yesterday (02 Mar) that ‘risk is still on the downside and the next support below 1.2020 is at 1.1985’. EUR came close to 1.1985 as it dropped to 1.1990 during London hours yesterday before staging a sharp rebound. Downward momentum has waned but as long as 1.2135 (no change in ‘strong resistance’ level) is intact, there is still chance, albeit a slim one for EUR to make another run lower. That said, in order to rejuvenate the flagging momentum, EUR has to move and stay below 1.2030 within these 1 to 2 days or a break of 1.2135 would not be surprising.”  

EUR/GBP prints mild gains while struggling to keep the bulls hopeful around 0.8660 during the pre-European session on Wednesday. The pair becomes key

EUR/GBP wavers around intraday top after breaking 10-week-old resistance the previous day.Short-term resistance line, 21-day SMA stands tall to test the bulls amid upbeat MACD.Bears will eye breakdown of 0.8600 for fresh entries.EUR/GBP prints mild gains while struggling to keep the bulls hopeful around 0.8660 during the pre-European session on Wednesday. The pair becomes key for the day considering the scheduled release of Eurozone PMIs and the UK budget. Given the high hopes from the British budget, any disappointment in the form of a future tax hike could derail the upbeat sentiment. However, technical formations favor buyers after the pair crossed a descending trend line from December 21 the previous day. The moves also gain support from the bullish MACD, which in turn directs EUR/GBP optimists to the next key hurdles, namely a descending trend line from January 22 and 21-day SMA, respectively around 0.8685 and 0.8705. Meanwhile, EUR/GBP sellers are less likely to return unless witnessing a daily closing below the 0.8600 round-figure, following that the multi-month low flashed last week near 0.8540 will be the key to watch. Overall, EUR/GBP has already flashed initial signals for a trend change that need confirmation. EUR/GBP daily chart Trend: Further upside expected  

The Bank of Japan (BOJ) board member Goushi Kataoka is back on the wires now, via Reuters, noting that the recent US yield rise partly reflects hopes

The Bank of Japan (BOJ) board member Goushi Kataoka is back on the wires now, via Reuters, noting that the recent US yield rise partly reflects hopes for fiscal policy and vaccine rollouts. Key quotes Watching virus impact, will act if needed.   more to come ....

USD/INR holds lower ground near 73.12, down 0.20% intraday, amid the initial Indian session on Wednesday. In doing so, the quote drops for the third c

USD/INR stays offered near weekly bottom, prints three-day losing streak.50-day SMA, four-month-old falling trend line offer immediate support.Bulls can look for a daily close beyond 200-day SMA for trend reversal.USD/INR holds lower ground near 73.12, down 0.20% intraday, amid the initial Indian session on Wednesday. In doing so, the quote drops for the third consecutive day after stepping back from 200-day SMA on Friday. Not only another U-turn from 200-day SMA but downward sloping RSI also directs USD/INR sellers towards re-testing the 50-day SMA level of 73.02. However, the pair’s weakness past-73.02 will be challenged by the 73.00 threshold and the prior resistance line from November, currently around 72.85. Meanwhile, fresh upside momentum can aim for 73.50 and the 74.00 round-figure before trying to conquer the tough nut to the north, namely the 200-day SMA level of 74.02. Although USD/INR bulls are likely not to cross the 74.02 hurdle, a daily closing beyond the same will not hesitate to poke the late 2020 top close to the 75.00 level. USD/INR daily chart Trend: Further weakness expected  

EUR/USD is flatlined below 1.2100, consolidating Tuesday’s sharp rebound from four-week lows of 1.1992. The bulls take a breather, gathering pace in o

EUR/USD in a consolidative mode, eyeing for a big move above 1.21. The US dollar holds the lower ground amid an upbeat market mood.  Eurozone Services PMIs eyed ahead of the key US data flow. EUR/USD is flatlined below 1.2100, consolidating Tuesday’s sharp rebound from four-week lows of 1.1992. The bulls take a breather, gathering pace in order to recapture the 1.21 level on a sustained basis. The main currency pair is holding at higher levels, courtesy of the bearish tone seen around the safe-haven US dollar, as the risk tone remains upbeat amid vaccine and stimulus hopes.   The greenback slipped from monthly tops on Tuesday after the risk sentiment recovered on retreating Treasury yields, which eased off the pressure on the Fed to act amid concerns about overheating of the economy. On the euro-side of the story, the mixed Eurozone CPI data failed to deter the EUR bulls, as the dynamics around the yields and dollar remain the main market motor. Attention now turns towards the Euro area Final Services PMIs ahead of the US ADP and ISM Services PMI releases for fresh trading impetus. EUR/USD: Technical levels “The immediate resistance is seen at 1.2139 (50-day SMA), followed by the Feb. 25 high of 1.2243. A daily close below the 100-day SMA, currently at 1.2024, would invalidate the bullish outlook,” FXStreet’s Analyst Omkar Godbole notes. EUR/USD: Additional levels    

GBP/USD stays sluggish as taking rounds to the 1.3950-65 trading range, currently around 1.3960, while heading into the London open on Wednesday. The

GBP/USD wavers in a 15-pip trading range after Tuesday’s recovery from two-week low.British Chancellor Rishi Sunak ready to do “whatever it takes” but traders stay cautious as high hopes often disappoint.Furlough extension, personal/business benefits aimed for faster economic recovery.US stimulus, vaccine news and Services PMIs to offer extra filters to cable’s moves.GBP/USD stays sluggish as taking rounds to the 1.3950-65 trading range, currently around 1.3960, while heading into the London open on Wednesday. The pair portrays the typical cautious sentiment ahead of the key event, i.e. the British annual budget, while also respecting the broad US dollar weakness and risk-on mood. More firepower to save jobs and businesses… On Tuesday, around 12:30 GMT, UK Finance Minister Rishi Sunak will be in the global stoplight as he will deliver his second annual budget for the British economy. While the Chancellor of the Exchequer has already signaled readiness to do “whatever it takes”, traders would seek clues as to how the present freebies will be curtailed in the future to determine immediate GBP/USD moves. Among the most talked-about measures, a five-month extension to the furlough, from April to September, as well as heavy support to business and no tax rate hike, gained major attention. Additional details suggest an extension of stamp duty and keep maintain the £20 a week uplift in universal credit for six months, per The Guardian. However, British borrowing is already highest since World War II and hence UK Chancellor Sunak may not miss the opportunity to signal future balancing of the finances. Herein the deadline for hiking the corporate tax from 19% and how faster the economy can recover from what the Sky News said, “after suffering its deepest annual decline for three centuries last year when GDP shrank by 9.9%.” Elsewhere, the UK is up for getting ten million AztraZeneca vaccine from the Indian manufacturer of Serum Institute of India (SII) but then this doesn’t help to overcome the fears of Brazilian covid variants as the search for suspect extends in London. On the other hand, US President Joe Biden prepones the time to immunize all the American adults from July to previously announced May. Against this backdrop, stock futures from the UK and the US print mild gains whereas the US 10-year Treasury yields look for clearer direction by press time. Other than the UK Budget, the final reading of the Britain Services PMI for February, expected to drop from 49.7 to 38.8, followed by the US ISM Services PMI, likely to remain unchanged at 58.7, will entertain the GBP/USD traders. Overall, the cable is in an uptrend and can escalate the northward trajectory on welcome details from the UK’s much-awaited budget. However, any disappointment won’t be taken lightly and hence should be traded with caution. Technical analysis GBP/USD grinds to the north amid sustained trading beyond key trend lines from December and September 2020. However, the 1.4000 guards immediate upside with the 21-day EMA near 1.3905 acting as nearby support to watch during the pullback.  

AUD/USD takes rounds to 0.7830 amid the early Wednesday. The pair recovered so far during the week before pausing the run-up off-late. In doing so, th

AUD/USD seesaws in a choppy range near weekly top.Two-month-old horizontal area offers immediate support, previous hurdle from February 05 guards nearby upside.Bullish MACD backs recent recovery from short-term support line, 200-bar SMA.AUD/USD takes rounds to 0.7830 amid the early Wednesday. The pair recovered so far during the week before pausing the run-up off-late. In doing so, the quote gives a sober reaction to the upbeat Aussie Q4 GDP and weak China Caixin Services PMI. Even so, the pair’s successful trading above a broad horizontal hurdle established since early January, as well as strength beyond the key SMA and one-month-old support line, favor the AUD/USD buyers. That said, the previous resistance line from February 04, at 0.7865 now, seems to lure short-term buyers of the AUD/USD ahead of directing them to the 0.7900 round-figure. In a case where bulls keep the reins past-0.7900, the 0.7930 becomes a buffer ahead of the yearly top surrounding 0.8010. If at all the AUD/USD prices slip below the immediate support zone occupying the 0.7820-05 area, 200-bar SMA and short-term support line, respectively near 0.7740 and 0.7725, should test the sellers. However, sustained weakness below 0.7725 may eye the previous week’s low near 0.7690 before confirming the downside to the sub-0.7600 region. AUD/USD four-hour chart Trend: Bullish  

The People’s Bank of China (PBOC) is likely to change its monetary policy stance towards containing macro leverage ratios this year in a departure fro

The People’s Bank of China (PBOC) is likely to change its monetary policy stance towards containing macro leverage ratios this year in a departure from last year's priority of reducing business financing costs, 21st Century Business Herald reports in an editorial article. Additional takeaways “The government may align M2 and social financing growth with nominal GDP.” “The central bank may keep policy rates or reserve ratios unchanged unless growth deviates from the targeted range, and adjust liquidity mainly by open market operations.” Market reaction USD/CNY is under pressure around 6.4646, down 0.08% on the day, at the press time. The yuan traders digest the latest PBOC headlines amid a broadly subdued US dollar. AUD/USD refreshes intraday high above 0.7800 on upbeat Australian Q4 GDP

Asian equities stay firmer despite Wall Street’s downbeat performance as Australia’s GDP and risk-positive signs from the US and the UK favor risks du

Shares in Asia-Pacific cheer hopes of faster vaccinations, early stimulus.Upbeat Aussie GDP superseded second-tier figures from China, Japan and New Zealand.UK budget, US aid package progress in the Senate will offer immediate directions before Fed’s Powell and American jobs report.Asian equities stay firmer despite Wall Street’s downbeat performance as Australia’s GDP and risk-positive signs from the US and the UK favor risks during early Wednesday. Also favoring the mood could be the absence of any disappointment from the economic calendar as well as hopes of a further rate cut from China. Additionally, Japan’s likely easing of the coronavirus (COVID-19)-led emergency from Tokyo adds to the mildly positive market sentiment. On the contrary, cautious sentiment ahead of the key British budget, coupled with a lack of major data, keeps traders at bay. Against this backdrop, MSCI’s index of Asia-Pacific shares outside Japan prints 0.75% intraday gains whereas Japan’s Nikkei 225 rises 0.25% by the press time. Australia’s ASX 200 is up around 0.75% as Aussie Q4 GDP beats estimates while rising 3.1% QoQ. Stocks in China and Hong Kong gain around 1.5% amid chatters of the People’s Bank of China’s (PBOC) reserve requirement ratio (RRR) cut. New Zealand’s NZX 50 buck the trend with 0.40% intraday loss as second-tier data at home eases. Though, stocks from Indonesia, South Korea and India remain on the front-foot while following the market’s mood. Moving on, S&P 500 Futures part ways from Wall Street’s downbeat performance as US President Biden prepones the time to immunize all the American adults. Though, the US 10-year Treasury yields fail to portray notable moves while waiting for Thursday’s speech of Fed Chair Jerome Powell after recent Fedspeak favors the bulls. Looking forward, UK’s budget headlines and the US ISM Services PMI can offer immediate direction and are likely to keep the latest optimism on the table. However, high hopes from Powell and Friday’s US employment figures for February become the area of concern.

Gold (XAU/USD) is consolidating its solid recovery from multi-month troughs on Wednesday, as the upbeat market mood weighs on the traditional safe-hav

Gold (XAU/USD) is consolidating its solid recovery from multi-month troughs on Wednesday, as the upbeat market mood weighs on the traditional safe-haven. The vaccine optimism seems to have helped the risk-recovery, especially after US President announced the US will have enough vaccine supply significantly sooner, which will cover all adults by the end of May. Gold staged a $30 rebound on Tuesday from $1707 after the retreat in the US Treasury yields calmed the markets and diminished the haven demand for the US dollar. Gold traders now await the critical US ADP jobs and ISM Services PMI data while keeping a close eye on the US $.9 trillion stimulus bill. How is gold positioned on the technical charts? Gold Price Chart: Key resistance and support levels The Technical Confluences Detector shows that gold is battling a major resistance at $1739/40, which is the convergence of the previous high four-hour, Fibonacci 23.6% one-week and the previous day high. The next upside target is placed at $1755, where the Fibonacci 23.6% one-month lies. Acceptance above the latter could trigger a sharp rally towards the $1773 zone, where the SMA10 one-day, SMA100 one-hour and SMA50 four-hour coincide. To the downside, immediate cushion awaits at $1730, the intersection of the Fibonacci 23.6% one-day, previous low one-hour and Bollinger Band one-hour Middle. The sellers will then challenge significant support at $1726, the Fibonacci 38.2% one-day. Further south, the bears need to crack $1717 to resume the downtrend. That level is the confluence of the previous month and week lows. The previous day low at $1707 would be back in play, subsequently. Here is how it looks on the tool About Technical Confluences Detector The TCD (Technical Confluences Detector) is a tool to locate and point out those price levels where there is a congestion of indicators, moving averages, Fibonacci levels, Pivot Points, etc. Knowing where these congestion points are located is very useful for the trader, and can be used as a basis for different strategies.  

GBP/JPY refreshes intraday high with 149.20 figures during the early Wednesday. In doing so, the quote justifies high hopes from today’s UK budget, ba

GBP/JPY takes bids near intraday high, battles one-week-old hurdle.Sustained trading above key SMA, trend lines join hopes of easy British budget to favor bulls.Horizontal area from mid-February adds to the downside filters.GBP/JPY refreshes intraday high with 149.20 figures during the early Wednesday. In doing so, the quote justifies high hopes from today’s UK budget, backed by official hints to do “whatever it takes”. Also on the positive side could be the strong RSI and successful trading above the key short-term support line, SMA. However, a one-week-old horizontal area surrounding 149.20-25 questions the pair’s run-up to the yearly peak of 150.44. On its way up, GBP/JPY may catch a breather around the 150.00 threshold. It should be noted that the quote’s sustained rise past-150.44 will have to cross April 20, 2018 low near 150.65-70 before extending the gains. Meanwhile, 50-bar SMA and an upward sloping trend line from early February, respectively around 148.65 and 148.15, restrict the short-term downside of the GBP/JPY. Also acting as the key immediate support is a region comprising multiple levels marked since February 16 around 147.40-45. GBP/JPY daily chart Trend: Bullish  

The Goldman Sachs analysts believe that the US inflation is likely to edge higher in the coming month before subsiding by the year-end. Key quotes For

The Goldman Sachs analysts believe that the US inflation is likely to edge higher in the coming month before subsiding by the year-end. Key quotes Forecast “core PCE inflation to peak at 2.4% in April and then by year-end back to 2.0%, bolstered by the year-on-year comparison to the April 2020 lockdowns.” “In our baseline, a partial rebound in four particularly sensitive categories-air and ground transportation, hotels, and recreation admissions-will contribute nearly +0.5pp.” “But how high could core inflation go if mass vaccination unleashes surging demand in virus-sensitive categories?”   

After a brief consolidative stint in early Asia, USD/JPY has regained poise, now heading back towards the seven-month highs of 106.96 reached Tuesday.

USD/JPY regains poise as retreating yields lift the market mood.The US dollar languishes in low, yen hurt by poor Japanese Services PMI. Focus shifts to the US macro news, stimulus updates. After a brief consolidative stint in early Asia, USD/JPY has regained poise, now heading back towards the seven-month highs of 106.96 reached Tuesday. The steady recovery in the spot could be attributed to the upbeat market mood, as reflected by the gains in the Asian equities and the S&P 500 futures.  US President Joe Biden talking up the covid vaccine progress and retreating global yields lifted the appetite for riskier assets at the expense of the safe-haven yen. Further, the Japanese currency also remains hurt by the deepening contraction in the country’s services sector, in the wake of the covid-induced state of emergency across the nation. The final au Jibun Bank Japan Services Purchasing Managers' Index (PMI) came in at a seasonally adjusted 46.3, staying below the 50 level that separates contraction from expansion for the 13th month. Usamah Bhatti, an economist at IHS Markit, which compiles the survey, said: “That showed demand remained in a fragile condition as the impact of the pandemic dragged on.” However, the further upside in USD/JPY remains at the mercy of the US dollar dynamics, as investors look forward to the US ADP jobs, ISM Services PMI and Fed’s Beige Book for fresh cues. The safe-haven US dollar remains on the defensive so far this Wednesday, weighed down by the continued to retreat in the Treasury yields, which have calmed the unnerved markets. USD/JPY: Technical levels The bulls now look to challenge the multi-month highs at 106.96, in a bid to retest the 107.50 level. To the downside, immediate support is seen at 106.61 (5-DMA), below which the 10-DMA cap at 106.03 could be probed. USD/JPY: Additional levels  

GBP/USD trims prior gains while declining to 1.3955, down 0.08% intraday, during Wednesday’s Asian session. In doing so, the quote fizzles Tuesday’s b

GBP/USD wavers in a choppy range near weekly top.Sustained trading beyond key EMA, trend lines joins hopes of easy budget to favor bulls.GBP/USD trims prior gains while declining to 1.3955, down 0.08% intraday, during Wednesday’s Asian session. In doing so, the quote fizzles Tuesday’s bounce off 21-day EMA amid the bearish MACD conditions. However, the cable’s sustained trading beyond key trend lines from December and September 2020, coupled with hopes of a market-favorable UK budget, suggest further upside for the GBP/USD prices. It’s worth mentioning that an upside break of the 1.4000 threshold will trigger a fresh rise targeting the 1.4085 and the 1.4100 resistances while February’s top, also the highest since early 2018, surrounding 1.4240, will challenge the bulls afterward. Alternatively, a daily closing below the 21-day EMA level of 1.3905 will need to provide a daily closing below the 1.3900 round-figure to direct the bearish bias towards an ascending trend line from December 21, 2020, currently around 1.3790. In a case where GBP/USD bears dominate past-1.3790, January’s top surrounding 1.3750 can offer an intermediate halt before dragging the quote back to a longer-term support line near 1.3600. Overall, GBP/USD stays in an uptrend and hence any more positive from the budget will escalate the cable’s run-up to refresh multi-month high. On the contrary, the disappointment will also have larger repercussions. GBP/USD daily chart Trend: Bullish  

The Bank of Japan (BOJ) must lower both short and long-term policy interest rates via ramping up purchases of Japanese government bonds (JGBs), the ce

The Bank of Japan (BOJ) must lower both short and long-term policy interest rates via ramping up purchases of Japanese government bonds (JGBs), the central bank’s board member Goushi Kataoka told business leaders in Maebashi City via an online meeting, per MNI. Key quotes “As for commitment, in order to prevent Japan's economy from falling into deflation, further policy coordination of both fiscal and monetary policy is needed.” “It was necessary for the BOJ to strengthen its policy commitment by relating the forward guidance for policy rates to price targets.” developing story ....

A private gauge of China's services-sector activity released a few minutes before press time showed a slowdown in the pace of expansion in February. S

AUD/USD keeps gains in the wake of weak China Services PMI. Dips, if any, could be supported by the upbeat Aussie Q4 GDP released early Wednesday.A private gauge of China's services-sector activity released a few minutes before press time showed a slowdown in the pace of expansion in February. So far, however, the data has failed to elicit a reaction from the Aussie dollar, leaving AUD/USD bid at session highs near 0.7830.  The Caixin China services purchasing managers index fell to 51.5 in February from 52 in January, Caixin Media Co. and research firm Markit said Wednesday. A decline to 51.5 was expected. Besides, the number stayed above the 50-mark, signaling expansion for the ninth straight month.  That's likely keeping the AUD from losing altitude. Also, the Aussie Q4 gross domestic product data released early today is supportive of a bullish move in AUD/USD.  Australia's economy expanded 3.1% quarter-on-quarter in the final three months of 2020, beating the estimated drop in the growth rate to 2.5% from the third quarter's reading of 3.4%. In annualized terms, the economy contracted 1.1% versus -1.8% expected and -3.8% previous. However, the currency pair may come under pressure if bond yields resume the recent rally, putting downward pressure on stock markets and other risk assets.  Australia's Treasurer Josh Frydenberg said early today that the global coronavirus stimulus is creating financial stability risk that will only intensify when interest rates inevitably rise.  The Fed funds futures recently brought forward the first interest rate hike's timing to December 2022 from 2024. However, last week Federal Reserve's chairman Powell assured markets of continued monetary stimulus. The Reserve Bank of Australia also delivered a similar message on Tuesday.  Technical levels  

Further to the earlier analysis, Gold Price Analysis: Bulls to take control to $1,760 to complete bearish 4-hour W-formation, the price is consolidati

Gold prices are moving higher with $1,760 on the radar. The hourly charts are offering a fresh support structure. Further to the earlier analysis, Gold Price Analysis: Bulls to take control to $1,760 to complete bearish 4-hour W-formation, the price is consolidating at new hourly support structure from where an upside extension is probable.  Prior analysis, 4-hour chart''The $1,760s are back on the cards, yet to be confirmed from the 4-hour chart:The upside is expected, however, as the MACD turns less negative and the 10 SMA approaches the 21 SMA. In doing so, there will be a completion of a bearish W-formation on the 4-hour chart as the price meets resistance.'' Live market, 4-hour chart As seen, the MACD is turning less negative as it crosses above the signal line.  The SMAs are less negative as price tests that 21-SMA.  We also have fresh support which would be expected to hold and see the price continue higher towards the target.  1-hour chart The bullish conditions, including support, are more visible from the hourly chart offering a vantage point to engage from. 

NZD/USD stays unaffected during its three-day upbeat, currently around 0.7300, following China’s weaker-than-expected data amid Wednesday’s Asian sess

NZD/USD ignores China’s downbeat Caixin Services PMI for February.NZ data also eased earlier in the day after bulls cheered weaker USD, NZ GDT figures on Tuesday.Sluggish market sentiment ahead of the key data/events probe traders.NZD/USD stays unaffected during its three-day upbeat, currently around 0.7300, following China’s weaker-than-expected data amid Wednesday’s Asian session. The reason could be traced from mixed risk catalysts and downbeat NZ data, published earlier in the day. China’s Caixin Services PMI eases from 52.0 to 51.5 during February. In doing so, the Chinese activity numbers mark sustained weakness for the previous month as not only the private survey data but official figures are also weak. Elsewhere, New Zealand Building Permits for January eased from upwardly revised 5.9% to 2.1% whereas February’s ANZ Commodity Price Index dropped below 3.6% prior to 3.3% earlier in Asia. It’s worth mentioning that New Zealand’s GDT Price Index rose to the highest since September 2015 while flashing a 15.0% mark in its latest reading versus 3.0% prior on Tuesday. Further details suggest the average prices of the Whole Milk Powder (WMP) rose to the seven-year top of USD4,364/MT on Tuesday. Talking about risks US President Joe Biden’s vaccine optimism joins hopes of an easy budget from the UK and hopes of a rate cut from the Chinese central bank to favor the bulls. However, cautious sentiment ahead of speech from Fed Chair Powell, US employment figures and the UK budget, not to forget US stimulus updates, keep the risks sluggish. Amid these plays, S&P 500 Futures seesaw around 3,870, up 0.20% intraday whereas the US 10-year Treasury yields look for fresh clues to overcome the 1.41% level. Moving on, a light calendar ahead of the US ISM Services PMI and ADP Employment Change can keep disappointing the momentum traders. However, risk catalysts may play their roles. Technical analysis Sellers are less likely to enter unless witnessing a daily closing below an ascending trend line from December 21, currently around 0.7195. As a result, bulls are up for challenging the area surrounding highs marked in January and touched twice last month, around 0.7320.  

China's Caixin services PMI for February came in at 51.5 vs. 52.0 last, which showed that the business activity grew at the slowest pace in ten months

China's Caixin services PMI for February came in at 51.5 vs. 52.0 last, which showed that the business activity grew at the slowest pace in ten months. Key findings Services activity growth eases to ten-month low. Softer increase in total new work amid renewed drop in export sales. Confidence regarding the 12-month business outlook remains robust. Commenting on the China General Services PMI ™ data, Dr. Wang Zhe, Senior Economist at Caixin Insight Group said: "The Caixin China General Services Business Activity Index came in at 51.5 in February, declining for the third month in a row and hitting the lowest point since April 2020, as the momentum of postepidemic services recovery further weakened.” more to come ...

China Caixin Services PMI down to 51.5 in February from previous 52

S&P 500 Futures seesaw around 3,870, up 0.10% intraday, during early Wednesday. In doing so, the risk barometer fades the early-Asian bullish bias ami

S&P 500 Futures struggles to extend the early Asian gains.US President Biden’s vaccine optimism, hints for UK furlough extension and PBOC RRR cut probe previously sober mood.UK budget, chatters over US stimulus will be the key ahead of Powell and US NFP.S&P 500 Futures seesaw around 3,870, up 0.10% intraday, during early Wednesday. In doing so, the risk barometer fades the early-Asian bullish bias amid a lack of major fundamental push. Although cautious sentiment ahead of this week’s key events probed risks the previous day, comments from US President Joe Biden, earlier in Asia, brightened the mood. US President Biden cited coronavirus (COVID-19) vaccine partnerships with Johnson and Johnson, as well as Merck, while citing the US capacity to jab all American adults by May versus previously cheered July. Elsewhere, the Financial Times (FT) conveyed hopes concerning the extension of the UK’s furlough scheme, coupled with benefits worth 20 billion pounds and favored the risks. Further, comments from the Aussie Treasurer Josh Frydenberg and Australia’s better than forecast Q4 GDP were also on the positive side. Additionally, signals from China suggesting the People’s Bank of China’s (PBOC) reserve requirement ratio (RRR) cut offered extra positives to the market. However, nothing from farther could recall the bulls as traders fear the covid variants and reflation chatters ahead of Fed Chair Powell’s speech on Thursday as well as the US employment figures, up for publishing on Friday. For an immediate direction, today’s UK budget and the US ISM Services PMI for February could become important. Given the likeliness of Powell’s rejection of the reflation fears and upbeat US NFP, not to forget the positive UK budget, the risk tone should regain upward trajectory and CAN favor the bulls in the coming days. It’s worth mentioning that US President Joe Biden’s $1.9 trillion stimulus is looming in the Senate and any clear announcement relating to the same will also be the key to watch. Read: Wall Street Close: Stocks slip amid profit taking ahead of key risk events later this week

Australia’s Treasurer Frydenberg warns global stimulus threatens financial stability – FT more to follow ....

Australia’s Treasurer Frydenberg warns global stimulus threatens financial stability – FT   more to follow ....

EUR/USD looks north, having defended the 100-day Simple Moving average (SMA) support on Tuesday with a green long-tailed candle – evidence of dip dema

EUR/USD looks north, having defended the 100-day Simple Moving average (SMA) support on Tuesday with a green long-tailed candle – evidence of dip demand.  The immediate resistance is seen at 1.2139 (50-day SMA), followed by the Feb. 25 high of 1.2243.  A daily close below the 100-day SMA, currently at 1.2024, would invalidate the bullish outlook.  The pair defended the 100-day SMA in early February, following which stronger buying pressure emerged, lifting the pair from 1.20 to 1.2243.  Daily chartTrend: Bullish Technical levels  

The People's Bank of China (PBOC) has set the yuan reference rate at 6.4565 versus Tuesday's fix at 6.4625.

The People's Bank of China (PBOC) has set the yuan reference rate at 6.4565 versus Tuesday's fix at 6.4625.

As per this week's ''The Watchlist: GBP/JPY, EUR/USD, CHF/JPY and more setups in the making,'' AUD/CAD is making its way towards the forecasted target

AUD/CAD bulls in the driving seat to target 0.9938.Aussie GDP boost the cross to fresh highs from newly formed support. As per this week's ''The Watchlist: GBP/JPY, EUR/USD, CHF/JPY and more setups in the making,'' AUD/CAD is making its way towards the forecasted target in accordance with the playbook. The cross has been recently boosted by the Australian Gross Domestic Product beat, printing a fresh hourly high within the bullish trend. Aussie GDP Q4 (QoQ): 3.1% QoQ, much better than expected, AUD bidPrior analysisAUD/CAD daily chart1-hour chart:''The price action will determine bullish conditions on a break of the current resistance from which bulls can begin to look for a bullish structure to form for an optimal entry point to target old support and the neckline of the M-formation.'' Progress Prior analysis:   Live market 

Ireland Purchasing Manager Index Services: 41.2 (February) vs 36.2

USD/CAD fades bounce off weekly lows while easing to 1.2630 during Wednesday’s Asian session. In doing so, the quote fizzles the early Asia recovery m

USD/CAD trims early day gains towards revisiting the 100, 200-HMA confluence.Sustained trading above key Fibonacci retracements, MACD conditions favor recovery moves.Weekly resistance line holds the key to welcome buyers.USD/CAD fades bounce off weekly lows while easing to 1.2630 during Wednesday’s Asian session. In doing so, the quote fizzles the early Asia recovery moves but stays above the key HMA confluence as the MACD teases bulls. Even if the HMA confluence around 1.2620 fails to stop the latest selling pressure, 50% and 61.8% Fibonacci retracement levels of the USD/CAD upside during late last week, respectively around 1.2600 and 1.2570, will be challenging the bears. In a case where USD/CAD sellers dominate past-1.2570, odds of its drop to the multi-month low marked last week, near 1.2470 can’t be ruled out. Meanwhile, buyers will look for a clear break of a downward sloping trend line from Monday, currently, around 1.2680, to recall the bullish bets. Following that, the latest swing high around 1.2740 and the previous month’s peak surrounding 1.2870 should return to the charts USD/CAD hourly chart Trend: Further recovery expected  

The bid tone around the Aussie dollar strengthened, pushing AUD/JPY higher by 15 pips to 83.66 after Australia reported an upbeat Gross Domestic Produ

AUD/JPY hits session high as Australia's Q4 GDP beats estimates. Big bullish move remains elusive as Australia's Frydenberg warns of global financial instability.The bid tone around the Aussie dollar strengthened, pushing AUD/JPY higher by 15 pips to 83.66 after Australia reported an upbeat Gross Domestic Product data for the fourth quarter of 2020.  The economy expanded 3.1% quarter-on-quarter in the final three months of 2020, beating the estimated drop in the growth rate to 2.5% from the third quarter's reading of 3.4%. In annualized terms, the economy contracted 1.1% versus -1.8% expected and -3.8% previous. So far, however, the gains in the AUD/JPY have been tepid at best. Possibly keeping aggressive buyers at bay is the warning from Australia's Treasurer Josh Frydenberg that unprecedented global stimulus launched to counter the coronavirus-induced economic slowdown is creating financial stability risks that will only intensify when interest rates inevitably rise. Frydenberg also defended tough new foreign investment rules that have led to a collapse in Chinese investment, and supported the idea of withdrawing stimulus with the economy showing signs of life.  An early tapering of the stimulus across the globe will likely weigh over the risk assets, including the AUD, and strengthen the haven bid for the US dollar.  However, the Reserve Bank of Australia (RBA) said on Tuesday that interest rates will remain low until 2024, and the bank may do more if needed to stem the rise in government bond yields.  As for the next few hours, vaccine optimism could keep the risk assets better bid. The US President Biden announced early today that there would be enough doses of the coronavirus vaccine available for the entire adult population by the end of May. The Caixin China Services PMI due in an hour could also influence the demand for the Aussie dollar.  Technical levels  

AUD/USD takes the bids near 0.7835 following upbeat Aussie Q4 GDP print during Wednesday’s Asian session. The quote also benefits from risk recovery a

AUD/USD prints three-day winning streak following better-than-forecast Aussie Q4 GDP.Risks recover as US President Biden propels vaccine hopes, UK budget ready for extending furlough scheme.China’s PBOC is expected to cut the reserve requirement ratio (RRR) this month.China Caixin Services, US ISM Services PMI and risk catalysts will offer immediate direction.AUD/USD takes the bids near 0.7835 following upbeat Aussie Q4 GDP print during Wednesday’s Asian session. The quote also benefits from risk recovery and hopes of the PBOC rate cut. Australia’s fourth-quarter (Q4) GDP grew past 2.5% QOQ forecast to 3.1% whereas the yearly figures cross -1.8% expected and -3.8% previous readouts with -1.1% numbers. The data follows the RBA’s optimism and helps AUD/USD in reversing the previous week’s losses. Read: Aussie GDP Q4 (QoQ): 3.1% QoQ, much better than expected, AUD bid Other than the data, news from China, suggesting a cut in the People’s Bank of China’s (PBOC) reserve requirement ratio (RRR) this month join the recent risk-on mood to also favor the AUD/USD bulls. Earlier during the day, market sentiment defied the previously cautious sentiment after US President Joe Biden show readiness to have vaccines for all of the American adults by May versus the earlier July deadline. Also on the risk-positive side could be the Financial Times (FT) news that teased the extension of the furlough scheme to September during the UK budget. On the contrary, jittery markets ahead of Fed Chair Powell’s speech, on Thursday, as well as today’s UK Budget and Friday’s US employment data for February, challenge the market’s mood. Further, mixed comments from the RBA and the Fed policymakers, in an attempt to placate bond bears, offered extra support to the sluggish sentiment. Against this backdrop, S&P 500 Futures recover the previous day’s losses by rising 0.30% whereas the US 10-year Treasury yields also seesaw around 1.41% by the press time. Having witnessed the initial market reaction to upbeat Aussie GDP, AUD/USD traders will require welcome figures of non-manufacturing activities from China and the US to keep the upside moves intact. It should, however, be noted that further deterioration in the coronavirus (COVID-19) conditions, due to the variants, as well as any hints of reflation and/or disappointment from the UK budget could derail the latest run-up. Technical analysis A four-month-old ascending trend line and 50-day EMA, respectively around 0.7740 and 0.7700, could challenge the quote’s surprise declines while bulls need a clear break of 0.7880 to tighten the grips.  

Australia's fourth-quarter national accounts have been released where Gross Domestic Product was expected to have risen by 2.5% QoQ taking year-ended

Australia's fourth-quarter national accounts have been released where Gross Domestic Product was expected to have risen by 2.5% QoQ taking year-ended growth to -1.8%YoY. However, the data is better than expected for the quarter.  Aussie GDP  AUSTRALIA Q4 REAL GDP +3.1 PCT QTR/QTR, S/ADJ (REUTERS POLL +2.5 PCT) 02-Mar-2021 18:30:01 - AUSTRALIA Q4 REAL GDP -1.1 PCT YR/YR, S/ADJ (REUTERS POLL -1.8 PCT) 02-Mar-2021 18:30:01 - AUSTRALIA Q4 FINAL CONSUMPTION EXPENDITURE +3.2 PCT, S/ADJ 02-Mar-2021 18:30:01 - AUSTRALIA Q4 GROSS FIXED CAPITAL EXPENDITURE +3.6 PCT, S/ADJ 02-Mar-2021 18:30:01 - AUSTRALIA Q4 CHAIN PRICE INDEX +1.7 PCT   AUD/USD reaction AUD/USD is a touch higher on the data and has been well on its way towards the following target at the M-formation's neckline at 0.7880: AUD/USD Price Analysis: Bulls target 0.7880 in price recovery The data is helping this setup move towards the target in a higher high: More to come... AUD/USD has been helped along on Wednesday with a better bid tone in markets owing to a stabilisation in US bond markets and weakness in the US dollar, buoying the commodities sector.  The Reserve Bank of Australia doubled down on its commitment to keep monetary policy settings loose yesterday and the markets expect the RBA to expand its bond purchase program by another $100bn in the summer time, potentially as soon as June. This comes due to the insertion of the phrase that the RBA “is prepared to make further adjustments to its [bond] purchases in response to market conditions”. On the currency, the central bank explained that AUUD “remains in the upper end of the range of recent years” and that current monetary policy settings are “contributing to a lower exchange rate than otherwise”.  Prior to the data, analysts at ANZ bank explained ''consistent with the run of better-than-expected partial data, the forecast bounce in Q4 GDP is larger than we had anticipated a few months ago, suggesting that spending has held up well despite the large reduction in fiscal stimulus in the quarter.'' About Aussie Gross Domestic Product  The Gross Domestic Product released by the Australian Bureau of Statistics is a measure of the total value of all goods and services produced by Australia. The GDP is considered as a broad measure of the economic activity and health. A rising trend has a positive effect on the AUD, while a falling trend is seen as negative (or bearish) for the AUD.  

Hong Kong SAR Nikkei Manufacturing PMI up to 50.2 in February from previous 47.8

Japan Jibun Bank Services PMI: 46.3 (February) vs 46.1

Australia Gross Domestic Product (QoQ) above expectations (2.5%) in 4Q: Actual (3.1%)

Australia Gross Domestic Product (YoY) above forecasts (-1.8%) in 4Q: Actual (-1.1%)

Silver refreshes intraday low to $26.67, currently around $26.72, in a pullback move during Wednesday’s Asian session. In doing so, the quote fizzles

Silver fails to extend weekly resistance breakout, eases below key moving averages.Strong RSI needs the seller to drop back below previous resistance.Descending the trend line from February 23 adds to the upside barriers.Silver refreshes intraday low to $26.67, currently around $26.72, in a pullback move during Wednesday’s Asian session. In doing so, the quote fizzles the previous day’s notable recovery moves from late-January lows. It should, however, be noted that the commodity keeps upside break of one-week-old trend line resistance, now support, amid strong RSI conditions. Hence, the latest pullback needs to decline below the stated resistance line, at $26.20 now, before recalling the silver sellers. Following that, the recent low, also the lowest since January 28, near $25.85, will be the key as a downside break of which will derail Tuesday’s recovery and direct silver bears to sub-$24.00 area. Alternatively, 100-HMA and 200-HMA guard the quote’s immediate upside around $27.00 and $27.30 respectively. Also acting as an upside barrier is the short-term descending trend line, at $28.00 now. Overall, silver faces an uphill task and hence sellers should remain hopeful. Silver hourly chart Trend: Further weakness expected  

Further to the start of the week's analysis, EUR/JPY Price Analysis: Bulls seeking daily upside continuation, the price has indeed got over the initia

EUR/JPY bulls seeking an upside extension now that conditions are bullish. Pair breaks through resistance and a restest of the structure opens prospects for fresh daily impulse. Further to the start of the week's analysis, EUR/JPY Price Analysis: Bulls seeking daily upside continuation, the price has indeed got over the initial resistance and the 21-moving average, resulting in a setup.Prior analysis, live market, daily chart''The price extended to the upside but failed to maintain the bid, leaving a compelling wick on the weekly chart as follows:This wick would be expected to be filled in as it merely represents the daily correction to prior resistance which has held the initial tests of a decelerating retracement according to the 4-hour chart:Bulls need to get over the initial resistance and the 21-moving average. ''Live market, 4-hour chart On a retest of the 21-moving average and/or the structure, a buy limit order will open a position for a 1:3 risk to reward set up to target the 130.40s. 

United Kingdom BRC Shop Price Index (YoY): -2.4% (January) vs previous -2.2%

New Zealand ANZ Commodity Price down to 3.3% in February from previous 3.6%

Having recently battled the Reserve Bank of Australia’s (RBA) monetary policy meeting updates, without much noise, AUD/USD traders are now gearing up

Australian GDP overview Having recently battled the Reserve Bank of Australia’s (RBA) monetary policy meeting updates, without much noise, AUD/USD traders are now gearing up for Australia’s fourth-quarter (Q4) Gross Domestic Product (GDP) figures, up for publishing at 00:30 GMT on Wednesday. The recent data from Australia have been upbeat, but the RBA defended the status-quo during the latest monetary policy meeting on Tuesday while flashing mixed signals on the economic recovery. Other than being the headline economic data, today’s GDP figures become even more important as they portray the Aussie economy’s performance out of the pandemic period. Also, AUD/USD struggles to keep the recovery moves to target a fresh high since February 2018 and hence the traders are waiting for fresh directives. Forecasts suggest the annualized pace of economic growth to come in at -1.8%, above the previous period's -3.8%, while the quarter-on-quarter (QoQ) numbers could mark the disappointment if easing to 2.5% versus 3.3% prior. Ahead of the outcome, Westpac said: Westpac is forecasting GDP to rise by 2.5% quarterly (in line with the median forecast). This would see year-ended growth at -1.8% yearly. The quarterly partials point to clear upside risks – potentially GDP could print close to 3%, following the 3.3% lift in Q3. All other things being equal, we require consumer spending to print at 3.7% for GDP to land on our 2.5% forecast. TD Securities expects, Based on RBA Feb SoMP forecasts, the Bank sees Dec'20 Q4 GDP coming in at +2.3% q/q, -2.0% y/y. Given the upside surprises on most data prints, we expect a beat at 2.9% q/q, -1.4% y/y. Separately, we anticipate wages and payroll jobs in the weekly ABS payrolls for the week ending 13 Feb to continue its uptrend, as labor demand remains healthy with ANZ job ads rising for the eighth consecutive month in Jan. To recap, the prior weekly ABS series for the period ending 30 Jan 2020 showed payrolls rising by 1.3% m/m while wages roll by 0.4%. Payroll jobs are currently around the same level as last year. How could it affect the AUD/USD? AUD/USD traders turn cautious ahead of the key event while fading the previous two-day run-up from the weekly top of 0.7838 to currently around 0.7820. Other than the pre-data sentiment, upbeat S&P 500 Futures, led by recent optimism in the US and the UK, also seems to probe the bulls. It should, however, be noted that most market analysts anticipate welcome figures from the Aussie GDP and hence any disappointment, which is less likely based on the central bank’s latest comments, could derail the latest corrective pullback. On the contrary, strong GDP figures will need the US dollar’s extended weakness to keep the AUD/USD bulls happy. Technically, a four-month-old ascending trend line and 50-day EMA, respectively around 0.7740 and 0.7700, could challenge the quote’s surprise declines while bulls need a clear break of 0.7880 to tighten the grips. Key notes AUD/USD Forecast: Back above 0.7800 as RBA’s Lowe provides relief Australian GDP Preview: Prospects for a sustained economic recovery AUD/USD reclaims 0.7800 level ahead of Aussie Q4 GDP numbers About the Aussie GDP release The Gross Domestic Product released by the Australian Bureau of Statistics is a measure of the total value of all goods and services produced by Australia. The GDP is considered as a broad measure of the economic activity and health. A rising trend has a positive effect on the AUD, while a falling trend is seen as negative (or bearish) for the AUD.

AUD/JPY fades the early week's corrective pullback while stepping back to 83.43, despite keeping the bullish chart formation, during the initial Asian

AUD/JPY catches a breather during the week’s recovery moves.MACD teases bears but needs validation from the stated channel.Key Fibonacci retracement levels will probe buyers outside the bullish pattern.AUD/JPY fades the early week's corrective pullback while stepping back to 83.43, despite keeping the bullish chart formation, during the initial Asian session on Wednesday. In doing so, the quote eases from the upper line of the weekly ascending trend channel ahead of the fourth-quarter (Q4) Australia GDP data. Read: Australian GDP Preview: Prospects for a sustained economic recovery Given the cautious sentiment ahead of the key data, coupled with not upbeat expectations from GDP, AUD/JPY may extend the pullback moves towards the 200-HMA level of 83.18. Also supporting the hopes of further weakness could be the MACD conditions that seem to tease bears. However, AUD/JPY sellers are less likely to turn serious until witnessing an hourly close below the support line of the stated channel, at 82.95 now, which in turn should challenge the weekly bottom surrounding 82.00. Meanwhile, an upside break of the channel’s resistance line, currently around 83.70, will have to cross the 61.8% Fibonacci retracement of February 25-26 downside, around 83.85, before recalling the AUD/JPY buyers. Following that, the multi-month top posted in February around the 85.00 threshold will be the key to watch. AUD/JPY hourly chart Trend: Pullback expected  

Gold prices extend the early-week recovery while picking up bids around $1,739 amid the initial Asian session on Wednesday. In doing so, the yellow me

Gold extends corrective pullback from 8.5-month low to refresh weekly high.US dollar weakness precedes the recently upbeat news from the US, the UK to favor bulls.Cautious sentiment ahead of the key data/events, lack of major catalysts keeps traders guessing.Gold prices extend the early-week recovery while picking up bids around $1,739 amid the initial Asian session on Wednesday. In doing so, the yellow metal stretches the bounce off the lowest since June 2020 to the weekly high near $1,740 before recently catching a breather. Although risk catalysts are less supportive to the yellow metal off-late, the US dollar weakness could be traced to the commodity’s recent upside. That said, the US dollar index (DXY) took a U-turn from a one-month high towards snapping a three-day winning streak on Tuesday. Checking the catalysts, the lack of major data/events and the market’s cautious sentiment ahead of the key speech from Fed Chair Jerome Powell, the UK budget and American employment figures for February could be spotted. Also challenging the mood could be the recent fears of the covid variant traced from Brazil. It should, however, be noted comments relating to the coronavirus (COVID-19) vaccine from US President Joe Biden and strong hints for today’s British budget recently favored risks. Details suggest US President Biden preponed the earlier deadline to have vaccines for all of the American adults whereas the Financial Times (FT) teased extension of the furlough scheme to September during the UK budget. Against this backdrop, S&P 500 Futures eyes recovery of the previous day’s Wall Street losses whereas the US 10-year Treasury yields signals reversal of the recent losses while staying above 1.41%. Looking forward, gold traders will keep eye on the UK budget and updates on the US covid stimulus progress in the Senate ahead of Thursday’s speech from Powell, not to forget Friday’s US Nonfarm Payrolls (NFP). It’s worth mentioning that the Fedspeak recently tried to placate bond bears and may keep doing so while suggesting further recovery of the yellow metal. Technical analysis Despite bouncing off multi-day low, gold prices remain vulnerable to the further downside unless crossing November 2020 low around $1,765. On the downside, a falling trend line from August, at $1,680 now, will be the key to watch.  

GBP/USD is currently consolidating around the 1.3950 mark amid thin trading volumes with the Wednesday Asia Pacific session yet to get into full flow.

GBP/USD is currently consolidating around the 1.3950 mark amid thin trading volumesThe UK budget is to be revealed tomorrow and will be the main event of the day for GBP.Recent reports from the FT suggest a longer than expected extension to UK Covid-19 support programmes like the furlough scheme.GBP/USD is currently consolidating around the 1.3950 mark amid thin trading volumes with the Wednesday Asia Pacific session yet to get into full flow. Recent news that UK Finance Minister Rishi Sunak is set to extend Covid-19 support further than expected has not impacted FX markets at all but may support GBP as volumes pick up in the coming hours. As a reminder, the budget is set to be revealed tomorrow; Sunak will be delivering a speech before parliament after PMQs likely to start around 12:30GMT. GBP/USD closed Tuesday trade with modest 0.2% gains, having recovered from early European session lows of just above the 1.3850 mark to current levels around 1.3950. Budget Expectations Update The FT just came out with a new report suggesting that UK Finance Minister Rishi Sunak is set to extend a vast package of Covid-19 support until the end of September, which, as the articles says, Sunak hopes will nurse the UK economy back to economic health by the autumn. Note that prior to this FT article, markets had been expecting Covid-19 support (i.e. the furlough scheme aimed at keeping employees in their jobs and the £20 per week enhancement to universal credit payments) to be extended until June. Reportedly, the Sunak wants to avoid a “jobs cliff-edge” that removing the furlough scheme too soon might cause. As a reminder, as reported by UK press over the weekend, the budget is set to contain three distinct “phases”. Phase One is mainly about ongoing Covid-19 support schemes, which are set to be extended to June (furlough, business rates relief and VAT reductions, stamp duty holiday and “bounce back loans”). Phase Two is going to be about some fiscal injection to accelerate the post-Covid-19 recovery (£5B “restart” fund for giving small business grants, a £22B national infrastructure bank and aid for first-time homebuyers). Phase Three is going to be about paying for everything and is likely to entail freezing income tax rates and a modest increase to corporation tax. UK press, citing leaked excerpts of Sunak’s speech, expects the UK Finance Minister to say that “once we are on the way to recovery, we will need to begin fixing the public finances and I want to be honest today about our plans to do that”.  

Further to the start of the week's analysis, NZD/CHF Price Analysis: Bulls look to 0.6820 in a trend continuation playbook, the price has indeed print

NZD/CHF has played out perfectly since prior analysis to trigger a long setup.Bulls to target 0.6820 for a 1:3 R/R ratio.Further to the start of the week's analysis, NZD/CHF Price Analysis: Bulls look to 0.6820 in a trend continuation playbook, the price has indeed printed the roadmap required for a long position to target 0.6820. Prior analysis, 4-hour chart''...from a 4-hour perspective, there could be some downside to come yet and a test of old resistance would offer structure to protect a subsequent position in a resumption in the upside. Bulls will be looking for overhead resistance to give and offer a higher probability setup for the 0.6820 target.''Live market, 4-hour market As illustrated, the price performed exactly as forecasted and right into the hands of the bulls seeking bullish structure from which to enter from and administer a setup as follows: A buy limit placed at old resistance offers a 1:3 risk to reward higher probability set up with a stop loss below the newly created bullish structure and take profit at the projected target. 

As per the latest news from the Financial Times (FT), the UK’s Chancellor of Exchequer Rishi Sunak is up for extending the furlough scheme from April-

As per the latest news from the Financial Times (FT), the UK’s Chancellor of Exchequer Rishi Sunak is up for extending the furlough scheme from April-end to September, giving £20 billion extensions to the UK Covid-19 support, during today’s budget announcement. Mr. Sunak is also expected to roll out a £20-a-week uplift to universal credit to help the self-employed. Further details from expected moves by Mr. Sunak and Company are, per FT, “Combined with an extension of the business rates holiday, a £5bn grants scheme for the high street and other measures, Sunak’s new Covid support package — intended to ‘cushion’ businesses and workers as the economy starts to reopen — will be well in excess of £20 billion.” Additional details Under the extended furlough scheme, the government will continue to pay 80 percent of wages up to a cap of £2,500 a month for hours the employee does not work until the end of June. The Treasury hopes to keep unemployment well below the 7.5 percent peak forecast last November by the Office for Budget Responsibility, enabling the chancellor to say that far fewer jobs had been lost in the Covid-19 crisis than in the global financial crisis of 2008-09. The total taxpayer cost of additional support measures in 2021-22 is likely to be well in excess of £20bn on top of extra money going to the NHS and schools and other departments this year. GBP/USD stays positive… Following the news, GBP/USD holds onto Tuesday’s recovery gains from a two-week low of 1.3859 to currently around 1.3960. However, cautious sentiment ahead of the actual announcement seems to challenge the cable bulls.

Australia Commonwealth Bank Composite PMI: 53.7 (February) vs previous 54.4

Australia Commonwealth Bank Services PMI fell from previous 54.1 to 53.4 in February

While announcing the fresh contracts to provide with the coronavirus (COVID-19) vaccines, US President Joe Biden sounds upbeat during the late Tuesday

While announcing the fresh contracts to provide with the coronavirus (COVID-19) vaccines, US President Joe Biden sounds upbeat during the late Tuesday, early Wednesday in Asia. The recently elected American leader not only claimed partnerships with the Johnson and Johnson, as well as the Merck, but also stretched forward his earlier timeline to have vaccines for all the US adults from July to end of May.

US equity markets sold off in the final hour of trade, with the S&P 500 dropping to fresh session lows in the 3870s to close the session down 0.73%, t

All three major US stock indices dropped amid profit-taking on Tuesday with the tech sector underperforming.Position adjustment ahead of key risk events later in the week was likely to have also been at play.US equity markets sold off in the final hour of trade, with the S&P 500 dropping to fresh session lows in the 3870s to close the session down 0.73%, the Nasdaq 100 dropping back below the 13,100 level to end the session with losses of around 1.7% and the Dow dropping a more modest half a percent. As indicated by underperformance in the Nasdaq 100, the tech sector underperformed on Tuesday, with the likes of Apple (-2.1%), Facebook (-2.2%), Amazon (-1.6%), Tesla (-4.5%) and the semiconductor sector (SOX index down 3.0%) all performing poorly. Driving the day Tuesday’s drop comes in wake of Monday’s powerful rally, which saw the S&P 500 post its strongest one-day percentage gain since June 2020 and, as a result, market commentators have chalked up the day’s moves to profit-taking. Position adjustment ahead of key risk events later in the week was also likely a factor; Wednesday sees the release of the ISM Services PMI report for February, a timely update on the state of the US’ service sector recovery, as well as February’s ADP National Employment Change estimate, a release that helps set expectations for the NFP release later in the week. Thursday sees Fed Chair Jerome Powell (expected to reiterate the dovish Fed script whilst now showing any concerns about rising bond yields) plus Weekly Jobless Claims numbers and Friday sees the release of the February Labour Market Report, which will be the main event of the week from a global macro perspective. US Equity Market Fundamentals Update The US Congress remains on track to pass US President Joe Biden’s $1.9T stimulus package into law by the middle of this month; Leader of the Senate Democrat Majority Chuck Schumer said on Tuesday that he expected the Senate to vote in favour of Biden’s stimulus bill on either Friday or Saturday, where it would be sent back to the House to start the second round of the voting procedure. Several senior Senate Democrats are expected to offer an amendment to Biden's stimulus bill that would be identical to the “Raise the Wage Act” with the aim of increasing the national minimum wage to $15 per hour, though this is not expected to pass. As Biden’s stimulus package passes into law, this is expected to keep equity market sentiment buoyant. In terms of the latest commentary from Fed members; influential FOMC member Lael Brainard spoke in a webinar earlier in the session and made some interesting comments regarding recent bond market moves, noting that last week’s bond market move caught her eye and commented that if there was a persistent tightening of financial conditions, this could slow progress towards job and inflation goals. Meanwhile, FOMC member Mary Daly talked about how the Fed could potentially use operation twist (where the Fed increases the average weighted maturity of the treasuries it is buying) as a first tool if monetary conditions became less accommodative and did not rule out the use of yield curve control as a potential option. QE talk from Fed members appears to have supported US treasury markets, with yields dropping sharply into the close (5-year -5bps, 10-year -5.1bps and 20-year -4bps). The fact that Fed rhetoric has been supportive of bond markets implies it ought also to offer some support to stocks going forward. Finally, in terms of the latest regarding the pandemic; new US Covid-19 infections continue to drop (came in at just above 50K for a second consecutive day) and the vaccine rollout continues to accelerate (Tuesday saw 1.7M vaccinated, taking the total of vaccinations administered to 78.6M). Meanwhile, lockdown continues to ease across the country; most notably, San Francisco is to allow a number of non-essential businesses to reopen and the Governor of Texas called for the state to open “100%”. As long as the US continues towards reopening and herd immunity, this ought to support risk appetite.  
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