Forex-novosti i prognoze od 14-03-2023

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14.03.2023
23:59
USD/JPY scales to near 134.50 on dovish BoJ minutes, spotlight shifts to US Retail Sales USDJPY
  • USD/JPY has inched higher to near 134.50 on dovish BoJ minutes.
  • The US Treasury yields are scaling higher despite rising odds for a smaller rate hike from the Fed.
  • Lower retail demand and PPI figures might weigh sheer pressure on the USD Index ahead.

The USD/JPY pair is approaching 134.50 amid the release of the dovish Bank of Japan (BoJ) minutes for the monetary policy meeting, announced last week on March 09. The last monetary policy announcement by ex-BoJ Governor Haruhiko Kuroda lacked surprises as a continuation of an ultra-dovish policy stance was highly required to keep inflation steady near desired rates.

The commentary in BoJ minutes that the central bank will continue with Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control, aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner, indicates that the ultra-loose monetary policy would stay for a longer period.

Also, the BoJ will continue expanding the monetary base until the year-on-year rate of increase in the observed CPI (all items less fresh food) exceeds 2 percent and stays above the target in a stable manner

S&P500 futures have trimmed losses generated after a super-bullish settlement on Tuesday. Positive commentary from Federal Reserve (Fed) Governor Michelle Bowman on United States banking system has infused optimism in risk-perceived currencies. Fed policymaker cited “The US banking system has substantial liquidity and capital, and the Fed board is closely observing developments.

The US Dollar index (DXY) looks vulnerable above 103.50 as US Consumer Price Index (CPI) has softened and the Fed is likely to go light on interest rates to avoid recession in the American economy. The alpha provided on 10-year US Treasury bonds has climbed to near 3.69% despite rising odds for a 25 basis point (bps) interest rate hike by the Fed. According to the CME FedWatch tool, around 70% chances are favoring a 25 bps rate hike push to a 4.75-5% interest rate.

For further guidance, the release of the US Retail Sales and Producer Price Index (PPI) (Feb) data will be keenly watched. According to the estimates from RBC Economics “US retail sales edged 0.1% lower in February, with sales in the motor vehicle sector shrinking by 3.3% during that month.”

Apart from that, the monthly US PPI is expected to expand by 0.3%, lower than the former release of 0.7%. While the annual figure would soften to 5.4% from the prior release of 6%. A decline in the PPI figures would indicate that producers are struggling to expand the prices of goods and services at factory gates due to a decline in the overall demand. Eventually, it would trim the demand for labor and the overall inflation ahead.

 

23:57
AUD/JPY bulls attack 90.00 as BoJ Minutes defend easy-money policy, China data eyed
  • AUD/JPY remains on the front foot after rising the most in a month.
  • BoJ Minutes push back hopes of tighter monetary policy, yields struggle to extend the previous day’s run-up.
  • China Retail Sales, Industrial Production eyed for fresh impulse.

AUD/JPY stays firmer for the second consecutive day, taking the bids to refresh intraday high near 89.95 during early Wednesday, as cautious optimism in the market joins the Bank of Japan’s (BoJ) slightly dovish Monetary Policy Meeting Minutes.

“It is important to continue with monetary easing,” said the Bank of Japan (BoJ) Minutes statement. The BoJ Minutes also stated that the members agreed Japan's inflation likely to slow toward latter half of next fiscal year.

Also read: BoJ Minutes: Members agreed japan's economy expected to recover

Elsewhere, receding fears of the global banking debacle and a return to the 2008 financial crisis due to the latest fallouts of the Silicon Valley Bank (SVB) and Signature Bank seem to favor the sentiment and underpin the AUD/JPY pair’s upside momentum. Recently, US Senate Banking Committee Chairman Sherrod Brown and Federal Reserve Governor Michelle Bowman ruled out chatters suggesting the grim conditions of the US banking industry. Previously, Japanese Finance Minister Shunichi Suzuki said on Tuesday that they are “closely watching how the Silicon Valley Bank (SVB) case may impact Japan's economy and financial conditions.” The policymaker also added that Japan's financial system remains stable as a whole.

Amid these plays, S&P 500 Future print mild gains while tracking the Wall Street benchmarks whereas the US Treasury bond yields struggle for clear directions after positing the biggest daily gains in five weeks the previous day.

Looking ahead, China’s February month data dump, including the Fixed Asset Investment, Industrial Production and Retail Sales could direct immediate AUD/JPY moves. That said, China’s Retail Sales is expected to improve to 3.5% versus -1.8% prior while the Industrial Production growth could also rise to 2.6% from 1.3% previous readings. However, the Fixed Asset Investment is likely to have eased to 4.4% YoY so far in 2023, till February, versus 5.1% prior.

Additionally, headlines conveying the market sentiment after the SVB fallout and the bond market moves will also be important for the AUD/JPY traders to watch for clear directions.

Technical analysis

AUD/JPY bulls need to cross a seven-week-old horizontal support-turned-resistance area, around 90.15-25, to confirm further upside momentum.

 

23:56
BoJ Minutes: Members agreed japan's economy expected to recover

Bank of Japan January meeting minutes are trickling through as follows:

BoJ minutes key notes

Members agreed Japan's economy expected to recover.

Minutes Of The Monetary Policy Meeting.

Important To Continue With Monetary Easing.

Members Agreed Japan's Economy Expected To Recover.

Members Agreed Japan's Inflation Likely To Slow Toward Latter Half Of Next Fiscal Year.

 

More to come...

23:52
US Dollar Index: DXY bulls approach 104.00 as SVB fears fade, Fed bets improve ahead of US Retail Sales
  • US Dollar Index picks up bids to extend the previous day’s U-turn from one-month low.
  • Treasury bond yields remain sidelined after Tuesday’s notable rebound.
  • US policymakers rule out challenges to the financial markets, economy due to SVB fallout.
  • US inflation came in mixed but market’s bets on 25 bps Fed rate hike favor DXY bulls ahead of Retail Sales for February.

US Dollar Index (DXY) renews intraday high near 103.75 as it stretches the previous day's rebound from a one-month low to early Wednesday’s Asian session. In doing so, the greenback’s gauge versus the six major currencies cheers the receding fears from the latest fallouts of the Silicon Valley Bank (SVB) and Signature Bank ahead of the key US Retail Sales for February.

Recently, US Senate Banking Committee Chairman Sherrod Brown and Federal Reserve Governor Michelle Bowman ruled out chatters suggesting the grim conditions of the US banking industry.

Alternatively, Wall Street Journal (WSJ) reported that a raft of tougher capital and liquidity requirements are under review, as well as steps to beef up annual “stress tests” that assess banks’ ability to weather a hypothetical recession, according to a person familiar with the latest thinking among U.S. regulators. “The rules could target firms with between $100 billion to $250 billion in assets, which at present escape some of the toughest requirements,” per WSJ.

It should be noted, however, that the S&P 500 Futures refrain from welcoming the bears at the latest, suggesting an absence of the risk-off mood, after the Wall Street benchmarks rallied the previous day. Additionally, the US 10-year and two-year Treasury bond yields grind higher following the biggest daily run-up in more than a month.

On Tuesday, the US Consumer Price Index (CPI) and CPI ex Food and Energy both matched 6.0% and 5.5% YoY market forecasts, versus 6.4% and 5.6% respective previous readings. It should be noted that the market consensus of 0.4% MoM for the CPI, versus 0.5% prior, also proved right but the CPI ex Food & Energy rose to 0.5% compared to 0.4% analysts’ estimates and prior.

“The Federal Reserve is seen raising its benchmark rate a quarter of a percentage point next week and again in May, as a government report showed U.S. inflation remained high in February, and concerns of a long-lasting banking crisis eased,” said Reuters following the US inflation data release.

Looking ahead, today’s US Retail Sales for February, expected -0.3% MoM versus 3.0% prior, will be important to watch as the hawkish bets on the Federal Reserve’s (Fed) 25 basis points (bps) rate hike in the next week’s Federal Open Market Committee (FOMC) improve lately. Also important to watch will be the headlines conveying the market sentiment after the SVB fallout and the bond market moves.

Technical analysis

An inverted hammer bullish candlestick on the daily chart, just above the 50-DMA support of 103.44, keeps the US Dollar Index (DXY) bulls hopeful.

 

23:26
GBP/JPY gains traction on risk-on mood, with traders eyeing BoJ Minutes, UK’s budget
  • Wages in the United Kingdom edged lower, a release for the Bank of England, as it scrambled to bring down inflation.
  • The Japanese economic docket will feature the Bank of Japan’s latest monetary policy minutes.
  • GBP/JPY Price Analysis: To remain upward biased, above 162.00.

GBP/JPY consolidates around the 163.00 figure after seesawing within a 380 pip range on a risk-off impulse spurred by the United States (US) banking system crisis. However, investors’ worries have eased, as shown by Wall Street finishing with gains. At the time of writing, the GBP/JPY is exchanging hands at 163.30.

GBP/JPY likely to be underpinned by sentiment ahead of the UK’s budget

Investors sentiment remains upbeat. An employment report in the United Kingdom (UK) revealed by the Office for National Statistics (ONS) showed that the labor market is easing. The UK economy added 65K people to the workforce, above the 52K expected by analysts, but trailed the prior’s month data of 74K. Delving into the data, the Unemployment Rate remained unchanged at 3.7% but missed forecasts of 3.8%, while wages fell from 6% to 5.7%,  easing the Bank of England (BoE) pressure.

After the collapse of Silicon Valley Bank (SVB), global investors slashed bets that most central banks would continue their tightening cycle. Though inflation remains an issue for most central banks, and the BoE is expected to raise rates by 25 bps at the upcoming monetary policy meeting.

On the Japan front, the lack of economic data in the docket left traders focused on the release of the Bank of Japan (BoJ) monetary policy minutes over the January meeting. On the UK side, the UK Chancellor of the Exchequer, Jeremy Hunt, is expected to reveal its spring budget.

According to Reuters, “British Finance Minister (Chancellor) Jeremy Hunt will announce on Wednesday how he will try to speed up the world’s sixth-biggest economy after the shocks of Brexit, a heavy COVID-19 hit and double-digit inflation have left it lagging behind its peers.”

GBP/JPY Technical analysis

The GBP/JPY trades sideways, influenced by the 20, 50, 100, and 200-day EMAs’ confluence around the 161.89-162.40 mark. Nevertheless, if the exchange rate stays above the latter, the GBP/JPY pair would remain upward biased. A bullish continuation is expected and will face solid resistance at 164.07, March’s 14 daily high, followed by the 165.00 figure, and the February 28 high at 166.00. On an alternate scenario, the GBP/JPY first support would be the 20-day EMA at 162.40, followed by the 100-day EMA at 162.24, ahead of testing the 200-day EMA at 161.97.

 

23:16
GBP/USD Price Analysis: Further downside hinges on 1.2135 break and UK Budget GBPUSD
  • GBP/USD remains pressured after reversing from one-month high.
  • Convergence of 50-DMA, 23.6% Fibonacci retracement limits immediate downside.
  • Bullish MACD signals, upbeat RSI (14) keeps buyers hopeful.
  • UK Chancellor Hunt will deliver Budget speech in Parliament at 12:30 GMT.

GBP/USD bears struggle to keep the reins, after entering the ring the previous day, as the quote stays depressed around 1.2160 during early Wednesday. In doing so, the Cable pair grinds near the short-term key support confluence as traders await the UK Finance Minister (Chancellor) Jeremy Hunt’s annual budget speech.

Also read: UK Chancellor Hunt, hemmed in by debt, set to focus on growth in British budget

Apart from the convergence of the 50-DMA and 23.6% Fibonacci retracement level of the GBP/USD pair’s upside from November 2022 to February 2023, around 1.2135, the bullish MACD signals and upbeat RSI (14), not overbought, also favor the Cable pair buyers.

Even if the quote breaks the 1.2135 support confluence, the resistance-turned-support line from mid-February, around 1.2005 at the latest, adds to the downside filters.

It’s worth noting that the GBP/USD bears need validation from the 50% Fibonacci retracement level surrounding 1.1800 to retake control. That said, lows marked during January and in the last week, respectively near 1.1840 and 1.1805, act as additional supports to watch during the quote’s further downside.

On the flip side, February’s top surrounding 1.2270 precedes the 1.2300 and 1.2350 round figures to test the GBP/USD bulls before directing them to the yearly top, marked in February around 1.2450.

Overall, GBP/USD remains on the bull’s radar even if the pair snapped a four-day uptrend, as well as reversed from a one-month high, the previous day.

GBP/USD: Daily chart

Trend: Upside expected

 

23:10
USD/CHF looks capped below 0.9150 as US Inflation worries fade, US Retail Sales eyed USDCHF
  • USD/CHF is facing barricades around 0.9150 as the appeal for safe-haven assets has been trimmed post-SVB collapse.
  • One school of thought believes that core CPI is at uncomfortable levels despite US inflation softening.
  • S&P500 was heavily bought as investors ignored the SVB collapse and cheered the declining trend in the US inflation.

The USD/CHF pair is juggling in a narrow range below 0.9150 in the early Asian session. The upside in the Swiss Franc asset looks capped as the United States inflation worries have cooled down while the street was anticipating a red-hot inflation figure. The release of the headline and core Consumer Price Index (CPI) was in-line with the projections.

S&P500 futures have sensed a marginal decline after a solid bullish drive on Tuesday. Investors ignored the Silicon Valley Bank (SVB) collapse and cheered the declining trend in US inflation. On the US financial system, Federal Reserve (Fed) Governor Michelle Bowman cited “The US banking system has substantial liquidity and capital, and the Fed board is closely observing developments.

The US Dollar Index (DXY) showed a sideways auction on Tuesday despite the release of the US CPI data. The USD Index looks confined above 103.50 but is likely to show action ahead of the release of the US Retail Sales data.

The 10-year US Treasury yields have remained firmer and have scaled to near 3.69% amid mixed views from the street on US inflation data. Prices of used cars continued to decline, however, house rent is climbing higher, weighing immense pressure on households.

Analysts at Wells Fargo believe “Core CPI inflation remained entrenched at uncomfortably high levels. With core CPI up 0.5% in February, it is rising at an annualized rate of more than 5% whether measured on a 1-month, 3-month, or 12-month basis.” They further added, “With more than a week to go until the next Federal Reserve (Fed) meeting, a 25 bps rate hike is still a distinct possibility if financial stresses ease.”

On the Swiss Franc front, Producer and Import Prices (Feb) have declined dramatically, which shows weak consumer demand. Monthly data was contracted by 0.2% while the street was anticipating a contraction of 0.1%. The Annual figure dropped to 2.7% vs. the consensus of 3.4%. A decline in prices of goods and services at factory gates and lower prices for imports must have reduced stress for Swiss National Bank (SNB) policymakers, which were worried about rising price pressures.

 

23:08
EUR/USD Price Analysis: Bulls find comfort above the 1.0700 level after the US CPI release EURUSD
  • EUR/USD bullish price momentum has yet to surpass the 50-DMA.
  • US Dollar safe-heaven demand receded since the market stabilized after the SVB fallout.
  • Bullish momentum is likely to remain intact on a lighter note of 25-bps rate hike expectations for the Fed.


EUR/USD bulls settled above the 1.0700 mark after four days of successive rallies. The pair is hovering around the 1.0732 level at the time of writing, which is a multi-tested support zone pegged by the 50-DMA on the daily time frame. 

A successive break to the 50-DMA, which also coincides with a 38.2% Fib level, will reinforce the EUR/USD toward the next resistance zone starting from the 1.07942 level.

Heading toward the ultimate destination at the 1.0800 level, EUR/USD has to surpass the 50% Fib level placed just beneath the aforementioned round figure mark. The 50-DMA has been keeping a lid on EUR/USD for the last two days despite strong bullish momentum and a mild United States Consumer Price Index (CPI) release on Tuesday.

The bullish momentum keeps on rolling for EUR/USD. The market is heading into the next Federal Reserve (Fed) FOMC meeting with a lighter foot and is pricing in just a 25 basis points (bps) rate hike, less than the 50 basis points that was being priced prior to the banking sector worries.

Downside momentum may resurface due to delicate market conditions, particularly as we experienced financial turbulence earlier this week, this could potentially stimulate demand for the safe haven US Dollar. Any downside price pressure is likely to be limited around the 23.6% Fib level at 1.0660, which coincides with both the previous day’s low as well as 21-DMA.

EUR/USD: Daily chart

23:00
South Korea Unemployment Rate below expectations (3.1%) in February: Actual (2.6%)
22:58
Fed’s Bowman: US banking system remains resilient and on a solid foundation

Federal Reserve Governor Michelle Bowman crossed wires, via Reuters late Tuesday, as he rules out chatters surrounding the challenges to the US banking system amid the Silicon Valley Bank (SVB) fallout.

“Banking system has strong capital and liquidity and Fed board is carefully monitoring developments,” said Fed’s Bowman per Reuters.

The policymaker, however, didn’t comment anything on the monetary policy and economic outlook as stipulated by the two-week blackout period for the Fed governing body members ahead of the Federal Open Market Committee (FOMC).

On the same line, US Senate Banking Committee Chairman Sherrod Brown also mentioned, during an interview with Bloomberg, that the US Congress should enact financial regulations to strengthen stress tests and capital and liquidity standards for banks. The policymaker also added that prospects remained low for such a step.

“Brown added that he hoped the Federal Reserve would not raise rates when it meets March 21 and 22,” reported Reuters.

Also read: Forex Today: Dollar unable to recover despite CPI and yields; Wall Street rebounds

22:45
UK Chancellor Hunt, hemmed in by debt, set to focus on growth in British budget

“British Finance Minister (Chancellor) Jeremy Hunt will announce on Wednesday how he will try to speed up the world's sixth-biggest economy after the shocks of Brexit, a heavy COVID-19 hit and double-digit inflation have left it lagging behind its peers,” reported Reuters ahead of a budget speech to the UK parliament at around 12:30 GMT.

The news also mentioned that UK’s Hunt has dismissed calls from other lawmakers in the ruling Conservative Party for big tax cuts now to boost their fortunes before an election expected in 2024.

"In the autumn we took difficult decisions to deliver stability and sound money," Hunt is due to say, according to excerpts of his budget speech. "Today, we deliver the next part of our plan: A budget for growth," he will add reported Reuters.

Key quotes

Hemmed in by his promise to lower the burden of Britain's 2.5 trillion pounds ($3.0 trillion) of debt, Hunt will seek to tackle some of the causes of Britain's long-term economic funk.

Having ruled out a major spending spree or big tax cuts, Hunt will address the acute shortage of candidates for jobs by changing childcare and welfare rules, something he says will help get hundreds of thousands of people back into work.

The Guardian newspaper said Hunt would announce a 4 billion-pound childcare expansion for one and two-year olds in England.

He is also expected to announce measures to improve skills training and give a green light to 12 investment zones.

In an attempt to soften that tax hit, Hunt has hinted at new incentives for business investment.

He is also under pressure from nurses, teachers and other public sector employees who striking for higher pay, while the armed forces say they need more money to support Ukraine in its war with Russia.

GBP/USD stays sidelined

GBP/USD seesaws around 1.2160 during early Wednesday, having reversed from a one-month high the previous day, as traders await the key UK event.

Also read: GBP/USD bulls meet resistance near 1.2200 ahead of UK budget

22:36
AUD/USD aims to recapture 0.6700 as worries for bigger Fed rate hikes fade AUDUSD
  • AUD/USD is looking to recapture the immediate resistance of 0.6700 as the risk-on impulse solidifies.
  • The Fed would be lighter on interest rates to safeguard the interest of investors and to restore consumer confidence.
  • RBA Lowe will continue its policy-tightening spell for the 11th time without focusing on SVB collapse.

The AUD/USD pair is demonstrating a sideways auction around 0.6685 in the early Tokyo session. The Aussie asset is looking to recapture the round-level resistance of 0.6700 as investors are not worried anymore for fears of bigger rate hikes from the Federal Reserve (Fed).

An anticipated decline in the United States inflation, higher Unemployment Rate, lower-than-expected increase in Average Earnings, and the Silicon Valley Bank (SVB) collapse indicate that the Fed would be lighter on interest rates to safeguard the interest of investors and to restore consumer confidence.

S&P500 futures are showing a marginal correction after a super-bullish Tuesday, portraying a minor long-liquidation amid an overall risk-on mood. However, Moody’s Investors Service cut its view on the entire banking system to negative from stable, as reported by CNBC. Credit rating firms cited it as a “rapidly deteriorating operating environment” despite regulators’ efforts to safeguard the interest of depositors and institutions that were hit with liquidity issues.

The US Dollar Index (DXY) has managed to safeguard the 103.60 support, however, the downside seems likely as the risk-appetite theme is getting more traction. Meanwhile, the alpha provided on 10-year US Treasury bonds has scaled to 3.69%.

After the expected decline in the US Consumer Price Index (CPI), investors are awaiting the release of the Retail Sales data. Analysts at Credit Suisse expect “Retail sales to fall 0.9% MoM in February, partly reversing a strong increase in January. Noisy seasonal adjustments and unseasonably warm weather likely played a role in last month’s report, so a normalization lower is likely.”

On the Australian Dollar front, Reuters reported that Australia’s economic outlook will be scrutinized by the Reserve Bank of Australia (RBA) for rate hikes, unlike other nations that are focusing on SVB collapse. Analysts at three of the top four lenders - Commonwealth Bank of Australia, National Australia Bank, and ANZ Group Holdings - continue to expect RBA Governor Philip Lowe to deliver its 11th consecutive rate hike next month.

 

22:34
Silver Price Analysis: XAG/USD consolidates around $21.70s after testing $22.00
  • Silver price remains steady at around $21.70s despite losing 0.39% on Tuesday.
  • The confluence of the 200/100/50-day EMAs would be solid resistance to break.
  • XAG/USD Price Analysis: In the short term, neutral biased.

XAG/USD stays firm after rallying more than 6% on Monday on investors’ flight to safety following the collapse of the Silicon Valley Bank and Signature Bank. Nevertheless, worries about a potential spread had waned. At the time of writing, the XAG/USD exchanges hands at $21.68 a troy ounce.

XAG/USD Price action

Silver prices retreated from weekly highs reached during the day at $21.96 due to several technical reasons. The 200, 50 and 100-day Exponential Moving Averages (EMAs) confluence around the $21.79-86 area capped the white metal climb. Therefore, the XAG/USD closed Tuesday’s session at around $21.68, below the 200-day EMA. That said, the XAG/USD is neutral to upward bias, though a daily close above the 200-day EMA must shift the bias neutral upwards.

On the upside, the XAG/USD first resistance would be the 200-day EMA at $21.79. Once cleared, the next supply zone would be the 50/100-day EMAs intersection, at $21.84-86, followed by the $22.00 figure.

On the flip side, the XAG/USD first support would be the 20-day EMA at $21.26. A breach of the latter will expose the March 10 daily high turned support at $20.78, followed by the March 13 low at $20.50

XAG/USD Daily chart

XAG/USD Technical levels

 

22:30
EUR/GBP rebound fades bounce 0.8800 ahead of UK Budget Report EURGBP
  • EUR/GBP remains sidelined after snapping four-day downtrend with bounce off two-week low.
  • GBP retreat amid mixed UK employment report, hopes of lucrative British budget.
  • Investment zones are the key incentive in the new government’s annual buget.
  • Eurozone Industrial Production for January, risk catalysts are also important for clear directions.

EUR/GBP treads water around 0.8830, following a rebound from a fortnight low to snap the four-day downtrend, as traders await the key UK Budget Report for fresh impulse. It should be noted that the latest catalysts from Britain haven’t been too impressive, which in turn lure the British Pound (GBP) bears as the key event looms.

That said, UK’s headline ILO Unemployment Rate reprinted 3.7% for three months to January versus 3.8% expected whereas the Claimant Count Change improved to -11.2K in February from -30.3K (revised) prior and -12.4K market forecasts. Further details suggest that the Average Earnings Including Bonus matched 5.7% analysts’ estimations for three months to January, versus upwardly revised 6.0% prior, whereas the ex-Bonus figures came in as 6.5% compared to 6.6% expected and 6.7% previous readings.

Following the UK data, the odds of the Bank of England’s (BoE) easy rate hikes, or policy pivot, gained attention. “Growth in pay in Britain - which the Bank of England is watching closely as it weighs up whether to pause its run of interest rate hikes next week - lost pace in the three months to January, official data showed on Tuesday,” said Reuters.

On the other hand, European Central Bank (ECB) policymaker Yannis Stournaras said, during an nterview with a Greek newspaper, that he doesn’t see any impact from the collapse of Silicon Valley Bank (SVB) on Eurozone banks. Previously, Eurogroup's President Paschal Donohoe mentioned, “Euro-area has very limited exposure to SVB.”

Apart from that, the fading Brexit optimism and comparatively more hawkish European Central Bank (ECB) policymakers, than the BoE, also probe the EUR/GBP bulls.

Looking ahead, the British government’s annual Budget Report and Eurozone Industrial Production for January, expected 0.4% MoM versus -1.1% prior, will be important for EUR/GBP traders to watch for clear directions. Apart from that, the headlines surrounding the SVB and Russia could also entertain the cross-currency pair traders.

Technical analysis

Despite bouncing off a two-month-old ascending support line, currently around 0.8800, the EUR/GBP bulls need validation from the 50-DMA hurdle of 0.8840 to retake control.

 

22:16
NZD/USD Price Analysis: Bulls run out of steam as key EMAs test upside near 0.6250 NZDUSD
  • NZD/USD struggles to extend three-day uptrend near the highest levels in a fortnight.
  • 100, 200 EMAs restrict immediate upside even as trend line breakout, bullish MACD signals favor buyers.
  • Four-month-old horizontal area is the key downside support.

NZD/USD seesaws around 0.6235-30 during the early Wednesday morning in Asia-Pacific as bulls jostle with the key Exponential Moving Averages (EMA) to extend the three-day uptrend.

It should be noted, however, that the Kiwi pair’s latest run-up could be linked to a clear U-turn from the four-month-old horizontal support zone, around 0.6090-80, as well as clear upside break of the downward-sloping resistance line, now immediate support close to 0.6175.

Apart from the aforementioned catalysts, the bullish MACD signals also favor the NZD/USD upside.

However, the 100-day EMA precedes the 200-day EMA to restrict immediate upside of the Kiwi pair near 0.6240 and 0.6265 in that order.

Should the quote manages to remain firmer past 0.6265, the odds of witnessing a quickly run-up towards the 0.6300 threshold appears bright.

Following that, the mid-February swing high, close to 0.6390, holds the key to the NZD/USD bull’s further dominance towards poking February’s high near 0.6540.

Alternatively, a downside break of the resistance-turned-support near 0.6175 could lure the NZD/USD bears. Though, a sustained break of the horizontal area comprising multiple lows marked since November, near 0. 6090-80, will be necessary to push back the buyers.

Overall, NZD/USD is likely to rise further but the EMAs hold the gate for bulls.

NZD/USD: Daily chart

Trend: Further upside expected

 

22:01
Gold Price Forecast: XAU/USD continues to juggle above $1,900 despite US Inflation softens
  • Gold price is struggling to come out of the woods despite the continuation of declining US Inflation.
  • The USD Index is defending the critical support of 103.50 but looks prone to the further downside amid the risk-on mood.
  • Monthly US Retail Sales data is expected to contract by 0.3% vs. the former release of 3% expansion.

Gold price (XAU/USD) is inside the woods despite the United States inflation figures meeting expectations. The precious metal is continuously oscillating in a narrow range of $1,895-1,913 from Monday. The release of the US Consumer Price Index (CPI) failed to deliver a power-pack action in the Gold price, however, the upside bias looks solidified as bets for smaller rate hikes from the Federal Reserve (Fed) have soared.

The US Dollar Index (DXY) is defending the critical support of 103.50 but looks prone to the further downside as investors’ risk appetite has improved dramatically. S&P500 futures witnessed responsive buying from the market participants as higher odds of a smaller rate hike from Fed chair Jerome Powell might postpone a likely recession in the US economy, portraying a sheer recovery in overall optimism.

Contrary to the risk-on mood, the demand for US Treasury bonds remained vulnerable, which led the 10-year US Treasury yields higher above 3.68%.

The headline US CPI was expanded by 0.4% on a monthly basis, as expected and the annual figure softened to 6.0% from the former release of 6.4%.  And, the core CPI that excludes oil and food prices dropped marginally to 5.5% from the former release of 5.6%. The continuation of a declining trend in the US inflation seems delightful for the Fed.

Going forward, investors will keep an eye on the US Retail Sales (Feb) data. Monthly Retail Sales data is expected to contract by 0.3% vs. the former release of 3% expansion. This indicates that resilience in consumer spending is over and the Fed is on track of achieving the 2% inflation target.

Gold technical analysis

Gold price is forming a Bullish Flag chart pattern on an hourly scale, which indicates a continuation of the bullish momentum after the breakout of a consolidation. Usually, the consolidation phase of the chart pattern serves as an inventory adjustment in which those participants initiate longs, which prefer to enter an auction after the establishment of a bullish bias.

Advancing 50-period Exponential Moving Average (EMA) at $1,894.00 add to the upside filters.

The Relative Strength Index (RSI) (14) is oscillating in a bullish range of 40.00-60.00. A break into the bullish range of 60.00-80.00 will trigger the upside momentum.

Gold hourly chart

 

21:46
USD/JPY Price Analysis: Bullish correction in full-flight, 135´s eyed USDJPY
  • USD/JPY bulls are in charge and eye a deeper correction. 
  • Bulls need to overcome the temporary hourly resistance.

USD/JPY is making its way north following confirmation that inflation is sticky in the US from the day´s Consumer Price Index outcome earlier in the US session. As per the prior analysis, the bulls are making a firm correction and the bias remains in the hands of the bulls as the following will illustrate. 

USD/JPY prior technical analysis

It was stated, that ´´on a daily basis, USD/JPY is moving into a support zone that could result in a correction ahead of the US CPI data with the 134.50-70 eyed as per the daily Fibonacci scale as illustrated above. However, on a lower time frame:´´

´´There is a lot of resistance between 133.70 and 134.00 that the bulls will need to volt first.´´

USD/JPY update

As can be seen, the bulls have indeed moved in and the price is well on its way toward the 135s. However, on the way, there are prospects of a correction and some grounding before further demand:

The bulls will need to commit to the trendline support, or thereabouts with resistance potentially found in the M'formaiton´s neckline for the meanwhile:

21:45
New Zealand Current Account - GDP Ratio below expectations (-8.4%) in 4Q: Actual (-8.9%)
21:45
New Zealand Current Account (QoQ) came in at $-9.458B below forecasts ($-7.64B) in 4Q
21:33
USD/CAD sinks on investors bracing for riskier assets amidst an offered USD USDCAD
  • The Canadian Dollar held to gains bolstered by market sentiment and a soft US Dollar.
  • US cooled on yearly figures, but core CPI rising MoM suggests inflation is stickier than estimates.
  • The Federal Funds rates is expected to peak at around 5.0%, according to money market futures.

USD/CAD drops on Tuesday by 0.37% after hitting a daily high of 1.3750 as Wall Street closes. A risk-on impulse weighed on the US Dollar (USD) and favored the Canadian Dollar (CAD), which despite falling oil prices, is clinging to gains. At the time of writing, the USD/CAD is trading at 1.3680.

US February core CPI came above estimates

Wall Street finished Tuesday’s session with 1% and 2.14% gains. Inflation in the United States (US), as reported by the Department of Labor (DoL), was lower than forecasts on annual figures. However, on a monthly basis, the Consumer Price Index (CPI) ticked down from 0.5% to 0.4%, but core CPI rose above estimates of 0.4% at 0.5%.

Recent turmoil in the US banking systems plunged US Treasury bond yields, particularly 2s, which fell 100 bps in two days. However, backstop measures implemented by the US Federal Reserve (Fed) have calmed investors, as shown by the market mood.

Given the backdrop, speculators have begun to price in a less aggressive Fed. The swaps market estimates the Fed would hike 25 basis points at the upcoming March meeting and is seeing rates peaking at the 4.75% - 5.00% range.

Consequently, US Treasury bond yields recovered some ground and underpinned the US Dollar. The US Dollar Index, a measure of the buck’s value vs. a basket of peers, finished the session with minuscule gains of 0.03%, at 103.659, and capped the USD/CAD rally.

Another reason that helped offset the Canadian dollar gains as oil prices collapsed by 4%, as shown by the US crude oil benchmark WTI. WTI finished the session losing 4.30% at $71.44 per barrel.

In later news, a crash between a Russian fighter jet and a US drone caused a dip in US equities, though most indices pared those losses and finished higher.

The lack of data in the Canadian docket kept investors leaning on the US Dollar dynamics, sentiment, and oil prices. On the US front, the economic calendar will feature the Retail Sales, the Producer Price Index, and the New York  Empire State Manufacturing Index.

USD/CAD Technical levels

 

21:04
United States API Weekly Crude Oil Stock increased to 1.155M in March 10 from previous -3.835M
21:00
Forex Today: Dollar unable to recover despite CPI and yields; Wall Street rebounds

Here is what you need to know on Wednesday, March 15:

The US Dollar dropped again on Tuesday, but it held above Monday’s lows. The Greenback remained weak despite US Consumer Price Index (CPI) numbers and a rebound in US Treasury yields. US stocks rose significantly, with the Dow Jones up by more than 1% and the Nasdaq rising by more than 2%. The VIX (Fear index) pulled back to 23.75. 

US February CPI inflation rate came in line with expectations, slowing marginally to 6% YoY, the lowest since September 2021, and the core CPI rate to 5.5% YoY, the lowest since December 2021. The numbers still show elevated inflation numbers that, together with the latest employment data, would argue for a 25 bps rate hike at next week’s FOMC meeting. The failures of Silicon Valley Bank and Signature Bank clouded the outlook. 

For how long will the SVB collapse will offset US economic data? On Wednesday, more inflation data is due with the Producer Price Index. Also, Retail Sales numbers will be released. The economic calendar also shows Chinese February Industrial Production and Retail Sales.

The DXY finished practically unchanged on Tuesday, due to the rebound in USD/JPY on the back of higher US yields. The US 10-year yield rose from 3.54% to 3.68% and the 2-year rate from 3.97% to 4.25%. The USD/JPY gained more than a hundred pips. The Bank of Japan (BoJ) will release the minutes of its January meeting on Wednesday. Contagion fears regarding SVB have reduced significantly, for the moment, the odds of a change in BoJ policy in 2023. 

EUR/USD rose marginally, still capped by 1.0750. On Thursday, the European Central Bank (ECB) will have its monetary policy meeting. A 50 basis point rate hike is still expected despite the SVB drama. Attention would be on potential changes to its forward guidance.

GBP/USD remains in a tight range around 1.2160. The UK employment report on Tuesday showed upbeat numbers. The unemployment rate, expected to rise to 3.8%, remained steady at 3.7% in the period of three months ending in January; the economy added 65.000 jobs, above the 53.000 expected. Average hours earnings slowed from 6% to 5.7% YoY. 

USD/CAD reached weekly lows at 1.3645 and then rebounded toward 1.3700. Manufacturing Sales in Canada rose 4.1% in January, surpassing expectations of a 3.9% gain. 

AUD/USD and NZD/USD climbed on the back of a weaker US Dollar and an improvement in risk sentiment. Both currency pairs failed to reach fresh highs, capped by 0.6700 and 0.6250, respectively. 

Bitcoin keeps making sharp moves. It peaked at $26,500 (highest since June 2022) and then pulled back to $24,500. Gold and Silver moved sideways, holding on to most of Monday’s gains. 

The outlook for Crude Oil prices keeps getting worse. WTI dropped more than 4% and settled at the lowest level since mid-December below $72.00. 
 

 

 

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20:31
GBP/USD bulls meet resistance near 1.2200 ahead of UK budget GBPUSD
  • GBP/USD bulls come up for air but pressures remain ahead of the UK budget.
  • Fed bets are dwindling in regards to a hawkish bias, weighing on the US Dollar. 

GBP/USD was lower on Tuesday but hovers around a one-month high on the back of a soft US dollar that was dented at the start of the week due to the market turmoil in the banking sector. At the time of writing, GBP/USD is trading at 1.2165 and down by some 0.14% after falling from a high of 1.2203 to a low of 1.2135 so far. 

On the domestic front, official data showed that UK pay growth lost pace in the three months to January, welcome news for the Bank of England as it seeks to rein in inflation and a further factor in the mix for its rate-setting meeting next week.

Meanwhile, for GBP, tomorrow’s budget will provide a diversion from the fallout from the collapse of SVB. ´´Following the debacle of the September 23 mini-budget, Chancellor Hunt will not be looking to ruffle many feathers in his speech tomorrow.  Not-as-bad-as-expected UK growth data and tight UK labour market conditions means that the public sector finances have outperformed the predictions of the OBR.  The Chancellor may therefore have a little wiggle room,´´ analysts at Rabobank explained. 

´´The Chancellor is also under pressure to increase pay for some public sector workers.  As long as the bulk of the measures announced by Hunt are aimed at supporting productivity and investment without added to the strain on public finances, GBP should react well,´´ the analysts added. ´´ The break above the 50 day sma at 1.2135 is a bullish near-term signal.  That said, we see room for the USD to reverse this week’s losses and would look for a move back to GBP/USD1.19 on a 1 month view,´´ the Rabobank analysts explained. 

Elsewhere, in the US, inflation data in the US Consumer Price Index (CPI) rose 0.4% last month after accelerating 0.5% in January. In the 12 months through February, the CPI increased by 6.0%, a slower pace than the 6.4% annualized gain in January, however, this was still above the Federal Reserve's 2% target. Consequently,  the US Dollar found some demand and made a session high in the US but it has since turned lower while futures priced in a Fed rate cut by year's end.

Fed funds futures show a change in sentiment with regard to this month's FOMC meeting. However, the CME´s Fed Watch Tool shows a 28.4% likelihood the Fed would stand pat at the end of its two-day policy meeting on March 22, slightly down from the prior day following the CPI data. 

 

19:13
AUD/USD bulls run into offers near 0.6700 with mixed Fed bets AUDUSD
  • AUD/USD bulls come up to meet resistance near 0.6700. 
  • Fed and RBA bets are driving AUD back and forth amid uncertainty. 

AUD/USD is a touch higher by some 0.2% on Tuesday after rising from a low of 0.6631 and reaching a high of 0.6696 at the start of the New York session. Bulls are in play despite softer Aussie data and the subsequent heightened dovish speculation with regard to the Reserve Bank of Australia. Instead, risk sentiment has improved, (AUD proxy) as Federal Reserve odds have moved in favor of a slower path of rate hikes amid the banking sector troubles. 

US CPI keeps Fed rate hike odds alive

The combination is neutral for the Aussie but there is a bearish bias in the US Dollar for the meanwhile as investors tread cautiously ahead of next week´s Federal Open Market Committee meeting. The US Consumer Price Index (CPI) rose 0.4% last month after accelerating 0.5% in January. In the 12 months through February, the CPI increased by 6.0%, a slower pace than the 6.4% annualized gain in January, however, this was still above the Federal Reserve's 2% target, as such, the US Dollar found some demand on the data and printed the session high in the US but it has since turned lower while futures priced in a Fed rate cut by year's end.

Federal Reserve observers are mixed on whether the still solid rise in inflation will push the Fed to raise rates again next week after the collapse of Silicon Valley Bank and Signature Bank caused turmoil in financial markets. Markets are in anticipation of a terminal rate of 4.45% for December, down from more than 5% last week. Fed funds futures also reveal a change in sentiment with regard to this month's FOMC meeting. However, the CME´s Fed Watch Tool shows a 28.4% likelihood the Fed would stand pat at the end of its two-day policy meeting on March 22, slightly down from the prior day following the CPI data. 

RBA dovish bets accumulating

Meanwhile, domestically, net AUD short positions have moved moderately lower between February 7 and February 21, analysts at Rabobank noted. ´´More recently, the Reserve Bank of Australia, RBA, has indicated that a pause in policy may be on the horizon, though further tightening is expected first.´´ 

In this regard, the recent NAB February business survey revealed a fall in business confidence though conditions remained similar to January. RBA Governor Lowe has stated that this is 1 of the 4 data points (i.e., jobs, retail sales, business survey, and inflation) the Bank is closely watching for its policy decision in April. This NAB print suggests business activity is softening and this is a dovish input that implies a potential pause by the RBA. ´´However, we think the Feb Jobs Report released this Thurs is more crucial to the Bank given the Governor's emphasis on preserving job gains,´´ analysts at TD Securities argued. 

The analysts said that this will be one of the most closely watched employment prints in a long time. ´´The larger-than-usual increase in under-employed people in Jan, and the larger-than-usual rise in the number of unemployed people who had a job to go to in the future suggests a bounce is likely,´´ the analysts said who forecast 47k jobs were added in Feb, the participation rate rising to 66.6%, keeping the Unemployment Rate rate unchanged at 3.7%.

 

19:01
Argentina Consumer Price Index (MoM) up to 6.6% in February from previous 6%
18:56
S&P 500 regains composure, rises as fears wane and US CPI ticks lower
  • The S&P 500, the Nasdaq 100, and the Dow Jones advanced as traders prepared for US Retail Sales.
  • US inflation cooled on a yearly basis, but on a monthly basis, core CPI advances.
  • Investors are expecting the Federal Funds Rate to peak around 5%.

Wall Street is trading with solid gains, recovering after Monday’s volatile session sponsored by the US regional bank crisis, threatening to spread to other banks. However, the measures to contain the collapse of Silicon Valley Bank (SVB) appeared to cushion risk assets fall.

At the time of typing, the S&P 500 is gaining 0.72, at 3,883.55. Following suit is the heavy-tech Nasdaq 100, up 1.20% at 11,322.69, while the Dow Jones raises 0.22%, at 31,891.57.

US equity indices and UST bond yields gain traction, and the US Dollar falls

Despite the current bank crisis, the latest economic data from the United States (US) would likely keep the US Federal Reserve (Fed) in a tightening mode. US inflation in the US came pretty much aligned with estimates, though on a monthly basis, the core Consumer Price Index (CPI) for February aimed for 0.5%, above forecasts of 0.4%. Headline inflation, the CPI, was 0.4% MoM, aligned with estimates. Annually based inflation data, in general, and core, was below estimates, showing the effect of higher interest rates.

In the meantime, expectations for a 25 bps rate hike by the Federal Reserve (Fed) remained elevated. Nevertheless, developments around the latest banking crisis in the US could influence Fed officials’ decisions next Wednesday. The CME FedWatch Tool odds for a 25 bps hike lie at 65% to the 4.75% - 5.00% range.

Sector-wise, Communication Services, and Financials are the two leaders of the pack, up 2.13% and 1.76%. The laggards are Consumer Staples and Real Estate, each up 0.16% and 0.11%.

Of late, geopolitical concerns over a Russian aircraft crashing with a US drone exacerbated the newest dip in US equities.

US Treasury bond yields are recovering, led by 2s and 10s, each up 7% and 1.76%, respectively. The US Dollar Index (DXY) pairs some of its earlier gains and slides 0.04%, at 103.581.

What to watch?

The US economic calendar will feature February Producer Price Index (PPI) and Retail Sales. The New York Empire State Manufacturing Index for March and the NAHB Housing Market Index would also be revealed.

S&P 500 Daily chart

 

18:10
WTI bulls waiting in the flanks at major support
  • WTI bears are in control and eye a test of $72.00.
  • However, the M-formation could see a correction in the forthcoming hours from major support.

Oil prices are weaker in mid-day trade on Wall Street after the United States reported inflation last month rose at an annualized 6% pace, matching expectations and down from 6.4% in January.

However, inflation is still way above the Federal Reserve's targets which imply prospects of a recession, especially amid the banking sector concerns that continue to challenge growth and demand-dependent commodities such as oil. 

West Texas Intermediate crude oil is down by over 3% on the day now and printing fresh session lows in New York at the time of writing. 

Looking to the charts, we can apply a multi-time frame analysis to determine prospects of a correction in the meanwhile but ultimately, a bearish bias prevails as follows:

WTI daily charts

 

In a series of lower highs, the daily charts show the price moving sideways within a broad range of between $70.10 and $83.32. There is a price imbalance, greyed area, above $77.50, but the momentum is with the bears while below $74.80, and liquidity below $70.10 is calling. However, while being on the backside of the bearish trend, (broken bear trendline), this could be a phase of accumulation and a clear out of stale stops below $70.10 could result in a surge of demand further down the line. nonetheless, the bears are in control for the time being

WTI weekly charts

The weekly charts show that the price broke the bullish trend and is now backside and moving sideways but still biased lower while on the front side of the micro bear trendline below $74.82 as illustrated above. 

However, the M-formation could hamstring the bears between $70.25 and the neckline near a 50% mean reversion of $76.70.

WTI H1 charts

Moving down to the hourly chart, we see that the price is indeed on the front side of the bear trendline but meeting support. The M-formation, zooming in, is a reversion pattern that could see a correction in the forthcoming hours from support before a downside continuation to test $72 the figure. 

18:02
USD/CHF Price Analysis: Buyers moved in, but sellers are looming USDCHF
  • USD/CHF gains traction after falling short of breaking to new YTD lows.
  • USD/CHF Price Analysis: Downward biased; it might test 0.9059 and below.

USD/CHF trims some of its Monday losses and shifts positively on Tuesday, gaining 0.47%. The USD/CHF is trading at 0.9151 after hitting a daily low of 0.9094 earlier in the European session.

USD/CHF Price action

After collapsing for three consecutive days, the USD/CHF found a bottom shy of the year-to-date (YTD) lows at 0.9070. However, the USD/CHF recovery has fallen short of cracking a previous low-turned resistance around 0.9160. That could exacerbate the downtrend, and the USD/CHF could be testing YTD lows soon.

The Relative Strength Index (RSI) remains in bearish territory, though turned flat. This means that sellers are taking a respite before pushing prices lower. The Rate of Change (RoC) portrays buyers stepping in but with insufficient force to shift the bias. The path of least resistance is downward biased.

The USD/CHF first support would be the 0.9100 figure. Break below, and the pair might fall toward March’s 13 daily low at 0.9070 before testing the YTD low at 0.9059, ahead of the 0.9000 figure. In an alternate scenario, the USD/CHF first resistance would be the March 13 daily high of 0.9205. Once cleared, the USD/CHF’s next resistance would be the 20-day Exponential Moving Average (EMA) At 0.9283 before reaching 0.9300.

USD/CHF Daily chart

USD/CHF Technical levels

 

17:17
US: February CPI did not show many signs of cooling – Wells Fargo

Data released on Tuesday showed the US Consumer Price Index rose 0.4% in February, as expected, while the annual rate slowed from 6.4% to 6%. Analysts at Wells Fargo argue the report did not show many signs of cooling in consumer inflation and warn there were only a few positive developments in the data.

Headline CPI coming down gradually

“Consumer price inflation did not show many signs of cooling in the February CPI. There were only a few positive developments in the data. Prices at the grocery store rose just 0.3%, the smallest increase since March 2021. Used auto prices continued to come back down to Earth and fell another 2.8% in the month.”

“Prices for food consumed away from home rose 0.6% in a potential sign that inflationary pressures emanating from the tight labor market remain in place. On a year-over-year basis, headline inflation continued to come down amid slower food and energy inflation. Headline CPI has risen 6.0% over the past 12 months, the smallest year-ago change since September 2021.”

“But beyond these pockets of improvement, core CPI inflation remained entrenched at uncomfortably high levels. With core CPI up 0.5% in February, it is rising at an annualized rate of more than 5% whether measured on a 1-month, 3-month or 12-month basis.”

“With more than a week to go until the next FOMC meeting, a 25 bps rate hike is still a distinct possibility if financial stresses ease.”

16:51
NZD/USD climbs back above 0.6200 on sentiment improvement after US CPI NZDUSD
  • NZD/USD reclaims the 0.6200 figure after Monday’s US banking crisis dented sentiment.
  • US CPI figures came aligned with estimates, though inflation remains elevated.
  • Traders eye US Retail Sales, PPI, and New Zealand GDP for Q4, 2022.

NZD/USD bounces off weekly lows of 0.6084 and rises, even though an inflation report in the United States (US) warrants further tightening by the US Federal Reserve (Fed). The NZD/USD stays firm at around 0.6221 after clearing the 20-day Exponential Moving Average (EMA).

US CPI for February aligned with estimates

Stocks went up again as worries about three US banks collapsing eased. The US Department of Labor (DoL) reported that yearly inflation in February matched predictions. The headline inflation measure, the Consumer Price Index (CPI), increased by 6%. Excluding food and energy, known as the core CPI, rose by 5.5%. Monthly readings witnessed the CPI at 0.4%, as expected, while the measure that excludes food and energy was 0.5%, higher than anticipated.

US central bank chief Jerome Powell said last week that the main interest rate would go higher than planned. He also noted that solid economic data would make interest rates rise faster. But the recent problems in the US banking system make traders expect a less aggressive central bank as they worry that more banks could go bankrupt.

US Treasury bond yields are up after Monday’s knee-jerk reaction plummeted them. The US 2s and 10s are back within familiar levels, with 2s at 4.389%, up 40 bps, while 10s are at 3.659%. Given that backdrop, the greenback’s fall stopped, as shown by the US Dollar Index (DXY). The DXY is gaining 0.17%, at 103.801.

What to watch?

On the New Zealand (NZ) front, an absent economic docket left traders adrift to market sentiment and US Dollar (USD) dynamics. However, on Wednesday, the NZ calendar will feature the Gross Domestic Product (GDP) for Q4, estimated at 3.3% YoY and -0.2% QoQ. On the US side, the calendar will feature Retail Sales and the Producer Price Index (PPI).

NZD/USD Technical Levels

 

 

16:48
EUR/USD slips just below Tuesday’s open price of 1.0729 EURUSD
  • EUR/USD trades slightly lower, but losses remain limited after US CPI data release.
  • Market participants assess US inflation data's implications on Fed's monetary policy.
  • EUR/USD faces immediate resistance at 1.0772, while support is at 1.0666.
  • Wednesday’s US Retail Sales and Thursday's ECB rate decision data are ahead.

Daily price movements:

EUR/USD currency pair trades under pressure around 1.0717 at the press time after Tuesday’s US CPI data release. However, the losses remain limited as market participants assess the inflation data's implications on the Fed's monetary policy. As of writing, the EUR/USD is down 0.05% on the day, with the daily high and low at 1.0748 and 1.0679, respectively.

According to Société Générale economists, if ECB President Christine Lagarde delivers a hawkish press conference and raises rates by 50 bps on Thursday, the EUR/USD pair could climb above 1.0800.

Key economic events:

It is essential to closely follow the US February Retail Sales report on Wednesday at 12:30 GMT and ECB Monetary Policy Decision Statement on Thursday at 13:15 GMT as they are critical data points in the short term.

Due to the devastating collapse of Silicon Valley Bank (SVB), the market is anticipating that the Federal Reserve (Fed) will adopt a less aggressive monetary policy stance. 

This is because the Federal Reserve (Fed) may want to avoid hiking rates in the future to prevent more banking collapses from occurring.

Technical view:

From a technical perspective, the EUR/USD pair faces immediate resistance at 1.0772, followed by 1.0814 and 1.0879 levels. On the other hand, the support is at 1.0666, followed by 1.0601 and 1.0560 levels. The daily 20-SMA is 1.0634, while the daily 50-SMA is 1.0723. The daily RSI(14) is at 54.906 with a neutral stance. The 38.2% Fibonacci retracement level of the latest daily decline is at 1.0708, while the 61.8% Fibonacci level is at 1.0683.

 

15:57
Gold Price Forecast: XAU/USD to trend above $1,925 later in the year, with convincing upside risk – TDS

Gold jumped to the highest in over a month. Economists at TD Securities see the yellow metal trading above $1,925 in the latter months of this year.

Long-term looks good for Gold

“Ironically, higher rates now are good for Gold later on as they would drive rates lower faster along the long end of the curve. The resulting Dollar weakness should be accretive for Gold longer term too.”

“Since there have been a lot of references to skewing policy to favor the lower end of income distribution, we judge the cuts would be aggressive as high unemployment would hurt that demographic most. To the extent that cuts real rates to levels below previous cyclical norms, Gold should benefit.”

“We expect prices to trend above $1,925 later in the year, with a significant upside risk in the months to come.”

 

15:36
USD/CHF and USD/JPY pops will inevitably be faded – TDS USDCHF

US inflation remains stubbornly high. With core prices rising at an accelerated pace of 0.5% in February, terminal pricing has moved higher. The repricing in terminal has hit CHF and JPY right off the bat, but the move is set to be short-lived, economists at TD Securities report.

Market will place more weighting on financial stability over price stability for now 

“Consumer price inflation matched expectations in February, with headline CPI advancing at a firm 0.4% MoM pace. However, the real news was in the core segment, with prices there accelerating to 0.5% m/m.”

“Importantly, the firmer core CPI reading reflected another robust m/m increase in the services segment, which saw sticky shelter prices as the main culprit. We also expect goods inflation to turn positive again in the near term, adding to upside risks for core price dynamics.”

“A stronger read on core has helped to reprice terminal higher, weighing mostly on CHF and JPY given they are most sensitive to this market. That said, we think markets may place more weight on financial over price stability, which may help to cap terminal rate pricing and eventually fade the dip.”

 

15:31
EUR/USD could nudge closer to early February highs above 1.08 on hawkish ECB press conference – SocGen EURUSD

EUR/USD built gains over 1.07. ECB forecast to raise rates 50 bps on Thursday and hawkish press conference by President Christine Lagarde could lift the pair above 1.08, economists at Société Générale report.

Fed repricing an opportunity for Euro bulls?

“It can be argued that a rebound in EGB yields and further tightening in US/EU spread could elicit further EUR/USD gains.”

“The ECB is unlikely to shift down the tightening pace on Thursday following events in the US. A 50 bps rate increase in the depo rate to 3% or 100 bps above the neutral rate is still highly likely.

“Guidance in the statement on rates for 2Q (meeting-by meeting?), debate about speeding up of APP QT and updated forecasts for core inflation and wages could be key for rate spreads and the Euro.”

“A hawkish press conference could again nudge EUR/USD closer to the highs of early February above 1.08.”

 

15:21
USD/MXN stumbles as sentiment improves despite higher US bond yields
  • USD/MXN reverses its course and aims toward $18.50 on a risk-on mood.
  • Inflation in the United States was aligned with forecasts, though it remains high.
  • USD/MXN Price Analysis: Break beneath the 50-day EMA will pave the way to 18.0000.

The Mexican Peso (MXN) states a recovery after the bank crisis in the United States (US) appears to calm, as a risk-on impulse underpinned global equities. The CBOE Volatility Index (VIX) has fallen from weekly highs of 30.81 to the 23.00 region, while inflation figures in the US ticked down. At the time of writing, the USD/MXN is trading at 18.6200.

USD/MXN falls on sentiment improvement

Global equities resumed to the upside due to easing concerns about the failure of three banks in the US. The US Bureau of Labor Statistics (BLS) revealed that US inflation in February was in line with estimates on annual readings. The Consumer Price Index (CPI) rose 6%, while the core CPI was 5.5%. On a monthly basis, CPI was 0.4%, aligned with the consensus, while core CPI edged up to 0.5%, above forecasts.

Last week, the US Federal Reserve (Fed) Chair Jerome Powell commented that the Federal Funds Rate (FFR) would peak higher than expected. Also, he stressed that solid incoming data would accelerate the pace of interest rate increases. But the recent turmoil in the US banking system keeps traders repricing a less hawkish Fed amidst fears that more institutions could fall under the water.

The CME FedWatch Tool shows Fed odds for a 25 bps rate hike lying at 86.4%, compared to last week’s 69.8% chance for a 50 bps rate hike.

That has triggered a reaction in the US fixed-income market. US Treasury bond yields are recovering, as shown by 2s and 10s, each gaining 35 and six basis points, respectively. The US Dollar Index (DXY), a measure of the buck’s value against a basket of six currencies, edges high 0.13%, at 103.754.

Nevertheless, the USD/MXN continued dropping amidst investors seeking return, as the interest rate differential between the US and Mexico favors the Mexican currency.

USD/MXN Technical analysis

From a technical perspective, the USD/MXN shifted neutral, though testing the 50-day Exponential Moving Average (EMA) at 18.6568. Even though the pair rallied to a five-week high at 19.1789, buyers failed to hold their gains above the 19.0000 figure. In addition, after skyrocketing, the Relative Strength Index (RSI) edged toward the neutral reading, suggesting that buying pressure is waning.

On the upside, the USD/MXN first resistance would be the 50-day EMA, followed by the 100-day EMA At 19.0043. A breach of the latter will expose the February 6 high at 19.2905 and the 200-day EMA At 19.4112. On the flip side, the USD/MXN first support would be 18.5000, followed by the 20-day EMA at 18.4100, followed by March’s 13 low of 18.2369.

What to watch?

15:05
US Retail Sales Forecast: Correction following January surge – Previews by eight banks

The US Census Bureau will release the February Retail Sales report on Wednesday, March 15 at 12:30 GMT and as we get closer to the release time, here are the forecasts of economists and researchers of eight major banks regarding the upcoming data. 

Retail Sales in the US are expected at -0.3% year-on-year vs. 3.0% in January. Meanwhile, ex-autos is expected at 0.2% YoY vs. 2.3% in January. The so-called control group used for GDP calculations is expected at -1.2% vs. 1.7% in January.  

Commerzbank

“For February, we expect a partial correction (forecast -0.3%), indicated, for example, by the figures already published on auto sales.”

Credit Suisse

“We expect retail sales to fall 0.9% MoM in February, partly reversing a strong increase in January. Noisy seasonal adjustments and unseasonably warm weather likely played a role in last month’s report, so a normalization lower is likely.”

Deutsche Bank

“February's data should see some reversal. A dip in unit motor vehicle sales will push headline sales (-1.2% vs. +3.0%) lower, while the expected payback from food services and drinking places, as well as nonstore retailers, should weigh on sales excluding automobiles (-1.1% vs. +2.3%) and retail control (-0.3% vs. +1.7%).”

RBC Economics

“We expect US retail sales edged 0.1% lower in February, with sales in the motor vehicle sector shrinking by 3.3% during that month.”

NBF

“Car dealers likely contributed negatively to the headline number, as auto sales fell during the month. Gasoline station receipts, meanwhile, could have stayed more or less unchanged judging by the stagnation in pump prices. All told, headline sales could have contracted 0.7%, erasing only a fraction of January’s gain. Spending on items other than vehicles could have fared a little better, retreating just 0.5%.” 

TDS

“We expect retail sales to give back some of the strength from Jan's 3% MoM surge, with the headline coming in flat. Declining auto sales will be a key culprit, while sales in gas stations are expected to offer support. Importantly, control group sales likely fell by 0.2% after registering a booming 1.7% expansion in Jan. We also look for sales in bars/restaurants to have slowed in Feb.”

CIBC

“January’s surge in auto sales looks to have reversed in February, but an increase in restaurant reservations and higher gasoline prices could have offset that to result in flat retail sales in February. The control group of sales (ex. autos, restaurants, gasoline, and building materials), which feeds more directly into non-auto goods consumption in GDP, likely saw sales fall by 0.5% following a lofty increase in January that seemed to be biased up by seasonal factors. Moreover, services could have garnered more funds than control group categories in February, given the higher pace of inflation in those sectors.”

CitiBank

“We expect a 0.7% MoM decline in total retail sales in February, after a very strong 3.0% MoM increase in January. Part of the strength in January was due to seasonal factors not capturing shifts in consumption patterns around end/beginning of year well. While this should not be as relevant in the February data, only a 0.7% decline this month does not offset the majority of the strength from last month and suggests that underlying strength in goods consumption while not as strong as January is somewhat stronger than what we would have thought six months ago. However, we would still expect goods consumption in the coming months to be somewhat weaker as the rotation to services consumption continues.”

 

14:47
USD/MXN: Another leg of downtren on a breach of support zone at 17.90/17.60 – SocGen

USD/MXN rebounded from a five-year low of 17.90. Economists at Société Générale expect the pair to suffer another substantial drop only on a break under 17.90/60.

19.40/19.65 could be an important resistance near term

“USD/MXN has eventually defended the earlier highlighted support zone of 17.90/17.60 representing the low of 2018 and more importantly the trend line connecting troughs of 2008 and 2013. A phase of consolidation is not ruled out after a V-shaped bounce.”

“The trough of May 2022 near 19.40/19.65 which is also the 200-DMA could be an important resistance near term.”  

“Only if the pair breaches the support zone at 17.90/17.60, would there be a risk of next leg of downtrend.” 

 

14:41
GBP/USD trades around 1.2164 after the anticipated US CPI data GBPUSD

 

  • GBP/USD trades sideways as monthly and annual US CPI comes out as expected.
  • In response to the US CPI report, the US Dollar Index (DXY) prints minor gains.
  • Eyes are on Wednesday’s US Retail Sales data and the Fed's possible actions in March.

GBP/USD sideways trades on Tuesday after the US inflation data was announced as per market expectations. Cable (GBP/USD) hovers around 1.2164 at the time of press. The intraday ATH price of 1.2205 was briefly touched just after the US CPİ data release, but the currency pair quickly pulled back to the lower end of its trading range.

US Consumer Price Index (CPI) Data Release (Feb)

On Tuesday, the US Bureau of Labor Statistics released a report indicating that inflation in the US, as measured by the Consumer Price Index (CPI), declines from 6.4% in January to 6% in February on a yearly basis. The actual reading aligns with the market's expectation of 6%.

On a monthly basis, the CPI declines from the January inflation figure of 0.5% to 0.4% in February, again staying in line with the analysts' estimates.

Meanwhile, the Core CPI, which excludes the prices of volatile food and energy, rose 0.5% in February, as expected on a monthly basis, bringing the annual rate down to 5.5% from 5.6%.

Market reaction:

The initial response of the GBP/USD to the inflation data from February was slightly positive. It then pulled back from its daily ATH of 1.2205, and currently trades around 1.2164 at the time of press.

US Dollar Index (DXY) trades slightly higher, around 103.87 on the day ahead of Wednesday’s US Retail Sales data.

Additionally, the current yield of the standard 10-year US Treasury bond decreases by approximately 1% and is at about 3.66% on the day.

Key economic events:

US February Retail Sales on Wednesday at 12:30 GMT is a short-term critical data point which it is necessary to monitor closely. 

The catastrophic Silicon Valley Bank (SVB) collapse has led markets to anticipate a less hawkish stance by the Federal Reserve (Fed). It is likely to avoid lifting rates in the future to avoid further unfortunate banking collapses.

Technical View:

GBP/USD trades above the daily 20-SMA and 50-SMA, 1,2016 and 1.2130, respectively, indicating a positive bias at the press time.

Also, the daily RSI(14) is in positive territory at 55.965. The daily pivot point is 1.2138, with daily resistance levels at 1.2244, 1.2306, and 1.2412. On the downside, daily support levels can be seen at 1.2077, 1.1970, and 1.1909.

 

 

14:18
Gold Price Forecast: XAU/USD may well be overbought relative to real rates, but do not fade the rally – TDS

Gold price manages to stay above the $1,900 level. Economists at TD Securities discuss the yellow metal outlook.

Trend of positive investment flows could come into play sooner than many anticipate

“Gold prices may well be overbought relative to real rates, but don't fade the rally. We have previously tied this apparent overvaluation to extremely supportive physical flows, but investment flows have finally joined forces to support the yellow metal amid bank liquidity risks.” 

“A trend of positive investment flows could come into play sooner than many anticipate as both discretionary and trend follower flows become favorable for the precious metals complex. And, while more pronounced fears could lead investors to sell Gold to raise liquidity, the risk is mitigated this cycle given that levered investors are largely flat amid the bearish macro headwinds over the last year.”

 

14:04
EUR/USD Price Analysis: Further upside still looks favoured EURUSD
  • EUR/USD sees its upside bias dented somewhat on Tuesday.
  • The 1.0804 level still emerges as the next up-barrier so far.

EUR/USD comes under fresh downside pressure following recent multi-week highs near 1.0750.

The continuation of the uptrend appears in store for the time being. Against that, a convincing move above 1.0750 should open the door the weekly high at 1.0804 (February 14). Further up, there are no resistance levels of note until the 2023 peak at 1.1032 (February 2).

Looking at the longer run, the constructive view remains unchanged while above the 200-day SMA, today at 1.0324.

EUR/USD daily chart

 

14:02
EUR/USD: Rebound could remain contained – SocGen EURUSD

Euro limps back after scoring 1.9% gain in three days. Economists at Société Générale expect the pair to suffer a deeper decline on a break under 1.0520. 

Resistance at 1.0910/1.0940

“An initial bounce is underway, however, it would be interesting to see if the pair can reclaim 1.0910/1.0940, the 76.4% retracement of recent down move. Failure could mean persistence in correction.”  

“If the pair breaches recent trough at 1.0520, a deeper decline is likely. Next potential supports are expected to be at 1.0330 and 1.0220/1.0200, the peak of last September.”

 

13:57
Silver Price Analysis: XAG/USD hovers around 38.2% Fibo. level, remains below $22.00 mark
  • Silver seesaws between tepid gains/minor losses below a one-month high touched on Monday.
  • Bulls need to wait for a sustained strength beyond the $22.00 mark before placing fresh bets.
  • A convincing break below the 23.6% Fibo. will shift the bias back in favour of bearish traders.

Silver reverses an early North American session dip to the $21.50-$21.45 region and jumps back closer to a one-month high touched the previous day. The white metal, however, remains below the $22.00 round-figure mark and is currently placed around the 38.2% Fibonacci retracement level of the recent downfall from the $24.65 area, or a multi-month peak touched in February.

From a technical perspective, oscillators on the daily chart have just started gaining positive traction and support prospects for additional gains. Bulls, however, might still wait for a sustained move beyond the 200-period Simple Moving Average (SMA) on the 4-hour chart before placing fresh bets. The XAG/USD might then aim to surpass the 50% Fibo. level, around the $22.30 region, and test the next relevant hurdle near the $22.55-$22.60 supply zone. This is followed by 61.8% Fibo. level, just ahead of the $23.00 round figure, which if cleared decisively will negate any near-term bearish bias and pave the way for a further near-term appreciating move.

On the flip side, any weakness below the daily low, around the $21.50-$21.45 zone, might now find some support near the $21.25 area ahead of the $21.00 mark, or the 23.6% Fibo. level. The latter should act as a strong base for the XAG/USD. A convincing break below will suggest that the recent recovery from levels just below the $20.00 psychological mark, or the YTD low touched last week, has run its course. The subsequent slide could drag the XAG/USD towards the $19.60 intermediate support en route to the $19.00 round-figure mark.

The downward trajectory could get extended further towards the $18.80-$18.75 zone before the XAG/USD eventually drops to the next relevant support near the $18.30-$18.25 zone and the $18.00 level.

Silver 4-hour chart

fxsoriginal

Key levels to watch

 

13:57
USD/JPY rises toward 135.00 after US CPI fueled by Treasury yields USDJPY
  • US Dollar gains momentum after US inflation numbers. 
  • US CPI rises mostly in line with expectation in February. 
  • USD/JPY up 250 pips from Monday's low, looking at 135.00.

The USD/JPY broke a range after the beginning of the American session and following the release of US CPI numbers. The pair is trading above 134.70, at daily highs as the US dollar strengthens.

Dollar gains momentum, no surprises from consumer inflation 

US February Consumer Price Index rose 0.4% in February, as expected, while the annual rate slowed down from 6.4% to 6%. The core CPI rose 0.5%, slightly above the 0.4% of market consensus. 

The US Dollar stayed relatively quiet immediately after the report. However, the Greenback gained momentum later as US yields moved further to the upside. US Treasury bonds are erasing most of Monday's gains. The rebound in yields is fueling the USD/JPY. 

"Inflation has peaked – but that is not news anymore. The issue is that price rises are not falling, just becoming sticky. Moreover, the peak in yearly inflation remains at risk if Core CPI comes out above 0.3%", explained Yohay Elam, analyst at FXStreet. Just a week ago the question regarding the Fed was 25 or 50bp rate hike. Now is it no change or 25bp. According to the market's response so far to CPI, there still is a chance of a hike. More US inflation data is due on Wednesday with the Produce Price Index. Also Retail Sales numbers will be released. 

The USD/JPY is erasing Monday's losses and is approaching the 20-day Simple Moving Average (135.40). The intraday outlook is bullish, however the main picture offers mixed signs. If the move higher extends above 135.60, it could gain more momentum. On the contrary, a slide below 133.50 would expose the three-week low it hit on Monday ay 132.26. 

Technical levels 

 

13:48
USD Index Price Analysis: Decent support remains at the 55-day SMA
  • DXY attempts a moderate recovery although it still trades below 104.00.
  • The 55-day SMA around 103.50 holds the downside so far.

DXY prints a decent rebound following Monday’s multi-week lows in the mid-103.00s.

Despite the daily bounce, the index remains under pressure and appears still supported by recent lows near 103.50, an area coincident with the provisional 55-day SMA. Below the latter, the dollar could slip back to the weekly low at 102.58 (February 14).

In the meantime, while below the 200-day SMA at 106.63, the outlook for the greenback is expected to remain negative.

DXY daily chart

 

13:26
USD/CAD slides to one-week low amid post-US CPI USD downtick, holds above mid-1.3600s USDCAD
  • USD/CAD drifts lower for the third straight day and drops to a one-week low on Tuesday.
  • The USD surrenders its modest gains in reaction to the US CPI report and exerts pressure.
  • Bearish Crude Oil prices could undermine the Loonie and help limit any further downside.

The USD/CAD pair extends its recent pullback from the 1.3860 area, or its highest level since October 2022, and remains under some selling pressure for the third successive day on Tuesday. The intraday downfall picks up pace following the release of the US consumer inflation figures and drags spot prices to a one-week low, around the 1.3660 region during the early North American session.

The US Bureau of Labor Statistics reported that the headline CPI rose by 0.4% in February as compared to the 0.5% recorded in the previous month and the yearly rate decelerated from 6.4% to 6.0%. The data reaffirm market expectations that the Federal Reserve could slow, or even pause its rate-hiking cycle in the wake of the strain on the US banking system, which, in turn, exerts some pressure on the US Dollar and turns out to be a key factor weighing on the USD/CAD pair.

That said, the Core CPI, which excludes volatile food and energy prices, came in at 0.5% on a monthly basis, beating estimates for a reading of 0.4%. Apart from this, easing fears of a broader systemic crisis and the risk-on impulse remain supportive of an intraday rally in the US Treasury bond yields, which lends some support to the Greenback. Furthermore, bearish Crude Oil prices undermine the commodity-linked Loonie and might act as a tailwind for the USD/CAD pair.

This, along with the fact that the Bank of Canada (BoC) became the first major central bank to pause its rate-hiking cycle last week, supports prospects for the emergence of some dip-buying around the USD/CAD pair. Hence, it will be prudent to wait for strong follow-through selling before confirming that the recent positive move witnessed over the past month or so has run its course and positioning for any meaningful corrective decline for the major.

Technical levels to watch

 

12:58
United States Redbook Index (YoY) declined to 2.6% in March 10 from previous 3%
12:56
AUD/USD: 200-DMA at 0.6780/0.6850 likely to cap upside – SocGen AUDUSD

The AUD/USD pair has seen an initial rebound but a hurdle awaits at the 0.6780/0.6850 area, analysts at Société Générale report.

Below 0.6550, next potential support is 0.6400

“An initial bounce is taking shape; the 200-Day Moving Average at 0.6780/0.6850 could cap upside. Failure to cross this resistance could mean persistence in decline.” 

“Below 0.6550, next potential supports are at 0.6400, the 76.4% retracement from last October and 0.6310.”

See: AUD/USD to climb back sustainably above 0.70 in the second half of 2023 – ING

 

12:48
AUD/USD lacks any firm direction, remains confined in a range below 0.6700 post-US CPI AUDUSD
  • AUD/USD struggles to capitalize on its modest intraday bounce from the 0.6630 area.
  • Rebounding US bond yields continues to underpin the USD and cap gains for the pair.
  • The latest US consumer inflation figures do little to provide any impetus to the major.

The AUD/USD pair reverses an early North American session dip and climbs to a fresh daily peak following the release of the latest US consumer inflation figures. Spot prices, however, struggle to capitalize on the modest intraday uptick and remain below the 0.6700 round-figure mark, at least for the time being.

The US Dollar comes under some selling pressure after the US Bureau of Labor Statistics reported that the headline CPI rose by 0.4% in February as compared to the 0.5% recorded in the previous month. Adding to this, the yearly rate decelerated from 6.4% to 6.0% during the reported month. The data reaffirms expectations that the Federal Reserve will slow, if not halt, its rate-hiking cycle amid the strain on the US banking system, which, in turn, weighs on the Greenback and lends support to the AUD/USD pair.

That said, the Core CPI, which excludes volatile food and energy prices, came in at 0.5% on a monthly basis, beating estimates for a reading of 0.4%. This comes on the back of easing fears of a broader systemic crisis, which remains supportive of a strong intraday rally in the US Treasury bond yields and helps limit the downside for the USD. Apart from this, the Reserve Bank of Australia's (RBA) recent dovish shift, signalling that it might be nearing the end of its rate-hiking cycle, contributes to capping the AUD/USD pair.

Hence, it will be prudent to wait for a sustained strength above the 0.6700 mark and a subsequent move beyond the overnight swing high, around the 0.6715 region, before placing fresh bullish bets around the AUD/USD pair. Moreover, the lack of any meaningful buying warrants some caution before confirming that spot prices have bottomed out in the near term and that the recent downfall witnessed since early February has run its course.

Technical levels to watch

 

12:44
Gold Price Forecast: XAU/USD rises modestly to $1,910 after US CPI
  • US CPI numbers are mostly in line with expectations. 
  • US Dollar resumes slide across the board, Wall Street futures hit fresh highs. 
  • XAU/USD holds above $1,900 after US data, looking at recent highs. 

Gold prices moved to the upside following the release of US inflation data. XAU/USD climbed from near $1,900, reached levels above $1,910 and lost strength. The yellow metal is looking at the monthly high it reached earlier on Tuesday at $1,915. 

The US Consumer Price Index (CPI) rose in February 0.4%, and the annual rate slowed down from 6.4% in January to 6.0%; both matched market consensus. The Core CPI rose 0.5% from the previous month, slightly above the 0.4% expected; and the annual Core rate rose 5.5% from the previous year, below the 5.6% of the previous month.

US Inflation numbers offered no surprise to market participants. US yield rose modestly, suggesting that the upside in Gold is being driven by a weaker US Dollar across the board and an improvement in sentiment. If the upside moves in US yields continue, XAU/USD could find difficulties extending gains. 

XAU/USD is facing a strong resistance around $1,915 and a break higher would clear the way to more gains. The next area to watch stands at $1,935/40. On the contrary, the band $1,900-$1,895 emerges as the initial support followed by $1,875.

Technical levels 

 

12:36
EUR/USD resumes the upside near 1.0750 post-US CPI EURUSD
  • EUR/USD now reverses initial losses and revisits 1.0750.
  • US CPI matched previous expectations in February.
  • Focus remains on the potential moves by the Fed in March.

EUR/USD now reverses the initial pessimism and retakes the 1.0750 region, advancing modestly on Tuesday.

EUR/USD: Gains look capped near 1.0750

EUR/USD trims its earlier decline after the US inflation figures tracked by the CPI showed headline consumer prices rose 6.0% in the year to February and 5.5% when it comes to the Core CPI, both prints matching initial consensus.

The dollar, in the meantime, gives away part of the earlier gains and now struggles to regain upside traction some traction in response to rising speculation that the Fed might pause its hiking cycle as soon as at the March gathering, always following heightened concerns around the US banking sector.

What to look for around EUR

EUR/USD now faces some downside pressure and keeps the upside target at the 1.0750 region amidst some inconclusive price action in the dollar following US CPI.

In the meantime, price action around the European currency should continue to closely follow dollar dynamics, as well as the potential next moves from the ECB past the March meeting, when the bank has already anticipated another 50 bps rate hike.

Key events in the euro area this week: ECOFIN Meeting (Tuesday) – EMU Industrial Production (Wednesday) – ECB Interest Rate decision, ECB Lagarde (Thursday) – EMU Final Inflation Rate (Friday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle amidst dwindling bets for a recession in the region and still elevated inflation. Impact of the Russia-Ukraine war on the growth prospects and inflation outlook in the region. Risks of inflation becoming entrenched.

EUR/USD levels to watch

So far, the pair is retreating 0.07% at 1.0718 and faces the next contention at 1.0524 (monthly low March 8) seconded by 1.0481 (2023 low January 6) and finally 1.0324 (200-day SMA). On the upside, the breakout of 1.0737 (monthly high March 13) would target 1.0804 (weekly high February 14) en route to 1.1032 (2023 high February 2).

 

12:31
United States Consumer Price Index n.s.a (MoM) registered at 300.84, below expectations (300.86) in February
12:31
United States Consumer Price Index Core s.a up to 304.07 in February from previous 302.7
12:31
United States Consumer Price Index (YoY) in line with expectations (6%) in February
12:30
United States Consumer Price Index ex Food & Energy (MoM) above expectations (0.4%) in February: Actual (0.5%)
12:30
Canada Manufacturing Sales (MoM) came in at 4.1%, above expectations (3.9%) in January
12:30
United States Consumer Price Index ex Food & Energy (YoY) meets forecasts (5.5%) in February
12:30
United States Consumer Price Index (MoM) meets forecasts (0.4%) in February
12:24
EUR/JPY Price Analysis: Recovery targets the 2023 high at 145.60 EURJPY
  • EUR/JPY regains some balance and approaches 144.00.
  • The continuation of the rebound could see the YTD peak revisited.

EUR/JPY manages to leave behind three consecutive sessions with losses and trades at shouting distance from the 144.00 zone on Tuesday.

Further recovery in the cross is expected to meet the next hurdle of note at the so far 2023 high at 145.56 (March 2). The surpass of the latter exposes a probable move to the December 2022 peak at 146.72 (December 15).

While above the 200-day SMA at 141.79, the outlook for the cross is expected to remain positive.

EUR/JPY daily chart

 

12:11
USD should perk up a bit more if inflation looks stickier than markets expect – Scotiabank

USD gains ahead of the February Consumer Price Index (CPI) data. Stickier than expected figures should enliven the greenback a bit more, economists at Scotiabank report.

CPI may renew Fed hike bets

“Markets priced out all but any additional hikes from the Fed in the wake of the wobbles in US regional banks yesterday but today’s data could indicate that policymakers are still battling significant inflationary pressures which will mean that US rates still have to move a bit higher still.”

“The street is looking for a 0.4% gain in headline and core CPI in Feb and for headline inflation to fall to 6.0% (from 6.4%). Core prices are called a tenth lower from Jan at 5.5% YoY. US yields and the USD should perk up a bit more if inflation does look stickier than markets expect.”

 

12:02
GBP/JPY jumps back closer to mid-162.00s, bulls flirt with the key 200-day SMA
  • GBP/JPY catches fresh bids on Tuesday and climbs closer to the 200-day SMA barrier.
  • A positive risk tone, the BoJ’s dovish outlook undermines the JPY and lends support.
  • Expectations for more rate hikes by the BoE benefit the GBP and favour bullish traders.

The GBP/JPY cross builds on the previous day's goodish rebound from the 160.00 psychological mark, or a one-month low and gains some follow-through traction on Tuesday. The momentum remains uninterrupted through the mid-European session and lifts spot prices back closer to a technically significant 200-day Simple Moving Average (SMA), around the 163.40 region in the last hour.

A modest recovery in the global risk sentiment - as depicted by a generally positive tone around the equity markets - undermines the safe-haven Japanese Yen (JPY) and acts as a tailwind for the GBP/JPY cross. The JPY is further pressured by speculations that the Bank of Japan (BoJ) will stick to its dovish stance to support the fragile domestic economy. It is worth mentioning that the incoming BoJ Governor Kazuo Ueda recently stressed the need to maintain the ultra-loose policy settings and said that the central bank isn't seeking a quick move away from a decade of massive easing.

The British Pound, on the other hand, draws support from firming expectations that the Bank of England (BoE) will hike interest rates again later this month. The mixed UK employment details released earlier this Tuesday did little to push back against bets for additional policy tightening by the BoE. In fact, the UK Office for National Statistics reported that the jobless rate held steady at 3.7% during the three months to January and the number of people claiming unemployment-related benefits fell for the second straight month in February, offsetting a slight slowdown in wage growth figures.

That said, a strong pickup in demand for the US Dollar is seen weighing on the Sterling Pound and might keep a lid on any further gains for the GBP/JPY cross, at least for the time being. The aforementioned fundamental backdrop, however, favours bullish traders and suggests that the path of least resistance for spot prices is to the upside. Hence, any meaningful dip might continue to attract fresh buyers and is more likely to remain limited.

Technical levels to watch

 

11:51
EUR/USD: Sustained break above 55-DMA at 1.0719 to boost near-term outlook – Scotiabank EURUSD

EUR/USD is consolidating. The pair needs to surpass the 55-Day Moving Average at 1.0719 to see a brighter outlook, economists at Scotiabank report.

Strong support aligns at 1.0650

“Price patterns that developed around yesterday’s peak at 1.0749 suggest a top/reversal is in place (‘evening star’ reversal on the 6-hour candle chart).”

“The pair is running into broader resistance on the daily chart, defined by the 55-DMA (1.0719); spot closed just above this point yesterday but a more obvious and sustained break is needed to boost the EUR’s near-term outlook.”

“Intraday support is 1.0665 and (stronger) at 1.0650.”

 

11:46
GBP/USD: Technical condition looks relatively strong – Scotiabank GBPUSD

Sterling has drifted a little against the USD. But Cable’s technical patterns lean bullish, economists at Scotiabank report.

Loss of support in the mid-1.21s could dump Cable back to the low/mid-1.2000s

“Short-term charts show the GBP is well-supported against minor trend support off of last week’s lows in the mid-1.21s and that price action is consolidating in a bull flag pattern (renewed gains above 1.2175 intraday).”

“Loss of support in the mid-1.21s could, however, dump the Pound back to the low/mid-1.2000s in rapid order.” 

“High US inflation data may give the USD an offsetting lift against the Pound but the near-term trend looks relatively positive in Cable at this point.”

 

11:33
Gold Price Forecast: XAU/USD to remain in demand as a safe haven – Commerzbank

At its peak, Gold reached $1,915. Economists at Commerzbank expect the yellow metal to remain on the up as rate hike expectations are priced out.

Gold will only begin falling again once the situation has stabilised and rate hike expectations resume

“Not even a rate hike by 25 bps is fully priced in for the Fed’s meeting next week, and rate cuts are already anticipated in the second half year. Today’s US inflation data are hardly likely to turn the tide. For this to happen, it first needs to become clear that the bank closures in the US are merely isolated cases and are unlikely to spark further closures.” 

“The support measures announced at the weekend by the Fed and US authorities should contribute to stabilising the banking sector. It remains to be seen whether market confidence will be restored so quickly, however. Consequently, Gold is likely to remain in demand as a safe haven.” 

“Gold will probably only begin falling again once the situation has stabilised and rate hike expectations resume.”

 

11:31
USD/CNH faces support at 6.8350 ahead of 6.8000 – UOB

Extra losses are likely to drag USD/CNH to the 6.8350 level ahead of a potential test of the 6.8000 region in the near term, in the opinion of UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “While our view for USD to weaken yesterday was not wrong, we did not anticipate the sharp selloff that sent USD plunging to a low of 6.8315 (we were of view that 6.8500 is unlikely to come under threat). Downward momentum is clearly strong and this could lead to further USD weakness. That said, deeply oversold conditions could “limit” any further losses to 6.8350. The downside risk is intact as long as USD stays below 6.8920 (minor resistance is at 6.8780).”

Next 1-3 weeks: “We highlighted yesterday (13 Mar, spot at 6.9180) that the outlook is mixed and for the time being and we expected USD to trade in a broad range of 6.8500/6.9500. We did not anticipate the outsized selloff as USD plunged by 1.20% (NY close of 6.8557), its largest 1-day drop in 3-1/2 months. The impulsive drop is likely to continue. Support levels are at 6.8350, followed by 6.8000. On the upside, a breach of 6.9300 (‘strong resistance’ level) would indicate that USD is not weakening further.”

11:29
USD/JPY rebounds from 133.04 ahead of Tuesday’s US CPI and BoJ’s minutes USDJPY
  • USD/JPY trades at 134.12, up 0.70% from the previous close price.
  • Markets digest the effects of the SVB collapse amid mixed concerns about the Fed's actions.
  • The US two-year Treasury bond yields show the most significant daily decrease since October 1987.
  • Market sentiment remains mixed, with investors watching upcoming US CPI and Retail Sales data.

Daily price movements:

USD/JPY opens the day at 133.17 and trades at 134.12 at the press time, with the intraday price range being 134.35 to 133.04. The currency pair has rebounded today, showing a considerable increase of 0.70% from the previous close price. The market sentiment remains mixed as investors are cautiously watching the price movements of USD/JPY ahead of the US inflation data.

The US 10-year Treasury bond yields fluctuate at approximately 3.60%, rebounding from the monthly low of 3.418% on the day. In comparison, the two-year Treasury bond yields have moderately increased to approximately 4.22% after experiencing a decline to levels not seen since September 2022.

It is worth mentioning that the two-year Treasury bond yields had their most significant drop since 1987 on Monday. However, the latest yield increase could indicate a trend reversal before crucial US data release.

It is worth noting that traders experienced a significant increase in bond purchasing the previous day following the fallouts of Silicon Valley Bank (SVB) and Signature Bank. US banking regulators took joint action to mitigate the risks arising from SVB and Signature Bank during the weekend. 

On Monday, US President Joe Biden announced that investors in those banks would not receive protection and emphasized that "no one is above the law."

Nevertheless, the US President also promised to take necessary measures to ensure the safety of the US banking system, according to Reuters.

Key economic events:

Tuesday’s US February Consumer Price Index (CPI) (12:30 GMT) and Bank of Japan (BoJ) Monetary Policy Meeting Minutes (23:50 GMT) will be closely monitored. 

Also, US February Retail Sales on Wednesday at 12:30 GMT are critical data to monitor closely. 

Side note: Due to the unfortunate collapse of Silicon Valley Bank (SVB), the markets are now expecting a more accommodating approach from the Federal Reserve (Fed).

Technical view:

According to the daily chart, USD/JPY is trading below its daily 20-SMA of 135.30, indicating a short-term bearish trend. However, it is still above its daily 50-SMA of 132.46, suggesting a longer-term bullish bias.

RSI(14) is currently at 48.031, indicating a neutral stance. The daily pivot point is at 133.51, with daily resistance levels at 134.74, 136.28, and 137.50 and daily support levels at 131.97, 130.75, and 129.21. Traders are advised to monitor price movements due to upcoming US CPI and Retail Sales data on Tuesday and Wednesday.

 

 

11:23
USD/CHF struggles near 0.9100 mark, stronger USD lends support ahead of US CPI USDCHF
  • USD/CHF remains depressed near its lowest level since early February touched on Monday.
  • Rebounding US bond yields revives the USD demand and limits the downside for the major.
  • Traders also seem reluctant and prefer to wait for the release of the crucial US CPI report.

The USD/CHF pair attracts fresh selling following an early uptick to the 0.9145 region on Tuesday and remains on the defensive through the mid-European session on Tuesday. The pair is currently placed around the 0.9100 mark, down over 0.10% for the day and well within the striking distance of its lowest level since early February touched on Monday.

The downside for the USD/CHF pair, however, seems cushioned, at least for the time being, amid resurgent US Dollar (USD) demand, bolstered by a goodish pickup in the US Treasury bond yields. The uptick in the US bond yields comes in the wake of easing fears of a broader systemic crisis, especially after the US authorities moved to limit the fallout from the sudden collapse of Silicon Valley Bank (SVB). Apart from this, a recovery in the global risk sentiment - as depicted by a generally positive tone around the equity markets - undermines the safe-haven Swiss Franc (CHF) and turns out to be another factor lending some support to the major.

Traders also seem reluctant to place aggressive bets and prefer to wait on the sidelines ahead of the release of the latest US consumer inflation figures, due later during the early North American session. The crucial US CPI data will play a key role in influencing the near-term USD price dynamics and provide some meaningful impetus to the USD/CHF pair ahead of a two-day FOMC policy meeting, starting next Tuesday. In the meantime, expectations that the Fed will slow, if not halt, its interest rate-hiking cycle in the wake of the strain on the US banking system could keep a lid on the US bond yields and hold back the USD bulls from placing aggressive bets.

The aforementioned fundamental backdrop suggests that the path of least resistance for the USD/CHF pair is to the downside. Bearish traders, however, are likely to wait for acceptance below the 0.9100 mark before placing fresh bets and positioning for an extension of the recent sharp pullback from the 0.9435-0.9440 supply zone, or the YTD peak touched last week.

Technical levels to watch

 

11:18
Dollar to resume the downtrend if SBVs woes cap Fed rate hikes – SocGen

The foreign exchange market’s reaction to the SVB affair has been milder, on the whole, than the reaction in other markets. How contagious the SBV crisis proves to be will decide whether it sends the dollar down slowly or up fast, Kit Juckes, Chief Global FX Strategist at Société Générale report.

Stronger Dollar if SBV was a canary in the global economy’s mine

“The reason it matters for FX is clear – if SBVs woes cap Fed rate hikes, slow the US economy somewhat but not disastrously and don’t spread globally, the Dollar is set to resume the downtrend that began at the end of September, and which was interrupted by strong data in February.”

“If on the other hand, SBV was a canary in the global economy’s mine, the Dollar will be stronger in a few months.” 

 

11:00
South Africa Manufacturing Production Index (YoY): -3.7% (January) vs -4.7%
10:43
Everything is possible for the Dollar at present – Commerzbank

Since Friday, the market has been dominated by fears of a renewed US banking crisis. Economists at Commerzbank note that the Dollar could trend toward either direction.

USD to appreciate if the situation settles down

“If the situation settles down, the Dollar is likely to appreciate as a result of recovering Fed rate expectations.”

“If nervousness remains high and if global contagion effects are feared, the Dollar might benefit in its role as a safe haven. However, if the crisis remains limited to the US, as it would seem for now, the USD might suffer a double blow – as a result of the adverse US risk environment that reduces the USD premium as a safe haven currency and due to possibly reduced scope for the Fed to react appropriately to inflation risks.”

 

10:34
USD/CAD tackles to hold above 1.3740 ahead of Tuesday’s US inflation data USDCAD
  • USD/CAD opens the day at 1.3724 and trades at 1.3738, up by 0.10%.
  • The intraday price movements are relatively narrow at 1.3751-1.3706.
  • Market sentiment remains cautious due to the SVG collapse.
  • Investors await fresh impetus from the US CPI and Retail Sales data.

Daily price movements:

USD/CAD trades at 1.3738, slightly below 1,3740 at the press time, with the intraday price range being 1.3751 to 1.3706. The market sentiment remains cautious as investors await fresh impetus from Tuesday's upcoming US Inflation data at 12:30 GMT. The USD/CAD currency pair's price movements have been relatively narrow, struggling to gain momentum.

Investors' willingness to take risks is low due to the impact of the collapse of the Silicon Valley Bank (SVG) on global stocks. Meanwhile, the yield on 10-year US Treasury bonds has risen to approximately 3.57% as investors anticipate that US inflation data will increase the demand for safe-haven investments.

The Bank of Canada (BoC) has stated that the current monetary policy adequately controls inflation in Canada. BoC Governor Tiff Macklem has decided to maintain the current monetary policy in March to assess its effectiveness. 

Nonetheless, unexpected growth in employment figures and an increase in the employment cost index imply that inflation could rise again. Along with maintaining the current monetary policy, BoC Governor Tiff Macklem has indicated the possibility of raising interest rates if inflation unexpectedly rises.

Key economic events:

US February Consumer Price Index (CPI) scheduled for Tuesday at 12:30 GMT and US February Retail Sales on Wednesday at 12:30 GMT are critical data to be closely monitored.

Nonetheless, due to the unfortunate collapse of Silicon Valley Bank (SVB), the markets are now expecting a more accommodating approach from the Federal Reserve (Fed).

Technical view:

According to the daily chart, USD/CAD trades above its daily 20-SMA of 1.3596, indicating a short-term bullish trend. RSI(14) is at 62.250 at the time of press, indicating a buying stance. 

The daily pivot point is 1.3745, with daily resistance levels at 1.3814, 1.3896, and 1.3964 and daily support levels at 1.3663, 1.3594, and 1.3512.

 

10:33
NZD/USD consolidates in a range above 0.6200 mark, eyes US CPI for fresh impetus NZDUSD
  • NZD/USD seesaws between tepid gains/minor losses through the first half of the European session.
  • A positive risk tone benefits the risk-sensitive Kiwi; resurgent USD demand caps gains for the major.
  • Traders now look forward to the US CPI report for some impetus ahead of the FOMC on Wednesday.

The NZD/USD pair struggles to gain any meaningful traction on Tuesday and oscillates in a narrow trading band through the first half of the European session. Spot prices, however, manage to hold above the 0.6200 mark and remain well below a nearly two-week high, around the 0.6265 region, touched the previous day.

A goodish intraday rally in the US Treasury bond yields helps revive the US Dollar demand, which, in turn, is seen as a key factor acting as a headwind for the NZD/USD pair. That said, a generally positive tone around the equity markets, bolstered by easing fears of a broader systemic crisis, lends some support to the risk-sensitive Kiwi and limits the downside for the major. Traders also seem reluctant to place aggressive bets and prefer to wait on the sidelines ahead of the release of the US consumer inflation figures, due later during the early North American session.

The crucial US CPI report might influence expectations about the Fed's future rate hike path, which, in turn, will play a key role in driving the USD demand and provide a fresh directional impetus to the NZD/USD pair. The markets have been speculating that the Fed could slow, if not halt, its rate-hiking cycle, in the wake of the strain on the US banking system. That said, a stronger US CPI print will lift bets for a more aggressive policy tightening by the Fed and boost the USD ahead of the key central bank event risk - the outcome of a two-day FOMC meeting on Wednesday.

Nevertheless, the important US macro data should infuse some volatility in the financial markets and allow traders to grab short-term opportunities around the NZD/USD pair. The intraday price action, meanwhile, warrants some caution before confirming that spot prices have formed a near-term bottom and positioning for an extension of the recent recovery move from sub-0.6100 levels, or the YTD low touched last week.

Technical levels to watch

 

10:13
GBP/USD to test January 1.2450 highs even if the BoE decides to hold – ING GBPUSD

Following Monday's sharp upsurge, GBP/USD has gone into a consolidation phase below 1.2200. Still, economists at ING see upside despite potential hold by the Bank of England.

Wage growth might have finally peaked

“On the data front, data released today show clear signs that wage growth might have finally peaked. The 3M/3M annualised rate of growth has slowed noticeably over recent months. This will be welcome news for the BoE and does question whether the Bank will indeed hike by 25 bps next week amid the SVB fallout.”

“Even if the BoE decides to hold, this should not prevent Cable from testing the January 1.2450 highs if the Fed pivots to the dovish side and risk sentiment bounces back.”

 

10:06
United Kingdom 10-y Bond Auction dipped from previous 3.527% to 3.495%
10:00
United States NFIB Business Optimism Index up to 90.9 in February from previous 90.3
09:56
Natural Gas Futures: Extra gains now look favoured

Considering advanced prints from CME Group for natural gas futures markets, open interest rose for the second session in a row on Monday, now by around 7.7K contracts. In the same line, volume went up by around 66.7K contracts following fourth consecutive daily drops.

Natural Gas now targets $3.00

Prices of natural gas kicked in the new trading week in a positive mood. The uptick came after three consecutive daily pullbacks and was in tandem with increasing open interest and volume, which leaves room for the continuation of the rebound in the very near term. That said, the next up-barrier emerges at the March top at $3.027 (March 3) per MMBtu ahead of a Fibo retracement near $3.20.

09:54
Spain 3-Month Letras Auction rose from previous 2.494% to 2.638%
09:53
GBP/USD trades with modest losses around mid-1.2100s, focus remains on US CPI report GBPUSD
  • GBP/USD snaps a four-day winning streak to a one-month high amid resurgent USD demand.
  • A goodish pickup in the US bond yields revives the USD demand ahead of the US CPI report.
  • The mixed UK jobs data fails to impress the GBP bulls or provide any impetus to the major.

The GBP/USD pair struggles to capitalize on its modest intraday uptick and trades with a negative bias through the first half of the European session on Tuesday. The pair is currently placed just above the mid-1.2100s, down over 0.15% for the day, and for now, seems to have snapped a four-day winning streak to a one-month peak, around the 1.2200 mark touched on Monday.

The British Pound did get a minor lift following the release of the UK monthly employment details, which reaffirmed bets for additional rate hikes by the Bank of England (BoE) later this month. That said, resurgent US Dollar (USD) demand, bolstered by a goodish pickup in the US Treasury bond yields, turns out to be a key factor forcing the GBP/USD pair to erode a part of the previous day's strong gains.

The Federal Reserve moved to limit the fallout from the sudden collapse of Silicon Valley Bank (SVB) and announced on Sunday that it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors. This, in turn, helps ease fears of a broader systemic crisis and is seen pushing the US bond yields higher across the board.

The strong intraday USD rally could further be attributed to some repositioning trade ahead of the release of the crucial US consumer inflation figures, due later during the early North American session. However, speculations that the Fed could slow, if not halt, its rate-hiking cycle, amid the strain on the US banking system, might cap any meaningful upside for the USD and lend some support to the GBP/USD pair.

Traders might also refrain from placing aggressive bets and prefer to move to the sidelines ahead of the key central bank event risks - the FOMC decision on Wednesday, followed by the BoE meeting next week. This further makes it prudent to wait for strong follow-through buying before confirming that the GBP/USD pair's recent recovery from the 1.1800 mark, or the YTD low touched last week, has run its course.

Technical levels to watch

 

09:48
USD/JPY risks extra pullbacks in the near term – UOB USDJPY

USD/JPY could slip back to the 131.50 region amidst the ongoing downside momentum, comment UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “While we expected USD to weaken yesterday, we did not anticipate the rapid downward acceleration as it plummeted to a low of 132.27 before rebounding (we were of the view that 133.00 was likely out of reach). The rapid rebound amid deeply oversold conditions suggests JPY is unlikely to weaken further. Today, JPY is more likely to trade in a range, expected to be between 132.70 and 134.50.”

Next 1-3 weeks: “We turned negative USD yesterday (13 Mar, spot at 134.40) but we held the view that any decline could be limited to 133.00. We did not anticipate the sharp selloff as USD plunged to 132.27 and then rebounded to close at 133.18 (-1.33%). The sharp increase in downward momentum suggests further USD weakness. The next level to watch is 131.50. On the upside, a breach of 135.10 (‘strong resistance’ level was at 136.40 yesterday) would indicate that USD is not weakening further.”

09:42
Hawkish ECB to support EUR as long as there are no contagion effects in European banking sector – Commerzbank

EUR/USD climbed to its highest level in a month at 1.0750 on Monday. Economists at Commerzbank expect the shared currency to remain supported by a suddenly hawkish European Central Bank (ECB).

Euro supported by hawkish ECB outlook?

“From the market’s point of view, the ECB has suddenly become one of the most hawkish central banks, which might support the Euro as long as there are no contagion effects in the European banking sector.”

“At present rates are expected to peak at 3.25% as opposed to at 4% previously. The ECB is likely to keep its options for the future rate path even more open now and will hope that its next decision in May will be held in a less tense market environment.”

 

09:33
Crude Oil Futures: Scope for further losses

Open interest in crude oil futures markets increased for the fifth consecutive day on Monday, this time by around 4K contracts according to preliminary readings from CME Group. Volume followed suit and went up by nearly 226K contracts, reversing the previous daily drop.

WTI: Next on the downside comes $70.00

The WTI started the week on the back foot amidst increasing open interest and volume, which is indicative that further weakness lies ahead for the commodity, at least in the very near term. Against that, the loss of the 2023 low at $72.30 (February 6) could put the key $70.00 mark per barrel back on the traders’ radar.

09:26
NZD/USD: Next key resistance comes at 0.6315 – UOB NZDUSD

NZD/USD needs to clear the 0.62754 level to allow for a potential move to 0.6315 in the near term, suggest UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “We did not expect the strong rise in NZD to 0.6263 yesterday (we were expecting NZD to trade in a range). Not surprisingly, the sharp and rapid rise is overbought. However, with no signs of weakness just yet, NZD could test the resistance at 0.6275. Today, the chance of a sustained rise above 0.6275 is not high. On the downside, a breach of 0.6160 (minor support is at 0.6190) would indicate that the current upward pressure has eased.”

Next 1-3 weeks: “Yesterday (13 Mar, spot at 0.6145), we held the view that NZD ‘appears to have moved into a consolidation phase and it is likely to trade between 0.6085 and 0.6220’. We did not anticipate the strong surge to 0.6263. Upward momentum has improved, albeit not much. NZD has to break clearly above 0.6275 before a sustained advance is likely (the next resistance level is at 0.6315). The likelihood of NZD breaking clearly above 0.6275 will remain intact as long as NZD stays above 0.6145.”

09:23
XAG/USD trades below the three-week high level of $22.00

  • Silver slides after reaching a March high, following a significant increase not seen since early November 2022.
  • XAG/USD starts the day with a lower open price of $20.54 before climbing to an intraday price of $21.70.
  • The price movements are relatively narrow, with the highest and lowest intraday prices being $21.92 and $21.62, respectively.
  • Traders cautiously watch Tuesday’s US CPI and Wednesday’s US Retail Sales data.

Daily price movements:

Silver (XAG/USD) starts the day on a slightly bearish note, with a lower open price of $20.54 compared to the close price of the previous day. However, the XAG/USD currency pair climbs back up and trades at $21.70, still 0.47% down from its previous close of $21.81 at the press time, with a narrow intraday price range of $21.92 to $21.62. The market sentiment remains mixed ahead of Tuesday’s US inflation data.

After Silicon Valley Bank's (SVB) collapse, the banking sector's condition has raised concerns, leading to a decrease in expectations for a rate hike by the Federal Reserve (Fed). Investors are watching how this crisis and US Inflation data – to be announced on Tuesday at 15:30 GMT – could impact.

Key economic events:

US February Consumer Price Index (CPI) (Feb) on Tuesday at 12:30 GMT and US February Retail Sales on Wednesday at 12:30 GMT are crucial for monetary expectations and are closely watched. However, the unfortunate SVB collapse has resulted in markets anticipating a more lenient stance by the Federal Reserve (Fed).

March 14-15 Economic Calendar (USD Events)

Technical view:

The daily chart shows XAG/USD trades above its 20-SMA of $21.05, indicating a short-term bullish trend. However, it is still below its daily 50-SMA of $22.36, suggesting a longer-term bearish bias. RSI(14) is at 59.43 at the time of press, indicating a buying stance.

The daily pivot point is $21.43, with daily resistance levels at $22.32, $22.82, and $23.71, and daily support levels at $20.93, $20.04, and $19.54.

Traders are advised to carefully monitor price movements ahead of the US inflation data and use appropriate risk management strategies.

 

09:19
EUR/USD comes under pressure and pierces 1.0700 ahead of US CPI EURUSD
  • EUR/USD corrects lower and briefly tests the 1.0680 region.
  • Industrial Production in Italy surprised to the downside.
  • US CPI takes centre stage later in the NA session.

The European currency gives away part of the recent gains and prompts EUR/USD to recede to the 1.0680/75 band on Tuesday, where it seems to have met some initial contention.

EUR/USD cautious ahead of US CPI, risk-off

Following multi-week highs near 1.0750 at the beginning of the week, EUR/USD now appears to see that initial upside impulse somewhat mitigated on the back of the moderate rebound in the greenback.

In fact, the dollar regains some traction after collapsing to multi-week lows in the previous session in response to rising speculation that the Fed might pause its hiking cycle as soon as at the March gathering, always following heightened concerns around the US banking sector.

In the domestic docket, Industrial Production in Italy contracted at a monthly 0.7% in January and expanded 1.4% over the last twelve months.

Across the pond, the salient event will be the release of the US inflation figures gauged by the CPIP for the month of February.

What to look for around EUR

EUR/USD now faces some downside pressure and puts the 1.0700 region to the test amidst some recovery in the dollar ahead of US CPI.

In the meantime, price action around the European currency should continue to closely follow dollar dynamics, as well as the potential next moves from the ECB past the March meeting, when the bank has already anticipated another 50 bps rate hike.

Key events in the euro area this week: ECOFIN Meeting (Tuesday) – EMU Industrial Production (Wednesday) – ECB Interest Rate decision, ECB Lagarde (Thursday) – EMU Final Inflation Rate (Friday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle amidst dwindling bets for a recession in the region and still elevated inflation. Impact of the Russia-Ukraine war on the growth prospects and inflation outlook in the region. Risks of inflation becoming entrenched.

EUR/USD levels to watch

So far, the pair is retreating 0.31% at 1.0697 and faces the next contention at 1.0524 (monthly low March 8) seconded by 1.0481 (2023 low January 6) and finally 1.0324 (200-day SMA). On the upside, the breakout of 1.0737 (monthly high March 13) would target 1.0804 (weekly high February 14) en route to 1.1032 (2023 high February 2).

09:17
USD Index: Risks of another leg lower – ING

The fallout of the collapse of Silicon Valley Bank and Signature Bank is still unfolding. What can we expect today? Economists at ING note that risks are tilted to the downside for the US Dollar.

AUD and NZD still look attractive in a risk recovery

“We think the balance of risks is tilted towards another leg lower in the Dollar. The Fed and US regulators have taken decisive steps to restore market confidence and may be ready to do more (on the monetary side, when it comes to Fed) should financial risks fail to abate.”

“While it is true that the move in rates appears overblown, there is ample room for a bounce in risk sentiment, and FX is currently much more sensitive to equities than rates.”

“AUD and NZD still look attractive in a risk recovery.”

“Should equities fail to rebound, CHF and JPY may emerge as outperformers.”

 

 

09:12
AUD/USD flat-lines above mid-0.6600s amid positive risk tone, resurgent USD demand AUDUSD
  • AUD/USD recovers early lost ground, albeit lacks follow-through or bullish conviction.
  • A positive risk tone benefits the risk-sensitive Aussie, though a stronger USD caps gains.
  • Traders also seem reluctant to place aggressive bets ahead of the crucial US CPI report.

The AUD/USD pair attracts some dip-buying near the 0.6630 area on Tuesday and climbs to a fresh daily high during the early part of the European session. Spot prices, however, struggle to capitalize on the intraday move up beyond the 0.6670 region and remain below a multi-day top touched the previous day.

As the shock from the collapse of three US banks in a week began to recede, a modest recovery in the global equity markets turn out to be a key factor lending some support to the risk-sensitive Aussie. That said, a goodish pickup in the US Dollar demand, bolstered by rebounding US Treasury bond yields, keeps a lid on any meaningful upside for the AUD/USD pair, at least for the time being.

The uptick in the US bond yields comes after the US authorities moved to limit the fallout from the sudden collapse of Silicon Valley Bank (SVB). In fact, the Federal Reserve on Sunday announced that it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors and ease fears of a broader systemic crisis.

Apart from this, traders seem reluctant to place aggressive bets and prefer to wait on the sidelines ahead of the release of the key US consumer inflation figures, due later during the early North American session. Given the strain on the US banking system, the Fed is now expected to slow, if not halt, its interest rate-hiking cycle. Hence, a stronger US CPI print might do little to impress the USD bulls.

This, in turn, supports prospects for some near-term appreciating move for the AUD/USD pair. That said, the Reserve Bank of Australia's (RBA) recent dovish shift, signalling that it might be nearing the end of its rate-hiking cycle, warrants some caution before confirming that spot prices have bottomed out in the near term.

Technical levels to watch

 

09:00
Italy Industrial Output w.d.a (YoY) below forecasts (2.9%) in January: Actual (1.4%)
09:00
Italy Industrial Output s.a. (MoM) below expectations (-0.1%) in January: Actual (-0.7%)
08:55
Gold Price Forecast: XAU/USD acceleration to moderate – TDS

Gold price extended its bullish rally and gained more than 2% on Monday. Short-term, however, the Gold market should lose momentum, in the view of economists at TD Securities.

Financial system risks are ebbing

“The risk that the Fed hikes will be more robust than the market currently expected, technical dynamics, end to short covering suggest that Gold acceleration will moderate and there may be some give back at least some of the gains made on the back of the payrolls report and the systemic risk scare.”

“Convincing signals from authorities that they are ready to provide liquidity to stabilize financial firms, should they require it, should go a long way to reduce systemic risk concerns over time. This should increase risk appetite, reduce the probability of very poor economic outcomes and move expected rates somewhat higher.”

08:34
USD/MXN Price Analysis: Retakes 19.00 mark, eyes 100-day SMA/38.2% Fibo. confluence hurdle
  • USD/MXN gains traction for the fourth straight day and trades near a one-month high set on Monday.
  • Bulls now await a move beyond the 100-day SMA and 38.2% Fibo. confluence before placing fresh bets.
  • Weakness back below the 18.35 horizontal support is needed to offset the near-term positive outlook.

The USD/MXN pair attracts some buying for the fourth successive day on Tuesday and maintains its bid tone through the early part of the European session. The pair steadily climbs back above the 19.00 mark and remains well within the striking distance of over a one-month top touched on Monday.

Given that oscillators on the daily chart are holding in the positive territory and are still far from being in the overbought zone, the technical setup favours bullish traders. That said, the overnight failures to find acceptance above the 100-day Simple Moving Average (SMA) and the 38.2% Fibonacci retracement level of the July 2022-March 2023 downfall warrant caution. This makes it prudent to wait for a convincing break through the said confluence barrier before positioning for any further appreciating move.

The USD/MXN pair could then aim to surpass the February monthly swing high, around the 19.30 region and climb to the 50% Fibo. level, around the mid-19.00s. The upward trajectory could get extended towards testing the 19.75-19.80 horizontal support breakpoint, which now coincides with the 61.8% Fibo. level and should act as a pivotal point. A convincing breakthrough will set the stage for an extension of the recent strong recovery move from sub-18.00 levels, or a multi-year low touched last week.

On the flip side, the 23.6% Fibo. level, around the 18.65 area, now seems to protect the immediate downside ahead of the 18.35 horizontal support. Sustained weakness below will suggest that a one-week-old uptrend has run out of steam and make the USD/MXN pair vulnerable to retesting the 18.00-17.90 support zone.

USD/MXN daily chart

fxsoriginal

Key levels to watch

 

08:33
EUR/USD: The size of the rally depends on the Fed's “overreaction” – ING EURUSD

EUR/USD is holding up at 1.07 despite the huge move in US rates.  The direction for the pair is set to be determined almost solely by how the Fed “overreacts”  to the SVB fallout, according to economists at ING.

EUR/USD seen at 1.08-1.09 by the end of this week

“Based on the information we have at the time of writing, we would expect at least some unwinding of the recent hawkish rhetoric by the Fed, which could help stabilise sentiment and translate into a stronger EUR/USD.”

“The size of a EUR/USD rally entirely depends – in our view – to the Fed’s ‘overreaction’ to the recent turmoil.” 

“For now, we target 1.08-1.09 by the end of this week.”

 

08:10
Gold Price Forecast: XAU/USD short outlook looks strong – ANZ

Gold extended gains following the collapse of Silicon Valley Bank. The shifting expectations of US federal fund rates (FFR) are likely to see strong support for haven assets such as Gold, economists at ANZ Bank report.

Strong demand for safe haven assets

“The precious metals allure as a safe haven asset saw strong demand from investors. This was aided by a sharp reassessment of the direction of Fed policy. The market’s expectations of smaller rate hikes saw the 10y yield on Treasuries fall to a six-week low, while the USD erased its gains for the year.”

“The short outlook for Gold looks strong. The precious metal has jumped above its 50-Day Moving Average, signalling a change in momentum. With investor allocation relatively low, we expect this to continue.”

 

08:00
Spain Harmonized Index of Consumer Prices (MoM) registered at 0.9%, below expectations (1%) in February
08:00
Spain Harmonized Index of Consumer Prices (YoY) below expectations (6.1%) in February: Actual (6%)
08:00
Spain Consumer Price Index (MoM) came in at 0.9% below forecasts (1%) in February
08:00
Spain Consumer Price Index (YoY) below expectations (6.1%) in February: Actual (6%)
07:55
USD/INR to consolidate around the 82.00 level near term – Commerzbank

The Indian Rupee did not gain much ground against the US Dollar in the past few sessions. Economists at Commerzbank expect the USD/INR pair to hover around the 82 mark.

RBI has a tricky decision on its hands

“Given strong domestic demand and elevated core inflation, RBI is likely to stick with a hawkish bias and deliver another 25 bps hike to 6.75%. However, it will also keep a close eye on global developments and the contagion effects from the US bank failures.”

“An increase in contagion risks will most likely force RBI to take a cautious stance and stay on hold.”

“We look for consolidation near term around the 82.00 level.”

 

07:55
EUR/GBP drops to nearly two-week low, weakens further below 0.8800 mark EURGBP
  • EUR/GBP drifts lower for the fifth straight day and drops to a nearly two-week low on Tuesday.
  • The GBP’s relative outperformance comes amid rising bets for additional rate hikes by the BoE.
  • The mixed UK jobs data fails to push back against hawkish BoE expectations or lend any support.
  • Speculations for more jumbo rate hikes by the ECB warrant caution for aggressive bearish traders.

The EUR/GBP cross remains under some selling pressure for the fifth successive day on Tuesday and drops to a nearly two-week low during the early European session. The selling bias remains unabated following the release of the mixed UK monthly employment details and drags spot prices below the 0.8800 mark, with bears now eyeing to challenge a technically significant 100-day Simple Moving Average (SMA).

In fact, the UK Office for National Statistics reported that the number of people claiming unemployment-related benefits fell by 11.2K in February, less than the 12.4 decline anticipated. The slight disappointment, however, was offset by a sharp downward revision of the previous month's reading to show a drop of 30.3K in the Claimant Count Change against the 12.9 fall estimated. Furthermore, the jobless rate held steady at 3.7% during the three months to January as compared to a modest uptick to 3.8%, while the rolling three-month average indicated that the UK wages are cooling. Nevertheless, the data is strong enough to allow the Bank of England (BoE) to hike interest rates again later this month, which continues to underpin the British Pound and exerts downward pressure on the EUR/GBP cross.

Apart from this, a goodish pickup in the US Dollar demand is seen weighing on the shared currency, which further contributes to the heavily offered tone surrounding the EUR/GBP cross. That said, the recent hawkish comments by several European Central Bank (ECB) officials, stressing the need for more interest rate hikes beyond March, could lend some support to the Euro. Traders might also refrain from placing aggressive bearish bets ahead of the ECB monetary policy meeting, scheduled on Thursday. The focus will then shift to the BoE meeting next week, which should help determine the next leg of a directional move for the cross. Hence, any subsequent decline is more likely to find decent support near the 100-day SMA, which should act as a pivotal point ahead of the key central bank event risks.

Technical levels to watch

 

07:35
Forex Today: Markets try to settle down ahead of US inflation data

Here is what you need to know on Tuesday, March 14:

Markets stay relatively quiet early Tuesday as investors try to figure out how the major central banks' policy will be shaped after the collapse of Silicon Valley Bank (SVB) revealed vulnerabilities in the financial sector. Ahead of the February Consumer Price Index (CPI) data from the US, the US Dollar Index clings to modest recovery gains near 104.00 and the benchmark 10-year US Treasury bond yield looks to stabilize at around 3.5%. Following Monday's mixed trading in Wall Street, US stock index futures trade modestly higher in the European morning.

US Inflation Preview: Five scenarios for trading the Core CPI whipsaw within the SVB storm.

Annual inflation in the US, as measured by the CPI, is forecast to decline to 6% in February from 6.4% in January. The Core CPI is expected to come in at 0.4%.

Pressured by the collapse of SVB and Signature Bank, S&P 500 Financials Index lost nearly 4% on Monday. Meanwhile, Moody's announced late Monday it downgraded the debt rating of Signature Bank to "junk" and places First Republic Bank (FRC.N), Zions Bancorporation (ZION.O), Western Alliance Bancorp (WAL.N), Comerica Inc (CMA.N), UMB Financial Corp and Intrust Financial Corporation under review.

EUR/USD climbed to its highest level in a month at 1.0750 on Monday but lost its traction on Tuesday. As of writing, the pair was trading in negative territory below 1.0700. In an interview with a Greek newspaper on Tuesday, European Central Bank (ECB) policymaker Yannis Stournaras said that he doesn't see any impact from the collapse of SVB on Eurozone banks.

Following Monday's sharp upsurge, GBP/USD has gone into a consolidation phase below 1.2200. The data published by the UK's Office for National Statistics showed on Tuesday that the ILO Unemployment Rate remained unchanged at 3.7%. Additionally, Average Earnings Including Bonus rose by 5.7% in three months to January, down from 6% in December.

USD/JPY lost nearly 2% on Monday and touched its lowest level below 132.50 before staging a rebound in the late American session. The pair clings to modest recovery gains at around 133.50 in the European morning.

Gold price extended its bullish rally and gained more than 2% on Monday. Following a technical correction toward $1,900 in the late Asian session, XAU/USD managed to regain its traction and was last seen trading slightly above $1,910.

Following Sunday's upsurge, Bitcoin gained nearly 10% on Monday and continued to stretch higher toward $25,000 early Tuesday before losing its traction. At the time of press, BTC/USD was trading marginally higher on the day at $24,380. Ethereum closed the third straight day in positive territory and rose nearly 15% in that period. ETH/USD stays relatively quiet on Tuesday and trades slightly below $1,700.

 

07:30
Switzerland Producer and Import Prices (YoY) below expectations (3.4%) in February: Actual (2.7%)
07:30
Switzerland Producer and Import Prices (MoM) registered at -0.2%, below expectations (-0.1%) in February
07:29
NZD/USD: More volatility seems likely into US CPI data – ANZ NZDUSD

The Kiwi is higher as the USD comes under pressure under the weight of falling rates and recession fears. Economists at ANZ Bank expect ongoing volatility.

NZ considerations relegated to the background

“Bond markets have taken the view that the Fed will hike just once more, and then start cutting by September, presumably on the view that confidence and spending will hit a brick wall. That’s possible, but of course, the inflation starting point is problematic.”

“The point, there are a lot of ifs and buts, and more volatility seems likely into CPI data tonight.”

“NZ considerations have been well and truly relegated to the background, and this is the USD show.” “Positioning, and the need to be nimble, are likely to dominate the economics for now.”

“Support 0.5750/0.5900/0.6090 Resistance 0.6540/0.6675”

 

07:22
ECB’s Stournaras: Do not see any impact from SVB collapse on Eurozone banks

In an interview with a Greek newspaper on Tuesday, European Central Bank (ECB) policymaker Yannis Stournaras said that “I don't see any impact from the collapse of Silicon Valley Bank (SVB) on Eurozone banks.”

This comes after Eurogroup's President Paschal Donohoe said on Monday, “Euro-area has very limited exposure to SVB.”

Market reaction

EUR/USD was last seen trading at 1.0695, down 0.30% on the day.

07:19
GBP/USD bounces off daily low post-UK jobs data, remains below 1.2200 amid strong USD GBPUSD
  • GBP/USD attracts some dip-buying, though the intraday uptick lacks strong follow-through.
  • The mixed UK jobs data fails to push back against BoE rate hike bets and lends some support.
  • Rebounding US bond yields helps revive the USD demand and acts as a headwind for the pair.

The GBP/USD pair recovers modest intraday losses following the release of the UK monthly employment details and climbs to the top end of its daily range during the early European session on Tuesday. Spot prices, meanwhile, remain below the 1.2200 mark, or a one-month high touched on Monday.

The UK Office for National Statistics reported that the number of people claiming unemployment-related benefits fell by 11.2K in February as compared to the 12.4 decline anticipated. Adding to this, the previous month's reading was also revised to a fall of 30.3K in the Claimant Count Change from 12.9 estimated originally. Furthermore, the jobless rate held steady at 3.7% during the three months to January against expectations for a modest uptick to 3.8%. This, to a larger extent, helped offset a slowdown in the UK wage growth data and does little pushback against market bets for additional rate hikes by the Bank of England (BoE) later this month, which lends some support to the British Pound.

That said, a goodish pickup in the US Dollar demand, bolstered by rebounding US Treasury bond yields, acts as a headwind for the GBP/USD pair, at least for the time being. The uptick in the US bond yields comes after the US authorities moved to limit the fallout from the collapse of Silicon Valley Bank (SNB) and could further be attributed to some repositioning trade ahead of the US consumer inflation figures. However, expectations that the US central bank will slow, if not halt, its interest rate-hiking cycle in the wake of the strain on the US banking system could keep a lid on any meaningful upside for the US bond yields and hold back the USD bulls from placing aggressive bets.

Traders might also prefer to wait on the sidelines and await the release of the crucial US CPI report, due later during the early North American session. This week's US economic docket also features the Producer Price Index (PPI) and monthly Retail Sales figures on Wednesday, which should influence the USD price dynamics and provide some impetus to the GBP/USD pair. The focus, however, will remain glued to next week's key central bank event risks - the outcome of a two-day FOMC meeting on Wednesday, followed by the BoE policy decision on Thursday.

Technical levels to watch

 

07:03
United Kingdom Claimant Count Rate: 3.8% (February) vs previous 3.9%
07:02
UK ILO Unemployment Rate steadies at 3.7% in January vs. 3.8% expected
  • The Unemployment Rate in the UK held steady at 3.7% in January.
  • UK Claimant Count Change came in at -11.2K in February.
  • The UK wages excluding bonuses eased to 6.5% YoY in January vs. 6.6% expected.

The latest data released by the Office for National Statistics (ONS) showed on Tuesday that the United Kingdom’s (UK) ILO Unemployment Rate came in at 3.7% in January vs. the 3.8% expected while the claimant count change showed a smaller-than-expected decline in the reported month.

The number of people claiming jobless benefits fell by 11.2K in February when compared to -12.4K expected and -30.3K booked previously.

Key points (via ONS)

In February 2023, 98,000 more people were in payrolled employment when compared with January 2023.

UK LFS employment +65k 3m/3m in 3 months to Jan.

UK February payrolls change 98k vs. 102k previous.

GBP/USD reaction

GBP/USD remains unfazed by the mixed UK employment data, keeping its range around 1.2170, as of writing. The pair is down 0.08% on the day.

About UK jobs

The UK Average Earnings released by the Office for National Statistics (ONS) is a key short-term indicator of how levels of pay are changing within the UK economy. Generally speaking, positive earnings growth anticipates positive (or bullish) for the GBP, whereas a low reading is seen as negative (or bearish).

07:01
United Kingdom ILO Unemployment Rate (3M) registered at 3.7%, below expectations (3.8%) in January
07:01
United Kingdom Average Earnings Excluding Bonus (3Mo/Yr) registered at 6.5%, below expectations (6.6%) in January
07:01
United Kingdom Average Earnings Including Bonus (3Mo/Yr) meets forecasts (5.7%) in January
07:00
United Kingdom Claimant Count Change came in at -11.2K, above expectations (-12.4K) in February
06:59
Gold Price Forecast: XAU/USD stays defensive above $1,900 as Fed bets reverberate ahead of US inflation
  • Gold price struggles to keep the early Asian session pullback from five-week high, picks up bids of late.
  • Interest rate futures suggest Fed policy pivot in March, versus the last week’s expectations of 50 bps rate hike.
  • Corrective bounce in yields probe XAU/USD bulls ahead of US CPI for February.

Gold price (XAU/USD) remains mildly offered as traders struggle to justify mixed catalysts ahead of the key US Consumer Price Index (CPI) data during early Tuesday. That said, the XAU/USD drops 0.25% intraday to $1,909 during the first loss-making day in four heading into the European session.

The precious metal’s latest losses could be linked to the US Dollar’s corrective bounce, while tracing the US Treasury bond yields. US 10-year Treasury bond yields print mild gains of around 3.58%, after bouncing off the monthly bottom of 3.418%, whereas the two-year counterpart rebounds from the lowest levels since September 2022 to print mild gains of around 4.19% by the press time. It should be noted that the US two-year Treasury bond yields dropped the most since 1987 the previous day.

On the other hand, the US Dollar Index (DXY) bounces off one-month low to snap three-day downtrend near 103.90, up 0.27% intraday at the latest.

It’s worth observing that the fears emanated from the Silicon Valley Bank (SVB) and the Signature Bank fallouts have recently reversed the hawkish expectations from the Federal Reserve (Fed) and challenge the DXY bulls of late. “Traders see 33% chance Fed holds rates this month, market pricing shows rate cuts expected as early as June,” said CME. On the same line Reuters mentioned that the US Fed Fund Futures have priced in a 69% chance of a 25-bps hike at next week's Fed policy meeting, with a more than 30% probability of a pause,” said Reuters. The news also added that the market last week was poised for a 50-bps increase prior to the SVB collapse.

Also likely to weigh on the Gold price could be the latest fears surrounding China and Russia as the UK, the US and Australia over the nuclear submarine issues while Washington meets Taiwan leader. However, hopes of more investment in China and the recently increasing hopes of the dragon nation’s gradual recovery, as backed by Bloomberg, favor the XAU/USD bulls.

Moving on, the US CPI will be more important for the USD/CHF pair traders as the Fed bets have already reversed. As per the market forecasts, the headline US CPI is likely to ease to 6.0% YoY versus 6.4% prior while CPI ex Food & Energy may slide to 5.5% YoY from 5.6% prior.

Gold price technical analysis

The downside break of a two-day-old ascending trend channel joins bearish MACD signal and firmer RSI to keep Gold sellers hopeful. However, the 21-bar Exponential Moving Average (EMA) restricts immediate downside of the XAU/USD near the $1,900 threshold.

Following that, the 38.2% Fibonacci retracement level of the metal’s upside from February 28, close to $1,873, can act as a buffer before directing the Gold price towards March 06 swing high of near $1,858.

It should be noted, however, that the 200-EMA level surrounding $1,851 could act as the last defense for the XAU/USD buyers.

Alternatively, Gold price recovery remains elusive unless the quote stays below the stated channel’s lower line, close to $1,921 at the latest.

In a case where the XAU/USD remains firmer past $1,921, the previous monthly high surrounding $1,960 could lure the bulls.

Gold price: Hourly chart

Trend: Bullish

 

06:59
Gold Price Forecast: XAU/USD could recapture the $1,919 barrier on softer US CPI

Gold price retreats from six-week highs but holds above the $1,900 level. XAU/USD needs softer United States Consumer Price Index (CPI) data to take out the $1,919 barrier, FXStreet’s Dhwani Mehta reports.

$1,900 could be tested on further retracement in the Gold price

“A softer-than-expected US inflation data could help strengthen the ongoing narrative that the Fed should pause its rate hike cycle amid mounting risks to financial stability. As a result, the USD could witness a fresh selling wave, reaffirming Gold’s journey toward the $2,000 threshold.”

“Daily closing above the February 3 high of $1,919 is needed to resume the uptrend toward the year-to-date highs of $1,960. The next stop for Gold buyers is seen at the $2,000 threshold.”

“On the flip side, $1,900 could be tested on further retracement in XAU/USD. Should the correction gather steam, then Gold sellers will extend control toward the mildly bullish 50-Daily Moving Average (DMA) at $1,874. Ahead of that, the February 9 high of $1,890 could come to the rescue of Gold buyers.”

See – Gold Price Forecast: XAU/USD bullish momentum continues, eyes on next resistance at $1,960 – ANZ

06:49
USD Index regains upside traction and targets 104.00 ahead of CPI
  • The index bounces off recent lows and approaches 104.00.
  • Bets for a pause in the Fed’s tightening cycle remain on the rise.
  • All the attention will be on the release of US inflation figures.

The greenback seems to have met some respite from the recent sharp selling pressure and approaches the 104.00 region when tracked by the USD Index (DXY) on turnaround Tuesday.

USD Index now looks at CPI and SVB

After three consecutive daily pullbacks - including a 4-week low near 103.50 recorded on Monday - the index now manages to retarget the 104.00 zone amidst some tepid recovery in the short end of the US yields curve and the knee-jerk in the risk complex.

In the meantime, investors continue to closely follow the aftermath of the SVB collapse and the shutdown of the New York-based Signature Bank, which sparked contagion fears on both sides of the Atlantic as well as a pick-up in the risk aversion.

By the same token, the probability of a 25 bps rate hike now hover around the 75% according to FedWatch Tool from CME Group, while bets for a no-hike remain on the rise.

Moving forward, all the attention will be on the release of US inflation figures gauged by the CPI for the month of February, due later in the NA session.

What to look for around USD

The index manages to grab some oxygen and rebounds from the sharp decline to 4-week lows seen at the beginning of the week.

The latest results from the US jobs report coupled with the ongoing effervescence around the US banking system threat the greenback and collaborate with investors’ view of a 25 bps rate hike at the March gathering, all sponsoring the corrective decline in the USD Index (DXY) from last week’s 2023 highs in the boundaries of the 106.00 region to Monday’s 103.50 zone.

So far, the index remains under pressure against the backdrop of reinvigorated bets of a Fed’s pivot in the short-term horizon. However, the still elevated inflation and the resilience of the US economy continue to play against that view.

Key events in the US this week: Inflation Rate (Tuesday) – MBA Mortgage Applications, Producer Prices, Retail Sales, Business Inventories, NAHB Housing Market Index, TIC Flows (Wednesday) – Initial Jobless Claims, Housing Starts, Building Permits, Philly Fed Manufacturing Index (Thursday) – Industrial Production, Flash Michigan Consumer Sentiment, CB Leading Index (Friday).

Eminent issues on the back boiler: Rising conviction of a soft landing of the US economy. Persistent narrative for a Fed’s tighter-for-longer stance. Terminal rates near 5.5%? Fed’s pivot. Geopolitical effervescence vs. Russia and China. US-China trade conflict.

USD Index relevant levels

Now, the index is advancing 0.26% at 103.89 and faces the next hurdle at 105.88 (2023 high March 8) seconded by 106.63 (200-day SMA) and then 107.19 (weekly high November 30 2022). On the flip side, the breakdown of 103.48 (monthly low March 13) would open the door to 102.58 (weekly low February 14) and finally 100.82 (2023 low February 2).

 

06:33
India WPI Inflation registered at 3.85%, below expectations (4%) in February
06:22
GBP/USD: Sustained gains likely above 1.2440 – UOB GBPUSD

In the view of UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang, GBP/USD could extend the upside on a more convincing fashion once 1.2440 is cleared.

Key Quotes

24-hour view: “We highlighted yesterday that ‘the rapid rise has scope to test 1.2145’. We added. ‘The major resistance at 1.2240 is not expected to come into view’. GBP strengthened more than expected as it rose to 1.2200 before closing on a strong note at 1.2183 (1.22%). Further GBP strength appears likely even though it remains to be seen if GBP can clearly break above 1.2240. Support is at 1.2135; a breach of 1.2090 would indicate that the current upward pressure has faded.”

Next 1-3 weeks: “Yesterday (14 Mar, spot at 1.2085), we held the view that the outlook for GBP is mixed and we expected it to trade in a broad range of 1.1950/1.2240 for the time being. GBP rose to a high of 1.2200 in NY trade and upward momentum is beginning to build. That said, GBP has to break clearly above 1.2440 before a sustained advance is likely. In the next few days, the chance of a clear break above 1.2440 will continue to increase as long as GBP stays above 1.2040.”

06:20
USD/CNH Price Analysis: Bounces off 50-DMA but bears keep control
  • USD/CNH portrays corrective bounce near one-month low, mildly bid of late.
  • 50-DMA probes sellers but clear downside break of five-week-old ascending trend line, bearish MACD signals push back buyers.
  • 100-DMA, monthly high act as final defence of China Yuan pair bears.

USD/CNH prints mild gains around 6.8660 as it struggles to defend the bounce off a one-month low during early Tuesday. In doing so, the offshore Chinese Yuan (CNH) pair justifies the bearish MACD signals, as well as the downside break of a five-week-old ascending support line, now resistance, while portraying a rebound from the 50-DMA.

That said, the USD/CNH pair’s latest recovery remains elusive unless the quote stays below the support-turned-resistance line from early February, around 6.9350 by the press time.

Even if the Yuan pair crosses the 6.9350 hurdle, the 100-DMA and the monthly high, respectively around 6.9620 and 6.9970 could test the bulls.

It should be observed that the 7.0000 psychological magnet acts as an extra upside filter before giving control to the USD/CNH bulls.

On the flip side, a daily closing below the 50-DMA, around 6.8360 at the latest, appears necessary to recall the bears.

Following that, multiple tops marked during late January around 6.7900 can act as an intermediate halt before directing the USD/CNH bears towards the year 2023 low, marked in January around 6.6975.

Overall, USD/CNH remains on the bear’s radar even if the 50-DMA challenges the pair’s immediate downside.

USD/CNH: Daily chart

Trend: Further downside expected

 

06:18
Gold Futures: Rally could take a breather

CME Group’s flash data for gold futures markets noted traders scaled back their open interest positions by more than 2K contracts on Monday. Volume, instead, rose for the third session in a row, this time by around 161.5K contracts.

Gold: Next on the upside comes $1960

The auspicious start of the new trading week saw gold prices surpass the key $1900 mark per ounce troy. The acute advance was on the back of diminishing open interest, which hints at the idea that the yellow metal could enter an impasse in the current sharp recovery. So far, the next hurdle of note for bullion emerges at the 2023 high at $1959 (February 2).

06:08
USD/CAD struggles to scale above 1.3740 as investors await US Inflation for fresh impetus USDCAD
  • USD/CAD is facing hurdles in stretching its recovery above 1.3740, volatility is expected ahead of US Inflation.
  • Federal Reserve could continue a smaller rate-hike regime to avoid the United States recession.
  • Bank of Canada may be required to resume its policy-tightening process to tame inflation recovery.
  • USD/CAD might display a downside momentum if RSI (14) skids into the bearish range of 20.00-40.00.

The USD/CAD pair is facing barricades while extending its recovery above the immediate resistance of 1.3740 in the early European session. A sideways performance is expected from the Loonie asset till the release of the United States Consumer Price Index (CPI) data. Earlier, the asset rebounded after a five-day low of 1.3677 as investors got anxious ahead of the US inflation release and improved appeal for safe-haven assets.

The US Dollar Index (DXY) is displaying a back-and-forth action below 104.00. It seems that the USD Index is gathering strength to stretch its recovery as the release of the US Inflation will prepare the ground for the interest rate decision from the Federal Reserve (Fed), which is scheduled for next week. S&P500 futures are attempting to hold gains generated in the Asian session.

However, the risk appetite is still weak as global stocks are facing the heat of the Silicon Valley Bank (SVG) collapse. The return delivered on 10-year US Treasury bonds has rebounded to near 3.57% on hopes that US inflation data could fuel safe-haven's appeal.

Upside risk for US inflation looks favored

The major catalyst of the week- US inflation, will release on Tuesday and is expected to deliver a power-pack action in the FX domain. Considering the resilience in the overall demand, strong employment bills, and upbeat strong labor market, an acceleration in the US inflationary pressures cannot be ruled out. Last week, the US Bureau of Labor Statistics reported a significant jump in the number of payrolls generated by the US economy in February than anticipated. The Unemployment Rate increased to 3.6%. And, Average Hourly Earnings were increased to 4.6%, lower than the consensus of 4.7%.

Despite an increase in the jobless rate, the US labor market looks upbeat as firms are continuously escalating their recruitment process to add more people. And, employment bills are still in a rising trend, which indicates that households are equipped with sufficient funds to trigger inflation again.

Analysts at Wells Fargo expect “Another monthly increase of 0.4% in the overall CPI in February, which would put the annual rate at 6.0%. We still see inflation set to grind lower, but the process is likely to be bumpy and take time. Despite some directional improvement over the past couple of quarters, prices are still growing well above the Fed's 2% target, and the tight labor market suggests that there are still inflationary pressures that could forestall a full return to 2% inflation.”

Upbeat labor market to compel Bank of Canada to rollback rate-hiking process

The Bank of Canada (BoC) has already confirmed that the current monetary policy is restrictive enough to contain Canadian inflation. BoC Governor Tiff Macklem decided to allow the current monetary policy to display its potential and has therefore kept monetary policy steady in March. However, a surprise increase in the Employment numbers and higher employment cost index indicate that inflation could be propelled again. Along with an unchanged monetary policy, Bank of Canada Tiff Macklem kept the room open for more rates if inflation surprises to the upside.

Meanwhile, oil prices have witnessed a sell-off as the street is worried about the overall demand ahead. It is worth noting that Canada is a leading exporter of oil to the US and lower oil prices would impact the Canadian dollar.

USD/CAD technical outlook

USD/CAD has delivered a sheer downside move after a breakdown of the Head and Shoulder chart pattern formed on a two-hour scale. The asset rebounded but has now found barricades near the horizontal resistance plotted from March 08 low at 1.3745. The US Dollar bulls are expected to find a cushion near support placed from March 01 high at 1.3659.

The 20-period Exponential Moving Average (EMA) at 1.3745 is expected to act as a major resistance for the US Dollar.

Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in the 40.00-60.00 range. A breakdown into the bearish range of 20.00-40.00 will trigger the downside momentum.

 

06:08
EUR/USD faces some consolidation near term – UOB EURUSD

UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang note EUR/USD is now seen trading within 1.0560 and 1.0800 in the next weeks.

Key Quotes

24-hour view: “We noted yesterday that ‘upward momentum has improved, albeit not significantly’. We expected EUR to advance further to 1.0740 but we were of the view that the major resistance at 1.0800 is not expected to come under threat. Our view was not wrong as EUR rose to 1.0748, dropped to 1.0649 and then rebounded to close at 1.0729 (+0.81%). While upward momentum has not improved much, EUR is likely to edge higher. However, the major resistance at 1.0800 is still unlikely to come under threat (there is a minor resistance at 1.0770). Support is at 1.0690, a breach of 1.0660 would suggest that the current upward pressure has eased.”

Next 1-3 weeks: “We continue to hold the same view as yesterday (13 Mar, spot at 1.0685). As highlighted, we view the current price actions as part of a consolidation range and expect EUR to trade between 1.0560 and 1.0800 for the time being. That said, the short-term underlying tone appears to be firm and in the next 1-2 days, the risk is for EUR to edge higher and test 1.0800. At this stage, a sustained rise above 1.0800 is unlikely.”

06:00
CPI Data Expectations: Analyzing February US Inflation
  • Annualized Consumer Price Index in the US is expected to decline to 6.0% in February.
  • Core CPI is forecast to edge lower to 5.5% YoY in February from January’s 5.6%.
  • Hot US CPI is critical to initiating a turnaround in the US Dollar against its major rivals.

The Consumer Price Index (CPI) data release for February, published by the US Bureau of Labor Statistics (BLS), is scheduled for March 14 at 12:30 GMT. The US Dollar (USD) has entered into a downward spiral following the latest mixed US labor market report and the US banking stress, which have revived the dovish US Federal Reserve (Fed) expectations. 

The United States (US) inflation report will be the last high-impact economic data that will be published ahead of the March 22 Federal Reserve policy meeting.

What to expect in the next CPI data report?

On an annualized basis, the Consumer Price Index data is forecast to decline to 6.0% and the Core CPI, which excludes volatile food and energy prices, is also expected to edge a tad lower to 5.5% from 5.6% registered in January.

Meanwhile, the headline CPI data is seen easing to 0.4% MoM in February, compared with a 0.5% increase reported in January. The Core CPI is likely to hold steady at 0.4% MoM in the reported month. 

The US CPI data will hold the utmost relevance, as the Federal Reserve remains committed to bringing down inflation back to its 2.0% target. Further, it’s a ‘blackout period’ for the Fed policymakers ahead of the March 22 meeting, and therefore, the inflation data will have a strong market impact, as it helps the Fed determine the future policy path.  

Economists from Wells Fargo agree with the consensus and expect headline inflation numbers to remain high this time around: “We look for another monthly increase of 0.4% in the overall CPI in February, which would put the YoY rate at 6.0%. We still see inflation set to grind lower, but the process is likely to be bumpy and take time. Despite some directional improvement over the past couple of quarters, prices are still growing well above the Fed's 2% target, and the tight labor market suggests that there are still inflationary pressures that could forestall a full return to 2% inflation.”

When will be the Consumer Price Index report and how could it affect EUR/USD?

The Consumer Price Index data report is scheduled for release at 12:30 GMT, on March 14. A softer-than-expected reading could strengthen the renewed dovish Fed rate hike expectations. 

Federal Reserve Chief Jerome Powell, during his testimony in the US Congress last week, endorsed a case for bigger rate hikes should the incoming data warrant faster tightening. However, the US banking rout combined with mixed employment data old cold water on a bigger Fed rate hike outlook.

Goldman Sachs revised down its Fed rate hike outlook, now stating that the Federal Reserve will not deliver any rate hike at its March 22 meeting. Meanwhile, JP Morgan called on for a 25 bps March Fed rate increase. 

The Silicon Valley Bank (SVB) collapse saga prompted traders to reassess their bets for the US interest rate trajectory, with rate cuts by end-2023 now priced in.

In case of a disappointing CPI print, the US Dollar will see a fresh leg lower, allowing the EUR/USD pair to extend its uptrend toward the 1.0800 level. Conversely, a surprisingly hotter US CPI print could save the day for the Greenback bulls. 

The US CPI data is likely to stir the market and ramp up volatility, irrespective of divergence from the expected readings, prompting traders to grab short-term opportunities around the EUR/USD pair.

Dhwani Mehta offers a brief technical outlook for the major and explains: “EUR/USD has turned south after failing to find acceptance above the flattish 50-Daily Moving Average (DMA) at 1.0726 on the daily sticks. The Relative Strength Index (RSI) is pointing lower while defending the midline, suggesting that the retracement could be shortlived.”

Dhwani also outlines important technical levels to trade the EUR/USD pair: “On the upside, recapturing the 50 DMA barrier is critical to resuming the uptrend. The next stops for Euro bulls are seen at the monthly top of 1.0749 and the 1.0800 round figure. Alternatively, further retreat in the EUR/USD pair could expose the horizontal 21 DMA support at 1.0637, below which the road toward the 1.0600 mark could be a smooth one for EUR/USD sellers.”

CPI data related content

  • US Inflation Forecast: Easing only slowly, still sticky – Previews by 10 banks
  • Gold Price Forecast: XAU/USD needs softer United States CPI to take out $1,919 barrier
  • US Inflation Preview: Five scenarios for trading the Core CPI whipsaw within the SVB storm

About the Consumer Price Index

The Consumer Price Index released by the US Bureau of Labor Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchasing power of USD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or Bearish).

05:59
FX option expiries for Mar 14 NY cut

FX option expiries for Mar 14 NY cut at 10:00 Eastern Time, via DTCC, can be found below.

- EUR/USD: EUR amounts        

  • 1.0650 931m
  • 1.0600 724m
  • 1.0750 1.5b
  • 1.0800 1.4b

- USD/JPY: USD amounts                     

  • 130.00 720m
  • 131.00 562m

- AUD/USD: AUD amounts  

  • 0.6781 694m

- EUR/GBP: EUR amounts        

  • 0.8850 752m
05:56
USD/JPY kisses the 134.00 mark on a rebound ahead of US CPI USDJPY
  • USD/JPY is taking a pause on a corrective phase amid softer US Treasury yields.
  • Surging borrowing costs are causing liquidity traps.
  • US CPI data will pave the way for the next FOMC meeting. 

USD/JPY rebounded after hitting the monthly low of 132.34. The short covering just comes ahead of the US Consumer Price Index (CPI) release. The corrective downfall in USD/JPY was started earlier this week on the back of falling US Treasury bond yields.

The Silicon Valley Bank’s (SVB) fallout has prompted investors to revisit their rate-hiking expectations about the Federal Reserve's (Fed) plans to increase interest rates during the March FOMC meeting., which was surging exponentially prior to the last Nonfarm Payrolls (NFP) release. 

When borrowing costs increase, it's natural for highly leveraged businesses to experience pressure in repaying their debts. The recent rise in US Treasury bond yields, which reflects the lending rates in the US economy, has resulted in a decrease in the value of US government bonds purchased during a low-yield market period.

Therefore, the credit side has loosened the original value amid surging yield and a liquidity trap is emerging among the businesses.

Fundamentally, this situation is quite similar to the UK’s bond market incident that happened a while ago, where the pension funds have struggled with liquidity.

Since the Fed commentary is muted for further clarity on the underlying US financial ecosystem, investors are refraining to put fresh bets on risky assets.

Meanwhile, US Consumer Price Index (CPI) is on the cards. The market is expecting a slightly downbeat CPI release from prior releases on Tuesday. As it is always said “devil in the details”, market participants will likely jump to the service-led inflationary portion, since the Fed has made concerns regarding this in many instances.

Levels to watch

     

 

05:51
USD/CHF snaps four-day losing streak above 0.9100 as focus shifts to US CPI, Fed bets USDCHF
  • USD/CHF bounces off five-week low to print the first daily gain in five.
  • US Dollar traces corrective bounce off yields to pare recent losses.
  • Interest rate futures raise doubts on further USD/CHF advances unless US inflation markets notable jump.

USD/CHF seesaws around intraday high during the first positive day in five heading into Tuesday’s European session.

In doing so, the Swiss Franc (CHF) pair traces the US Dollar’s latest corrective bounce amid a recovery in the US Treasury bond yields ahead of the Consumer Price Index (CPI) data. It should be noted, however, that the recently downbeat market concerns surrounding the Federal Reserve (Fed) seem to test the buyers ahead of the key US data.

That said, US 10-year Treasury bond yields print mild gains of around 3.58%, after bouncing off the monthly bottom of 3.418%, whereas the two-year counterpart rebounds from the lowest levels since September 2022 to print mild gains of around 4.19% by the press time. It should be noted that the US two-year Treasury bond yields dropped the most since 1987 the previous day.

A major slump in the US Treasury bond yields could be linked to the fears emanated from the Silicon Valley Bank (SVB) and the Signature Bank fallouts, despite the US authorities’ defense.

While talking about the Fed bets, CME said, “Traders see 33% chance Fed holds rates this month, market pricing shows rate cuts expected as early as June.” On the same line Reuters mentioned that yhe US Fed Fund Futures have priced in a 69% chance of a 25-bps hike at next week's Fed policy meeting, with a more than 30% probability of a pause,” said Reuters. The news also added that the market last week was poised for a 50-bps increase prior to the SVB collapse.

Amid these plays, Wall Street closed mixed and so do stocks in the Asia-Pacific region while S&P 500 Future snap three-day downtrend by bouncing off the lowest levels since early January.

Looking ahead, the US CPI will be more important for the USD/CHF pair traders as the Fed bets have already reversed. As per the market forecasts, the headline US CPI is likely to ease to 6.0% YoY versus 6.4% prior while CPI ex Food & Energy may slide to 5.5% YoY from 5.6% prior.

Also read: US Inflation Preview: Five scenarios for trading the Core CPI whipsaw within the SVB storm

Technical analysis

A clear downside break of the five-week-old ascending support line, now resistance around 0.9335, keeps USD/CHF bears hopeful of testing the previous monthly low of 0.9060.

 

05:30
Netherlands, The Consumer Price Index n.s.a (YoY) climbed from previous 7.6% to 8% in February
05:28
When are the UK jobs and how could they affect GBPUSD? GBPUSD

UK Jobs report overview

Early Tuesday, the UK’s Office for National Statistics (ONS) will release the February month Claimant Count figures together with the Unemployment Rate in the three months to January at 07:00 AM GMT.

Today’s UK employment data becomes more important for the GBP/USD pair traders considering the latest retreat among the Bank of England (BoE) hawks. That said, BoE policymaker Swati Dhingra warned against further interest rate increases. Also increasing the importance of today’s British jobs report is the worsening conditions of the labor strikes in London and hopes of more investment from the government within the new budget.

The UK job market report is expected to show that the Average Weekly Earnings, Including Bonuses, in the three months to January, eased to 5.7% YoY versus 5.9% prior while ex-bonuses, the wages are seen declining to 6.6% from 6.7% prior readings.

Further, the ILO Unemployment Rate is likely to increase to 3.8% versus 3.7% prior for the three months ending in January. It’s worth noting that the market consensus suggests the Claimant Count Change figures to arrive at -12.4K in February versus -12.9K prior with the Claimant Count Rate of 3.9% during the stated period.

How could they affect GBP/USD?

GBP/USD prints mild losses to snap a four-day winning streak around 1.2160 heading into Tuesday’s London open. In doing so, the Cable pair cheers the hopes of more investments from UK Finance Minister Jeremy Hunt amid the market’s consolidation mode.

It’s worth noting that the recent chatters surrounding downbeat UK employment conditions and a likely increase in government investments could escalate fears for the GBP/USD bears, especially ahead of the US Consumer Price Index (CPI) data. Furthermore, the Brexit fears join and the absence of hawkish BoE talks weigh on Cable prices.

Hence, today’s UK data is less likely to please the GBP/USD pair buyers unless marking major positive readings. Even if the British jobs report prints welcome numbers, the Cable pair remains indecisive ahead of the US CPI releases, as well as due to the recent corrective bounce in the US Treasury bond yields. That said, a likely easing in the Employment Change may weigh on the GBP/USD prices amid the US dollar’s rebound, as well as the cautious sentiment.

Technically, The first daily closing above the 50-DMA in five weeks, around 1.2135 by the press time, enables the GBP/USD bulls to aim for the mid-February swing high surrounding 1.2270.

Key notes

GBP/USD Price Analysis: Bulls about to show their commitments

GBP/USD grinds near one-month high below 1.2200 ahead of UK employment, US CPI 

GBP/USD extends downside to near 1.2150 ahead of UK Employment and US Inflation

About UK jobs

The UK Average Earnings released by the Office for National Statistics (ONS) is a key short-term indicator of how levels of pay are changing within the UK economy. Generally speaking, positive earnings growth anticipates positive (or bullish) for the GBP, whereas a low reading is seen as negative (or bearish).

05:07
NZD/USD Price Analysis: 100-EMA prods bears eyeing 0.6130 NZDUSD
  • NZD/USD holds lower ground near intraday low, snaps two-day winning streak.
  • RSI retreat backs the Kiwi pair’s U-turn from 200-EMA, one-month-long resistance line.
  • Receding bullish bias of MACD signals, failure to cross key upside hurdles keep sellers hopeful.
  • Fortnight-old horizontal support area lures bears past 100-EMA break.

NZD/USD sticks to mild losses near 0.6210 during the first downbeat day in three heading into Tuesday’s European session. In doing so, the Kiwi pair struggles to break the 100-bar Exponential Moving Average (EMA) amid sluggish trading hours.

That said, the quote rose the most in nine weeks the previous day before retreating from 0.6265. The pullback moves could be linked to the NZD/USD pair’s inability to cross the 200-bar EMA, as well as a downward-sloping resistance line from mid-February.

Adding strength to the pullback moves could be the RSI (14) retreat from the overbought territory, as well as the receding bullish bias of the MACD signals.

It’s worth noting, however, that a clear downside break of the 100-bar EMA, around 0.6200 by the press time, becomes necessary for the NZD/USD bears to take control.

Following that, a south-run towards the two-week-old horizontal support zone near 0.6130 and then to the monthly low of 0.6084 can’t be ruled out.

On the contrary, the aforementioned trend line and 200-EMA restrict short-term NZD/USD recovery to around 0.6230 and 0.6245 in that order.

In a case where NZD/USD remains firmer past 0.6245, the odds of witnessing a rally targeting the mid-February high of 0.6390 can’t be ruled out.

NZD/USD: Four-hour chart

Trend: Further downside expected

 

05:06
EUR/USD seeks cushion around 1.0700 as Fed to avoid bigger rate hikes amid SVB collapse EURUSD
  • EUR/USD is hoping for an intermediate cushion around 1.0700 on less-hawkish Fed bets.
  • The rationale behind short unwinding in the USD Index is the anxiety among the market participants for the US inflation.
  • ECB would continue its bigger rate hike spell despite SVB's collapse.

The EUR/USD pair is gauging a cushion near the round-level support of 1.0700 in the Asian session. The major currency pair has corrected from 1.0740 after exhaustion in the upside momentum. The shared currency pair is expected to remain on the tenterhooks ahead of the release of the United States Consumer Price Index (CPI) data.

The US Dollar Index (DXY) has extended its recovery to near 104.00 as investors have trimmed short-liquidation after a sheer sell-off. The rationale behind short unwinding in the USD Index is the anxiety among the market participants for the US inflation, which is likely to be a major trigger ahead.

Analysts at CIBC are of the view that “A further increase in prices at the pump and continued pressure in core categories suggest that prices rose by an uncomfortably fast 0.4% in February. Looking at core (ex. food and energy) categories, shelter prices are set to peak imminently as the typical lags with new leases that are resetting at lower rates kick in, but continued pressure in core services outside of the shelter, in line with the tight labor market, will keep the Fed on a tightening path.

S&P500 futures have shown a dramatic recovery in the Asian session after a choppy Monday as investors are anticipating a smaller interest rate hike from the Federal Reserve (Fed) as the catastrophic collapse of Silicon Valley Bank (SVG) has deepened fears of the US recession. Meanwhile, the return generated on 10-year US Treasury yields has extended above 3.57%.

On the Eurozone front, MNI reported that the European Central Bank (ECB) was planning to go ahead with the 50 basis points (bps) rate hike at its upcoming meeting despite sliding market rate expectations amid Silicon Bank Valley turmoil.

Considering the fact that, Eurozone inflation is extremely solid and has not softened meaningfully yet. Therefore, ECB President Christine Lagarde would have no alternative than to tweak interest rates further.

 

05:02
AUD/USD Price Analysis: The pair rebounds from 0.6560 and stalled at descending trend line AUDUSD
  • AUD/USD hits the high at 0.6716 and retraces.
  • Risk-averse environments keeping a lid on AUD/USD price appreciation.
  • US CPI could reinforce the pair to break major support at 0.6560.   

AUD/USD hits the ceiling on a descending trendline after a rebound from the four-month low at 0.6564. The sharp rebounds came on Monday upon the US Dollar's weakness.

Receding bets for a 50-bps Federal Reserve (Fed) rate hike have prompted AUD/USD to surge higher, although the downside bias is likely to remain intact, in a risk-averse environment led by SVB fallout.  

Any upside momentum for AUD/USD is likely to remain capped at Monday’s high around the 0.6713 mark, which is a support-turned-resistance and coincides with a descending trendline starting from February on a daily chart.

A break above will lead the pair to confront the next resistance at around 0.6766 which is pegged with 21-day Moving Average (DMA).

Both the 21-DMA and 50-DMA are pegged above the current price level, which is technically exerting overhead price pressure on AUD/USD and also confirming the bearish bias for the pair. 

Downside support is seen at 0.6560, which is a key support level for the AUD/USD. A convincing break below will likely put the pair in a vacuum without any major support for a long distance. Regarding the said level, the pair has respected it on the last three attempts and AUD/USD looks resilient above that price point. The intermediate support lies at the psychological 0.6500 level.    

AUD/USD: Daily chart

 

04:42
USD/TRY: Bulls and bears jostle around 19.00 as US inflation looms
  • USD/TRY struggles for clear directions after snapping two-day downtrend trend previous day.
  • Corrective bounce in US Treasury bond yields defends US Dollar bulls but talks of Fed policy pivot weigh on prices.
  • An increase in the Turkish Current deficit probe Lira buyers ahead of US CPI.

USD/TRY treads water around 18.95 during early Monday in Europe. In doing so, the Turkish Lira pair seek clear directions amid mixed catalysts from Turkiye and the US. Also likely to restrict the pair’s moves could be the cautious mood ahead of the key US inflation data, namely the Consumer Price Index (CPI) for February.

It’s worth noting that a slump in the Turkish Current Account Balance for January, to $-9.849B versus $-5.91B, allowed the USD/TRY pair to print the first daily gains in three despite the broad US Dollar weakness.

That said, the US Dollar Index (DXY) dropped the most since mid-January as fears emanated from the Silicon Valley Bank (SVB) and the Signature Bank. fallout, despite the US authorities’ defense, put a floor under the greenback. Adding strength to the US Dollar rebound could be the recently firmer US Treasury bond yields.

US 10-year Treasury bond yields print mild gains of around 3.57%, after bouncing off the monthly bottom of 3.418%, whereas the two-year counterpart rebounds from the lowest levels since September 2022 to print mild gains of around 4.19% by the press time. It should be noted that the US two-year Treasury bond yields dropped the most since 1987 the previous day while the latest rebound could be a U-turn from the 200-DMA support ahead of important US data.

Alternatively, the recently downbeat concerns surrounding the Federal Reserve’s (Fed) policy pivot, especially after the recent US government efforts to rescue the SVB and the Signature Bank seem to challenge the USD/TRY traders amid a sluggish session.

“The US Fed Fund Futures have priced in a 69% chance of a 25-bps hike at next week's Fed policy meeting, with a more than 30% probability of a pause,” said Reuters while also adding that the market last week was poised for a 50-bps increase prior to the SVB collapse. On the same line could be the CME as it mentioned, “Traders see 33% chance Fed holds rates this month, market pricing shows rate cuts expected as early as June.”

Looking forward, the US CPI will be important for intraday directions but major attention should be given to the risk catalysts and the yields. That said, the US CPI is likely to ease to 6.0% YoY versus 6.4% prior while CPI ex Food & Energy may slide to 5.5% YoY from 5.6% prior.

Technical analysis

Unless providing a daily close below the late 2021 peak surrounding 18.40, the USD/TRY bulls remain in the driver’s seat.

04:31
Asian Stock Market: Turmoil continues as SVB collapse-impact not faded yet, oil drops to $74.00
  • Asian stocks have continued turmoil as the impact of the SVB collapse would take time in healing.
  • An upbeat Chinese Retail Sales data might propel hopes of economic recovery after the rollback of lockdown curbs.
  • Soaring fears of a recession in the US economy has pushed oil price lower to $74.00.

Markets in the Asian domain have continued their downside momentum as investors are dumping equities after the collapse of Silicon Valley Bank (SVG). Investors have drastically cut their exposure to banks and financial lenders in hopes that the delinquency costs could fuel further.

Higher rates from global central banks have accelerated interest obligations and a failure on them has resulted in a pile-up of Non-Performing Assets (NPAs). Bloomberg reported that the combined market capitalization of the Morgan Stanley Composite Index (MSCI) World Financials Index and MSCI Emerging Markets (EM) Financials Index has dropped about $465 billion in three days.

S&P500 futures have attempted a recovery in the Asian session after a subdued Monday, however, the 500-US stocks basket futures are failing to fuel optimism in the Asian indices.

At the press time, Nikkie225 nosedives 2.16%, ChinaA50 tumbles 0.76%, Hang Seng plunges 1.86%, while Nifty50 remains flat.

Japanese stocks have been witnessing a sheer sell-off after ex-Bank of Japan (BoJ) Governor Haruhiko Kuroda maintained a dovish policy amid an absence of recovery in the overall demand and the wages distributed. The street is expecting that novel BoJ Governor Kazuo Ueda would provide a roadmap of an exit from the Yield Curve Control (YCC) and the ultra-loose monetary policy, however, the process would be gradual as anticipated.

Chinese equities are likely to dance to the tunes of Wednesday’s Retail Sales (Feb) data. The economic data is expected to expand by 3.5% against a contraction of 1.8% displayed prior. An upbeat Retail Sales data might propel hopes of economic recovery in the Chinese economy after the rollback of lockdown curbs.

Global stocks will remain on tenterhooks ahead of the release of the United States Consumer Price Index (CPI) data, which is expected to increase at a reduced pace on a monthly basis.

The oil price has dropped to near $74.00 on hopes that the US economy will face a recession as higher rates by the Federal Reserve (Fed) are resulting in a dismal outlook.

 

04:17
USD/INR Price News: Rupee licks its wounds near 82.40 ahead of India, US inflation cues
  • USD/INR pares the biggest daily gains in seven weeks amid sluggish session.
  • Indian equity rout, downbeat inflation data drowned Rupee the previous day despite broad US Dollar weakness.
  • Fed pivot chatters highlight US CPI for February as SVB-led market fears ease.

USD/INR sticks to mild losses near 82.35 as it consolidates the biggest daily gain in nearly two months during early Tuesday. In doing so, the Indian Rupee pair takes clues from the receding fears of hawkish Fed rate moves amid a sluggish session ahead of the US Consumer Price Index (CPI) data for February.

Interest rate futures hint at the US Federal Reserve’s (Fed) policy pivot, especially after the recent fallout of the Silicon Valley Bank (SVB) and the Signature Bank. “The US Fed Fund Futures have priced in a 69% chance of a 25-bps hike at next week's Fed policy meeting, with a more than 30% probability of a pause,” said Reuters while also adding that the market last week was poised for a 50-bps increase prior to the SVB collapse. On the same line could be the CME as it mentioned, “Traders see 33% chance Fed holds rates this month, market pricing shows rate cuts expected as early as June.”

On the other hand, the US Treasury bond yields’ corrective bounce should have underpinned the USD/INR pair’s run-up but couldn’t as the Indian Rupee (INR) pares the previous day’s gains, mainly levied due to the downbeat India Inflation data and the equity market rout.

That said, India Consumer Price Index (CPI) for February, rose 6.44% YoY versus 6.35% expected and 6.52% prior. The receding inflation fears raised concerns that the Reserve Bank of India (RBI) may refrain from further rate hikes now that the Fed bets suggest a policy pivot. Even so, the Indian equities failed to cheer receding hopes of hawkish monetary policy actions amid the equity rout during early Monday. It should be noted that India’s benchmark BSE Sensex dropped to the five-month low the previous day before printing mild gains of around             58,300 by the press time.

On a macro level, traders witnessed heavy bond buying the previous day as the US banking regulators rushed to defend the SVB and the Signature Bank after their fallouts. US banking regulators undertook joint actions to tame the risks emanating from SVB and Signature Bank during the weekend.  While announcing the plan, US President Joe Biden noted on Monday that investors in those banks will not be protected and reminded that "no one is above the law." However, the US President also vowed to take whatever action was needed to ensure the safety of the US banking system, per Reuters.

Amid these plays, Wall Street closed mixed and the S&P 500 Futures print mild gains at the latest.

Moving forward, India’s WPI inflation for February will precede the US CPI for the said month to direct immediate USD/INR moves. Given the latest blow to the hawkish Fed bets, any more softening of the US inflation numbers could allow the pair to recall the sellers.

Technical analysis

A daily closing beyond the convergence of the 100-DMA and 50-DMA, around 82.15-10 by the press time, keeps USD/INR bulls hopeful.

 

04:07
Gold price drifts lower after making a fresh high at $1,915 for March, with eyes on yields
  • Gold price looks comfortable above the $1,900 mark and obeying the yields. 
  • SVB fallout and underlying financial dents receding bets for a 50-bps Fed hike.
  • Stronger US CPI reading can put Fed into doom and gloom.


XAU/USD took a breather after three days of successive rallies. Gold price is slightly down on the day after hitting a fresh monthly high around the $1,915 mark, amidst falling US Treasury bond yields.

Gold is commonly recognized as an asset that has an inverse correlation with US Treasury (UST) bond yields, but its correlation with real UST bond yields is stronger than with nominal yields.

Emphasizing the inter-market correlation, fallouts of Silicon Valley Bank (SVB), and speculations around the deteriorating US financial system are prompting the market participants to scale out the bets for an aggressive rate-hiking path from Federal Reserve (Fed). UST yields have been gravitating toward the downside upon dwindling bets of a 50 basis point rate hike from the Fed at the March 22 meeting.

Following the fallout of SVB and muted Fed commentary, investors are likely to remain indecisive until the Fed provides more clarity on the spread of the contagion in the US banking sector.

Starting from Monday, many market forecasters have shifted their view on the Fed rate hiking plan and it seems the market is not finding a consensus view for the March FOMC meeting.

One argument favors the Fed’s rate hiking cycles on the urge of “whatever it takes to do” to tame inflation. On the other side, the Fed cannot keep going on when underlying dents from the financial system are cultivating. 

Meanwhile, the US economic calendar features the US Consumer Price Index (CPI) data for February. Attention will focus on the sticky service-led inflationary portion, which has the Fed’s focus.

In general, service-the led inflationary part has irreversibility and most of the developed economies are heavily dependent on the service sector, therefore, the Fed will be in a tricky situation if the inflation reading comes in higher than expected.

Levels to watch

 

03:54
GBP/USD extends downside to near 1.2150 ahead of UK Employment and US Inflation GBPUSD
  • GBP/USD has corrected further to near 1.2150 as the safe-haven appeal improves.
  • The street is expecting Fed chair Jerome Powell to look for a smaller rate hike or halt the rate-tightening spell.
  • a higher jobless rate and lower employment bills figure would delight the BoE.

The GBP/USD pair has stretched its correction to near 1.2150 in the Asian session. The corrective move from the round-level resistance of 1.2200 has extended as anxiety among investors is soaring ahead of the release of the United Kingdom labor market data and United States Consumer Price Index (CPI) figures.

S&P500 futures have added more gains as investors are digesting the collapse of Silicon Valley Bank (SVC), portraying an increase in the risk appetite specifically for equities. Maintenance of caution is highly advised as investors have cut their exposure to lenders from New York to Japan dramatically. Bloomberg reported that the combined market capitalization of the Morgan Stanley Composite Index (MSCI) World Financials Index and MSCI Emerging Markets (EM) Financials Index has dropped about $465 billion in three days.

The US Dollar Index (DXY) is struggling to stretch its recovery towards 104.00 as the SVB collapse has limited the odds of higher rates announcement by the Federal Reserve (Fed). The street is expecting Fed chair Jerome Powell to look for a smaller rate hike or halt the rate-tightening spell. Meanwhile, the alpha offered on the 10-year US Treasury yields has rebounded further to 3.57%.

Investors are awaiting the release of the US inflation, which could be a major trigger for the USD Index. Analysts at Credit Suisse expect “Core CPI inflation to remain steady at 0.4% MoM in February, causing the YoY reading to tick down to 5.5%. Energy and food prices are likely to moderate, with headline inflation also coming in at 0.4% MoM. A reading in-line with our expectations would be uncomfortably high for the Fed, but still consistent with gradual disinflation this year.”

On the Pound Sterling front, the release of the UK Employment data will be of significant importance. As per the consensus, the Claimant Count Change (Feb) will drop by 12.4K, lower than the former release of 12.9K. Three-month Unemployment Rate is expected to increase to 3.8% from the prior release of 3.7%.

The major catalyst would be the Average Earnings data, which is expected to decline to 5.7% vs. the prior release of 5.9%. A slowdown in employment bills and a higher jobless rate would decelerate the pace of galloping inflation, which might delight Bank of England (BoE) Governor Andrew Bailey and other policymakers.

 

03:22
Natural Gas shy from $2.70 despite USD Index attempts recovery, demand worries deepen
  • Natural Gas has turned lackluster after a vertical movement as the USD Index has rebounded from 10350.
  • The demand for natural gas might witness a bumpy road as industrial demand would decline due to higher rates from the Fed.
  • The period between Winter and Summer in the US remains weak for Natural Gas demand.

Natural Gas futures have turned sideways after a perpendicular recovery to near $2.70 in the Asian session. The upside bias in natural gas has been propelled by the weak US Dollar Index (DXY) broadly. Natural Gas futures looks shy near 2.70$ as the USD Index has demonstrated a recovery move to near 103.90 as investors are getting anxious ahead of the release of the United States Consumer Price Index (CPI) data.

The demand for natural gas is expected to witness a bumpy road as industrial demand is set to decline due to higher rates from the Federal Reserve (Fed). The street is expecting that planned rate hikes by Fed chair Jerome Powell will push the US economy into a recession ahead.

 Meanwhile, Winter is almost near the end and summer has not arrived yet. Therefore, demand for residential purposes to warm household areas will remain weak. Also, power companies have less dependency on natural gas as households won’t need much electricity to utilize for running air conditioners.

What has infused fresh blood into the Natural Gas prices is the recent sell-off in the USD Index. This week, the major focus for the action in the Natural Gas futures will be on the inventories data reported by US Energy Information Administration (EIA), scheduled every Thursday.

Going forward, investors are keenly awaiting the release of the US inflation data for fresh consensus. As per the projections, the headline CPI could decline to 6.0% from the former release of 6.4%. And, the core inflation that excludes oil and food prices is expected to trim marginally to 5.5% vs. the prior release of 5.6%.

 

03:01
USD/CAD Price Analysis: Recovery remains elusive below 1.3790 hurdle USDCAD
  • USD/CAD clings to mild gains after bouncing off short-term key technical supports.
  • Convergence of 50-SMA, one-month-old ascending trend line restricts immediate downside.
  • Horizontal area comprising early January lows adds to the downside filters.
  • Descending resistance line from Friday, bearish MACD signals challenge Loonie pair buyers.

USD/CAD bulls struggle to keep the latest rebound from a one-week low around 1.3750 during early Tuesday. Even so, the Loonie pair sellers have a tough road on the south before retaking control as the quote consolidates the biggest daily slump in a month.

That said, the pair bounced off early January tops the previous day, as well as portrayed a sustained recovery from the one-month-old ascending support line and the 50-SMA.

However, the bearish MACD signals and the Loonie pair’s inaction raises doubts on the quote’s further upside.

Also challenging the USD/CAD bulls is a downward-sloping resistance line from Friday, close to 1.3790 at the latest.

Even if the quote manages to remain firmer past 1.3790, it needs to remain firmer past the 1.3800 round figure ahead of challenging the monthly high surrounding 1.3860.

On the flip side, a convergence of the 50-SMA and aforementioned support line from the mid-February, around 1.3700 at the latest, appears the short-term key support for the USD/CAD sellers to watch during the quote’s pullback.

Should the quote drops below 1.3700 mark, the horizontal area comprising levels marked since early January, close to 1.3685-80, may gain the USD/CAD bear’s attention as a break of which won’t hesitate to challenge the monthly low marked in the last week around 1.3555.

USD/CAD: Four-hour chart

Trend: Limited upside expected

 

02:39
USD/JPY tracks corrective bounce in yields to aim for 134.00 ahead of US inflation data USDJPY
  • USD/JPY picks up bids to rebound from one-month low, snaps three-day downtrend.
  • Markets consolidate SVB-led moves amid mixed concerns surrounding Fed.
  • US two-year Treasury bond yields pare the biggest daily loss since October 1987.
  • Receding fears of US financial crisis contagion, optimism for China recovery also favor Yen buyers.

USD/JPY clings to mild gains around 133.70 as it snaps a three-day downtrend with a bounce off the one-month low marked the previous day. In doing so, the Yen pair cheers the market’s consolidation of the moves induced by the US actions to tame fears emanating from the Silicon Valley Bank (SVB) and the Signature Bank. Adding strength to the quote’s rebound could be the recent recovery in the US Treasury bond yields after the previous day’s bond market havoc.

That said, the US 10-year Treasury bond yields seesaw around 3.56%, after bouncing off the monthly bottom of 3.418%, whereas the two-year counterpart rebounds from the lowest levels since September 2022 to print mild gains of around 4.05% by the press time. It should be noted that the US two-year Treasury bond yields dropped the most since 1987 the previous day while the latest rebound could be a U-turn from the 200-DMA support ahead of important US data.

It should be noted that the traders witnessed heavy bond buying the previous day as the US banking regulators rushed to defend the Silicon Valley Bank (SVB) and the Signature Bank after their fallouts. US banking regulators undertook joint actions to tame the risks emanating from SVB and Signature Bank during the weekend.  While announcing the plan, US President Joe Biden noted on Monday that investors in those banks will not be protected and reminded that "no one is above the law." However, the US President also vowed to take whatever action was needed to ensure the safety of the US banking system, per Reuters.

However, the policymakers from the UK and Europe, as well as some of the Asia-Pacific majors, have ruled out the odds of witnessing a financial crisis at home after the SVB saga, which in turn might have also pleased the USD/JPY buyers of late.

Alternatively, receding hawkish Fed bets and downbeat US inflation expectations join the market’s jittery status amid the US-China tensions and SVB talks seem to challenge the USD/JPY buyers.

Also read: US inflation expectations drop to five-week low ahead of CPI release

Above all, the Yen pair traders seem to position themselves for the US CPI. However, major attention should be given to the risk catalysts and the yields. That said, the US CPI is likely to ease to 6.0% YoY versus 6.4% prior while CPI ex Food & Energy may slide to 5.5% YoY from 5.6% prior.

Also read: US Inflation Preview: Five scenarios for trading the Core CPI whipsaw within the SVB storm

Technical analysis

Although the 50-DMA restricts immediate downside of the USD/JPY pair around 132.50, the recovery moves remain elusive unless staying below the previous support line from early February, around 136.20 by the press time.

 

02:33
Japan’s Suzuki: Closely watching how SVB case may impact Japan's economy, financial conditions

Japanese Finance Minister Shunichi Suzuki said on Tuesday that they are “closely watching how the Silicon Valley Bank (SVB) case may impact Japan's economy and financial conditions.”

Additional comments

Underlying financial markets show risk aversion

Striving to gather information on Silicon Valley Bank as not in a position to grasp individual US banks' financial conditions.

Japan's financial system remains stable as a whole.

No comment on any impact on BoJ policy.

Don't expect big financial fallout from SVB failure on Japan's economy, financial system.

Nothing decided yet on Japan-South Korea financial cooperation.

Market reaction

USD/JPY shrugs off these above comments, as it capitalizes from a broad US Dollar rebound amid a recovery in the US Treasury bond yields. The pair is adding 0.36% on the day to trade at 133.65, as of writing.

02:30
Commodities. Daily history for Monday, March 13, 2023
Raw materials Closed Change, %
Silver 21.8 4.56
Gold 1913.93 1.44
Palladium 1472.74 6.09
02:26
USD/MXN Price Analysis: Bulls appear well-set to cross 100-DMA hurdle around 19.00
  • USD/MXN remains sidelined after refreshing five-week top the previous day.
  • Upbeat oscillators, clear upside break of previous key resistance line keep Mexican Peso pair buyers hopeful.
  • Sellers need validation from 18.65 to retake control.

USD/MXN grinds near 18.90 as bulls take a breather after a three-day rebound from the multi-month low. Even so, the Mexican Peso (MXN) pair remains on the bull’s radar as it defends the previous day’s bullish signals.

That said, a daily closing beyond a downward-sloping resistance line from late December 2022, now immediate support around 18.85, favors USD/MXN bulls. Adding strength to the upside bias is the bullish MACD signals and the firmer RSI (14) line, not overbought.

It should be noted that the USD/MXN pair failed to cross the 100-DMA hurdle, near 19.10 at the latest, during the previous day’s run-up. However, the aforementioned bullish catalysts hint at the pair’s sustained break of the key resistance.

Even so, the 61.8% Fibonacci retracement level of the pair’s December 2022 to March 2023 downside, close to 19.15, can act as an extra filter to the north. Following that, the previous monthly top surrounding 19.30 appears the last defense of the USD/MXN bears.

Meanwhile, the pair’s pullback moves appear unimpressive till staying beyond the aforementioned resistance-turned-support line near 18.85.

However, major attention should be given to a convergence of the 50-DMA and 38.2% Fibonacci retracement, near 18.65, to convince the USD/MXN bears to refresh the multi-month low marked the last week around 17.90.

USD/MXN: Daily chart

Trend: Further upside expected

 

02:09
S&P 500 Futures, Treasury bond yields pause SVB-induced moves on Fed concerns, US inflation eyed
  • Market sentiment remains dicey as traders reassess fears for financial markets emanating from SVB, Signature Bank fallouts.
  • S&P 500 Futures rebound from nine-week low, snapping three-day downtrend with mild gain.
  • US Treasury yields pause recent south-run at monthly lows, two-year bond coupons pare the biggest daily fall since 1987.
  • US CPI could offer intraday directions as talks surrounding Fed policy pivot make rounds.

The risk profile remains mildly positive during early Tuesday, following a volatile day that caused the bond market havoc amid fears of a financial crisis. That said, the sentiment also improves as hawkish Fed bets and inflation expectations retreat ahead of the key US Consumer Price Index (CPI) data for February.

While portraying the mood, the S&P 500 Futures prod the three-day downtrend while posting mild gains around 3,900, bouncing off the lowest levels since early January marked the previous day. On the same line, the US 10-year Treasury bond yields seesaw around 3.56%, after bouncing off the monthly bottom of 3.418%, whereas the two-year counterpart rebounds from the lowest levels since September 2022 to print mild gains of around 4.05% by the press time. It should be noted that the US two-year Treasury bond yields dropped the most since 1987 the previous day while the latest rebound could be a U-turn from the 200-DMA support ahead of important US data.

Global markets witnessed heavy bond buying the previous day as the US banking regulators rushed to defend the Silicon Valley Bank (SVB) and the Signature Bank after their fallouts. US banking regulators undertook joint actions to tame the risks emanating from SVB and Signature Bank during the weekend.  While announcing the plan, US President Joe Biden noted on Monday that investors in those banks will not be protected and reminded that "no one is above the law." However, the US President also vowed to take whatever action was needed to ensure the safety of the US banking system, per Reuters.

It should be noted that the policymakers from the UK and Europe, as well as some of the Asia-Pacific majors, have ruled out the odds of witnessing a financial crisis at home after the SVB saga, which in turn might have allowed the traders to pare the previous day’s market moves.

Apart from consolidating the previous day’s moves, as well as positioning themselves for the key US data, the recent retreat in the US Treasury bond buying and the hawkish Fed bets also allows the market sentiment to improve. Earlier in the day, “the US Fed Fund Futures have priced in a 69% chance of a 25-bps hike at next week's Fed policy meeting, with a more than 30% probability of a pause” said Reuters while also adding that the market last week was poised for a 50-bps increase prior to the SVB collapse. On the same line could be the CME as it mentioned, “Traders see 33% chance Fed holds rates this month, market pricing shows rate cuts expected as early as June.”

It should be noted that the slump in the US inflation expectations also favors consolidation of Monday’s moves. The US inflation expectations per the 10-year and 5-year breakeven inflation rates from the St. Louis Federal Reserve (FRED) dropped to the lowest levels since early February. In doing so, the inflation precursors dropped for the consecutive fifth and sixth days for the five-year and 10-year gauges respectively.

Moving forward, the US CPI will be important for intraday directions but major attention should be given to the risk catalysts and the yields. That said, the US CPI is likely to ease to 6.0% YoY versus 6.4% prior while CPI ex Food & Energy may slide to 5.5% YoY from 5.6% prior.

Also read: Forex Today: Dollar extends slide as markets reconsider Fed’s next move

02:02
USD/CHF Price Analysis: Bulls showing their cards for a significant correction USDCHF
  • USD/CHF bulls are in the market with sights on a significant correction. 
  • The bulls need to get above the first hurdle as being the hourly resistances. 

USD/CHF is attempting to recover from the lows of 0.9108 with highs of 0.9135 in sight while being 0.14% up on the day so far. As illustrated in the following charts, the bulls have moved in but there could be some resistance that needs to give in order to see anything of the likes in a significant correction. 

USD/CHF H1 charts

The hourly charts above show resistance both horizontal and dynamic that is coming under pressure in the Asian session. 

USD/CHF daily charts

The daily chart sees the price meeting support and if the bulls commit, the resistance should be blown out of the water in a bullish surge into the Fibonacci scale as illustrated above. 

 

01:46
EUR/USD Price Analysis: Bulls lead the pair above the 1.0700 mark, amid the US Dollar weakness EURUSD
  • The softer US Dollar is boosting the four-day rally, with eyes on the 50-DMA.
  •  Receding aggressive Fed tightening bets keep EUR/USD elevated.
  •  US CPI to provide the next directional bias for EUR/USD.

EUR/USD price took a sharp rebound from February's low at 1.0537 and since then it has been aggressively heading higher. The softer US Dollar is driving the EUR/USD above the 1.0700 psychological mark, which is a multi-tested round figure mark on the daily chart.  

The pair is flirting around the 50-Daily Moving Average (DMA), which is currently pegged around the 1.0727 level, at the time of writing, keeping a lid on further price momentum. 

Given the fact that the upside for the pair is likely to remain intact until the US Dollar is subdued on the back of falling US Treasury bond yields, any convincing break above the 50-DMA will likely lead the pair toward the next support zone and a key psychological level at 1.0800.

On the other side, any downside for EUR/USD will be limited around the previous day’s low at 1.0645, which is also coinciding with 21-DMA. The Relative Strength Index (RSI) is hovering around the soft ’50s, suggesting further upside room for EUR/USD.

Dwindling bets for aggressive rate hiking from Federal Reserve (FED) amid the Silicon Valley Bank’s (SVB) fallout is likely to keep the US Dollar trajectory to the downside, for time being. The next upcoming event, the US Consumer Price Index (CPI), will be key to watch for the pair, as it provides a narrative before heading into the March 22, FOMC meeting.  

EUR/USD: Daily chart 

01:44
AUD/USD slides to 0.6650 as markets pare SVB-led moves ahead of US inflation AUDUSD
  • AUD/USD consolidates the biggest daily gains in nine weeks amid sluggish markets.
  • Traders take a breather following the SVB-infused volatility; US dollar licks its wounds ahead of US CPI.
  • Downbeat Aussie NAB data, China fears also allowed Aussie bulls the much-needed break.

AUD/USD drops to 0.6650, down 0.25% on a day, as traders position themselves for the US inflation data during early Tuesday. The quote’s latest weakness could also be linked to the market’s fears surrounding China and Russia, as well as downbeat data from Australia. That said, the Aussie pair rose the most since early February on the previous day amid broad-based US Dollar weakness.

National Australia Bank’s (NAB) sentiment indices for February marked downbeat figures and allowed the AUD/USD bulls to take a breather. It should be noted that the NAB Business Conditions dropped to 17 from 18, versus 21 market forecasts, whereas the NAB Business Confidence nosedived to -4.0 compared to 0.0% analysts’ estimates and 6.0% prior.

Elsewhere, US Treasury bond yields print mild gains after falling heavily the previous day. On the same line is the latest minor upside by the S&P 500 Futures. With this, the US 10-year Treasury bond yields seesaw around 3.56%, after bouncing off the monthly bottom of 3.418%, whereas the two-year counterpart bounces off the lowest levels since September 2022 to print mild gains of around 4.05% by the press time.

Apart from the market positioning and NAB data, the AUD/USD traders may also have traced the US inflation expectations to rally the previous day, before marking the latest loss. That said, the US inflation expectations per the 10-year and 5-year breakeven inflation rates from the St. Louis Federal Reserve (FRED) dropped to the lowest levels since early February. In doing so, the inflation precursors dropped for the consecutive fifth and sixth days for the five-year and 10-year gauges respectively.

Above all, the recent rebound in the US Treasury bond yields allowed the AUD/USD pair to consolidate the gains marked due to the US banking regulators’ defense of the Silicon Valley Bank (SVB) and the Signature Bank.

Even so, the blow to the Federal Reserve (Fed) bets seems to challenge the AUD/USD bears ahead of the key US Consumer Price Index (CPI) data for February. As per the latest updates from Reuters, the US Fed Fund Futures have priced in a 69% chance of a 25-bps hike at next week's Fed policy meeting, with a more than 30% probability of a pause. The market last week was poised for a 50-bps increase prior to the SVB collapse, reported Reuters. On the same line could be the CME as it mentioned, “Traders see 33% chance Fed holds rates this month, market pricing shows rate cuts expected as early as June.”

Looking ahead, the US CPI will be important for intraday directions but major attention should be given to the risk catalysts and the yields. That said, the US CPI is likely to ease to 6.0% YoY versus 6.4% prior while CPI ex Food & Energy may slide to 5.5% YoY from 5.6% prior.

Technical analysis

Failure to cross a five-week-old descending resistance line, around 0.6700 by the press time, directs AUD/USD bears towards the monthly low of near 0.6565.

 

01:42
NZD/USD drops to near 0.6200 as USD Index rebounds ahead of US Inflation NZDUSD
  • NZD/USD has slipped below 0.6200 amid a recovery in the USD Index.
  • Investors have started ignoring the volatility associated with the SVB collapse.
  • As per the estimates, the NZ economy contracted by 0.2% in the fourth quarter.

The NZD/USD pair has extended its correction below 0.6220 in the Asian session. The Kiwi asset is expected to display sheer volatility ahead as investors are getting anxious ahead of the release of the United States Consumer Price Index (CPI) data.

After a surprise jump in the number of payrolls generated in the US economy in the month of February and a less-than-anticipated jump in the Average Earnings, an increase in inflationary pressures cannot be ruled out. However, the consensus shows a decline in the headline CPI to 6.0% from the former release of 6.4%. And, the core inflation that strips off oil and food prices is expected to soften marginally to 5.5% vs. the prior release of 5.6%.

The US Dollar Index (DXY) has shown a recovery to near 103.80, which seems like a pullback move after a vertical sell-off. Economists at MUFG Bank believe that only a big surprise upside in the US inflation could lift the US Dollar ahead. S&P500 futures are showing a decent recovery as investors are ignoring the volatility linked to Silicon Valley Bank (SVB) collapse. Also, the demand for US government bonds has dropped, which has led to a rebound in the 10-year US Treasury yields above 3.55%.

On the New Zealand Dollar front, investors are awaiting the release of the Gross Domestic Product (GDP) (Q4). According to the estimates, the NZ economy has contracted by 0.2% vs. a growth of 2.0% witnessed in the third quarter. The annual GDP (Q4) has expanded by 3.3%, lower than the prior expansion of 6.4%.

 

01:18
USD/CNY fix: 6.8949 vs. estimate of 6.8933

In recent trade today, the People’s Bank of China (PBOC) set the yuan at 6.8949 vs. the estimation of at 6.8933.

About the fix

China maintains strict control of the yuan’s rate on the mainland.

The onshore yuan (CNY) differs from the offshore one (CNH) in trading restrictions, this last one is not as tightly controlled.

Each morning, the People’s Bank of China (PBOC) sets a so-called daily midpoint fix, based on the yuan’s previous day's closing level and quotations taken from the inter-bank dealer.

01:17
Silver Price Analysis: Key EMAs prod XAG/USD bulls at three-week high near $22.00
  • Silver price eases around monthly top after rising the most since early November 2022.
  • Convergence of 50-day, 100-day EMAs challenge XAG/USD bulls.
  • Bullish MACD signals, sustained bounce off multi-day-old support line keep Silver buyers hopeful.

Silver price (XAG/USD) slides to around $21.70 as bulls take a breather following the biggest daily jump in more than four months. With this, the bright metal traces the Gold price while probing XAG/USD bulls ahead of the key US inflation data.

Also read: Gold Price Forecast: XAU/USD retreats on sluggish Treasury yields ahead of United States inflation

That said, a convergence of the 50-day and the 100-day Exponential Moving Average (EMA) challenges the immediate upside of the Silver price near $21.90. Adding strength to the stated resistance is the 38.2% Fibonacci retracement level of the metal’s run-up from September 2022 to February 2023.

It should, however, be noted that the XAG/USD rebound from the 5.5-month-old upward-sloping trend line, around $20.00 by the press time, joins the bullish MACD signals to keep the Silver buyers hopeful.

Given the quote’s successful break of the $21.90 hurdle, as well as sustained trading beyond the 22.00 round figure, Silver bulls can aim for the 23.6% Fibonacci retracement level surrounding $23.00. Following that, a rally toward the 2023 peak surrounding $24.65 can’t be ruled out.

On the contrary, the Silver price pullback can aim for the 50% and 61.8% Fibonacci retracements, respectively near $21.10 and $20.25 at the latest, before challenging the previously mentioned multi-day-old support line, close to $20.00 by the press time.

It’s worth observing, though, that the XAG/USD weakness below $20.00 could make it vulnerable to testing the November 2022 low of near $18.80. During the fall, the monthly bottom surrounding $19.90 can act as a validation point.

Silver price: Daily chart

Trend: Further upside expected

 

01:16
GBP/USD Price Analysis: Bulls about to show their commitments GBPUSD
  • GBP/USD´s M-formation as a reversion pattern could see price drawn to the neckline.
  • GBP/USD is meeting a 78.6% Fibonacci level of the prior bullish impulse.

As per the prior analysis, GBP/USD Price Analysis: Bears seek a break of structure while price slows below 1.2200, the bears are staying the course in a drift to the downside ahead key US data today. 

GBP/USD prior analysis

It was stated that the price was still very much on the front side of the trend. However, the analyses also noted that the hourly micro trendline was under some pressure while a break of the 1.2140 structure was needed to cement the bearish case for the day ahead. 

GBP/USD update

The price has fallen into a key territory where demand might be expected:

The M-formation is a reversion pattern that tends to see the price drawn to the neckline. The price is also meeting a 78.6% Fibonacci level of the prior bullish impulse which may see a deceleration in the downside for the hours ahead. Resistance at the neckline near 1.2175 could see a rejection and a subsequent downside continuation to fully test the bull´s commitments in the 1.21s. 

01:15
US inflation expectations drop to five-week low ahead of CPI release

Markets remain dicey during early Tuesday as traders await the key US Consumer Price Index (CPI) data for February, as well as taking a breather after the volatile start of the week due to the Silicon Valley Bank (SVB) and Signature Bank’s rescue.

While the recent fears of financial market distress in the US weighed on the Treasury bond yields and the US Dollar, the sudden shift in the hawkish Federal Reserve (Fed) bets and the US inflation expectations keep the greenback bears hopeful.

That said, the US inflation expectations per the 10-year and 5-year breakeven inflation rates from the St. Louis Federal Reserve (FRED) dropped to the lowest levels since early February. In doing so, the inflation precursors dropped for the consecutive fifth and sixth days for the five-year and 10-year gauges respectively.

To note the figures, the 10-year inflation expectations per the aforementioned measure plummeted to 2.24% by the end of Monday’s North American trading session, after refreshing a four-month high of 2.52% earlier in March.

On the same line, the five-year US inflation expectations slumped to the lowest levels since February 02, around 2.26% as per the latest readings.

Also read: US Dollar Index: DXY licks SVB-inflicted wounds as Fed bets dwindle, US inflation, yields in focus

00:58
EUR/JPY eyes more gains above 143.00 as SVB Bank collapse fails to impact hawkish ECB bets EURJPY
  • EUR/JPY is looking to scale above 143.00 for a fresh upside as hawkish ECB bets are intact.
  • The absence of recession in the Eurozone economy might postpone the achievement of the 2% inflation target.
  • The release of the BoJ minutes will provide a detailed explanation behind the stable monetary policy.

The EUR/JPY pair has gradually corrected below 143.00 in the Tokyo session. The cross is expected to resume its upside journey as the catastrophic collapse of the Silicon Valley Bank (SVB) has failed to fade the hawkish bets for the European Central Bank (ECB).

ECB President Christine Lagarde is expected to continue favoring a 50 basis point (bps) interest rate hike this week as the Eurozone economy looks set to avoid recession this year despite multiple headwinds.

A report from the Erste Bank Research team dictates “This Winter Interim Forecast lifts the outlook for growth and slightly lowers the inflation projections. Growth for 2022 is now estimated at 3.5% in the European Union (EU). Gross Domestic Product (GDP) is projected to expand by 0.8% in 2023 and 1.6% in 2024. Headline inflation is forecast to fall from 9.2% in 2022 to 6.4% in 2023 and 2.8% in 2024 in the EU.

Eurozone economic calendar will lack economic events this week, however, the release of the Industrial Production data could produce some power-pack events ahead.

As per the consensus, monthly Industrial Production (Jan) is expected to disclose an expansion by 0.5% against a contraction of 1.1% released earlier. Annual economic data is expected to scale higher by 0.2% vs. a contraction of 1.7% released in the same period a year ago.

On the Japanese Yen front, investors are keeping an eye on the release of the Bank of Japan (BoJ) monetary policy minutes. The release of the BoJ minutes will provide a detailed explanation behind the unchanged monetary policy by ex-BoJ Governor Haruhiko Kuroda and what is in the basket for novel BoJ Governor Kazuo Ueda.

 

00:42
Gold Price Forecast: XAU/USD retreats on sluggish Treasury yields ahead of United States inflation
  • Gold price eases from five-week high to pare the biggest daily gains in four months.
  • United States Treasury bond yields lick their wounds ahead of US inflation data and probe XAU/USD bulls.
  • SVB fallout weigh on Federal Reserve bets as interest rate futures suggest nearness to policy pivot.
  • US CPI may offer immediate directions but risk catalysts, yields are crucial for clear view.

Gold price (XAU/USD) fades the previous day’s upside momentum, the strongest in four months, as it makes rounds to the five-week high surrounding $1,910 with eyes on the United States Consumer Price Index (CPI). In doing so, the XAU/USD snaps a three-day winning streak as the US Treasury bond yields seesaw after a notable slump.

Gold price struggles as United States Treasury bond yields dribble

Gold price managed to post the biggest daily jump since November 2022 as the United States Treasury bond yields nosedived the previous day, mostly inactive of late. That said, the US two-year Treasury bond yields marked the biggest daily slump since October 1987 by declining more than 13.0% on a day as US banking regulators rushed to defend the Silicon Valley Bank (SVB) and the Signature Bank. Further, the US 10-year Treasury bond yields also plummeted to the monthly low amid a sudden shift in the market’s Fed bets due to the financial market risks emanating from the stated banks.

It should be noted that the US 10-year Treasury bond yields seesaw around 3.56%, after bouncing off the bottom of 3.418%, whereas the two-year counterpart bounces off the lowest levels since September 2022 to print mild gains around 4.05% by the press time.

With this, the yield curve inversion shrinks a bit and allows the US Dollar Index (DXY) to lick its wound. That said, the US Dollar Index (DXY) began the week’s trading on a back foot by printing a three-day south-run while declining the most in two months on Monday, mildly bid near 103.68 at the latest.

Federal Reserve bets lure XAU/USD buyers

Although the latest pause in the US Treasury bond yields’ south-run test the Gold price, recent data on the Interest Rate Futures suggests that the Federal Reserve’s hawkish bias run out of steam, which in turn keeps the XAU/USD bulls hopeful. That said, the US Fed Fund Futures have priced in a 69% chance of a 25-bps hike at next week's Fed policy meeting, with a more than 30% probability of a pause. The market last week was poised for a 50-bps increase prior to the SVB collapse, reported Reuters. On the same line could be CME mentioned, “Traders see 33% chance Fed holds rates this month, market pricing shows rate cuts expected as early as June.”

US CPI, risk catalysts in focus

Moving on, the pre-data anxiety may restrict immediate XAU/USD moves and can allow the bullion to pare some of the latest gains. However, hopes of the US inflation data providing any major market move are lesser considering the latest fallouts of the US banks and the trader’s attention on the yields. It should be noted, however, Forecasts suggest the US CPI is likely to ease to 6.0% YoY versus 6.4% prior while CPI ex Food & Energy may slide to 5.5% YoY from 5.6% prior.

Also read: US Inflation Preview: Five scenarios for trading the Core CPI whipsaw within the SVB storm

Gold price technical analysis

A clear upside break of a downward-sloping trend line from early February allowed the Gold price to extend the run-up towards crossing the 200-bar Simple Moving Average (SMA).

The XAU/USD run-up also took clues from the bullish signals from the Moving Average Convergence and Divergence (MACD) indicator. However, the overbought conditions of the Relative Strength Index (RSI) line, placed at 14, triggered the quote’s pullback from the support-turned-resistance line from January 17, close to $1,915.

Even so, the XAU/USD pullback remains elusive unless dropping back below the 200-SMA level of near $1,860.

That said, a one-month-old previous resistance line, close to $1,847, precedes the 50-SMA of around $1,840 and an upward-sloping trend line from late February, near $1,812, to act as the final defenses of the Gold buyers.

Overall, Gold price occupies a notable space on the bull’s radar as markets brace for the key United States inflation data.

On the flip side, the Gold price upside past the $1,915 immediate hurdle increases the odds of witnessing an extended rise toward January’s peak surrounding $1,960.

Overall, Gold price occupies a notable space on the bull’s radar as markets brace for the key United States inflation data.

Gold price: Four-hour chart

Trend: Further upside expected

 

00:31
USD/JPY juggles above 133.00, downside seems likely as Fed to continue soft rate hike spell USDJPY
  • USD/JPY is hovering above 133.00 as investors await US CPI for fresh impetus.
  • Fed might ignore a bumper rate hike ahead amid the SVB fallout.
  • The release of the BoJ minutes will provide the likely monetary policy action ahead.

The USD/JPY pair is displaying back-and-forth action above 133.00 in the Asian session. The asset has shown a recovery move from 132.50 but is struggling to extend gains amid the absence of strength in the US Dollar Index (DXY) after the Silicon Valley Bank (SVB) fallout. The loss of confidence of the market participants in the banking system of the United States has trimmed the safe-haven appeal dramatically.

S&P500 futures have recovered marginal losses recorded on Monday, indicating mild optimism in the market sentiment. The USD Index is aiming to recapture the immediate resistance of 103.80, however, the upside looks restricted amid expectations of the continuation of a smaller rate hike spell by the Federal Reserve (Fed). The rollback of 50 basis points (bps) rate hike expectations by the street has impacted the USD Index.

Meanwhile, the demand for US government bonds is narrowing again, which could be a recovery move from safe-haven assets. The 10-year US Treasury yields have rebounded to above 3.56%.

On Tuesday, the release of the United States Consumer Price Index (CPI) data would be a major trigger for the FX domain. Analysts at Wells Fargo expect “Another monthly increase of 0.4% in the overall CPI in February, which would put the annual rate at 6.0%. We still see inflation set to grind lower, but the process is likely to be bumpy and take time. Despite some directional improvement over the past couple of quarters, prices are still growing well above the Fed's 2% target, and the tight labor market suggests that there are still inflationary pressures that could forestall a full return to 2% inflation.”

Meanwhile, Japan Chief Cabinet Secretary Hirokazu Matsuno said on Monday, they don't see a big impact on Japan's financial companies from the SVB fallout. He further added, “Japan’s financial institutions have sufficient liquidity, capital base overall. “

Going forward, the minutes of the Bank of Japan's (BoJ) last monetary policy meeting conducted by ex-BoJ Governor Haruhiko Kuroda will be keenly watched, which is scheduled for Wednesday.

 

00:30
Australia National Australia Bank's Business Conditions below expectations (21) in February: Actual (17)
00:30
Australia National Australia Bank's Business Confidence registered at -4, below expectations (0) in February
00:30
Stocks. Daily history for Monday, March 13, 2023
Index Change, points Closed Change, %
NIKKEI 225 -311.01 27832.96 -1.11
Hang Seng 376.05 19695.97 1.95
KOSPI 16.01 2410.6 0.67
ASX 200 -35.9 7108.8 -0.5
FTSE 100 -199.77 7548.63 -2.58
DAX -468.5 14959.47 -3.04
CAC 40 -209.17 7011.5 -2.9
Dow Jones -90.5 31819.14 -0.28
S&P 500 -5.83 3855.76 -0.15
NASDAQ Composite 49.95 11188.84 0.45
00:25
WTI price drifts lower from the $76 mark, amid shifting financial dynamics and global growth concern
  • WTI price is heading lower despite the softer US Dollar.
  • Global growth concerns start to pick up on the back of the SVB fallout.
  • An inflationary outlook will be key to watching for WTI price directions.

West Texas Intermediate (WTI) price is trading flat on Tuesday amid a softer US Dollar and muted risk sentiment. Touching briefly on Monday’s price action, WTI has fallen to the low of $72.31 level on the back of a strong risk-off environment ignited by Silicon Valley Bank (SVB) and Signature Banks’ fallout. Since then, the WTI price has rebounded sharply in the wake of the Federal Reserve’s backstop plan.  After hitting the high around the $76 mark on Monday, the WTI price again drifted lower, since the US Dollar dynamics took a shift.

Higher borrowing cost across the globe is denting the financial system and raising growth concerns. WTI price is in the corrective decline since the China reopening story is not looking optimistic, as the populous country lowered its growth forecast to 5.0%.

The SVB fallout is adding to the global growth concern, as it is perceived as an indication of the first dent among many in the financial system. Businesses are struggling with their repayments amid rising borrowing costs and eventually, it will result in a slowing demand.

Despite tighter production and many voluntary cuts from the Organization of the Petroleum Exporting Countries (OPEC), the WTI price is struggling to surpass the $80 mark. 

Oil prices are impacted by a combination of factors like the US Dollar, inflation, OPEC, and global growth concerns. Adding all of the aforementioned factors, it is hard to justify the directional character of oil prices but seems that the oil market is taking its cue from growth concerns mainly.

It will also be important to watch the OPEC stance on lower oil prices since these countries are facing a struggle to keep oil above the oil prices to desired $80 mark.

Levels to watch.

 

00:15
Fed funds furtures are repricing the Fed significantly

Fed funds futures have rallied that shows that traders see a 33% chance that the Federal Reserve holds rates this month while the market pricing shows rate cuts are expected as early as June.

The reverberations SVB’s collapse in the US has hit global financial markets significantly.  A new Bank Term Funding Program will offer loans from the Federal Reserve of up to one year to depository institutions, backed by United States Treasuries and other assets these institutions hold. Consequently,  the US Dollar index, or DXY, which measures the greenback vs. a basket of major currencies, has dropped heavily benefitting the Yen. DXY has printed a fresh low of 103.484, tracking the fall in short-dated Treasury yields. The two-year note was paying as low as 3.997% at one point in New York trade early doors on Monday. The US yield dropped hard from the week´s highs of 4.534% in the biggest one-day drop since the financial crisis of 2008, on track for its biggest three-day decline since the Black Monday crash of 1987.

Amid this financial uncertainty, US February Consumer Price Index data will be out tonight and the consensus is for core CPI to slow just 0.1ppt to 5.5% YoY, analysts at ANZ Bank noted, saying, ´´that would indicate progress in bringing inflation back to target is proving very slow.´´

´´Combined with a hot February Nonfarm Payrolls print, and we retain our forecast for a 25bp FFR hike next week (and a peak of 5.5% in June). Financial stability risks are front of mind for markets, but it’s important to note that bringing inflation back to target is fundamental to securing economic and financial stability,´´ the analysts argued. 

US Dollar update

The H4 charts, above, see the price meeting current old support that could see supply come in from within the Fibonacci scale´s 38.2% retracement near 103.80. 

00:15
Currencies. Daily history for Monday, March 13, 2023
Pare Closed Change, %
AUDUSD 0.66658 0.85
EURJPY 142.91 -0.2
EURUSD 1.07279 0.26
GBPJPY 162.278 0.27
GBPUSD 1.21819 0.72
NZDUSD 0.62173 1
USDCAD 1.37287 -0.5
USDCHF 0.9118 -0.4
USDJPY 133.21 -0.44
00:09
US Dollar Index: DXY licks SVB-inflicted wounds as Fed bets dwindle, US inflation, yields in focus
  • US Dollar Index bears take a breather after posting the biggest daily fall in two months.
  • US two-year Treasury bond yields marked the biggest slump since October 1987, Fed bets reverberate.
  • US CPI for February may offer intermediate directions but risk catalysts are more important for clear directions.

US Dollar Index (DXY) seesaws around 103.65-70, after posting the biggest daily slump since mid-January, as US Dollar traders reassess the previous day’s volatile start of the week amid the US banking regulators’ defense of the Silicon Valley Bank (SVB) and the Signature Bank.

It’s worth noting that the greenback’s gauge versus six major currencies bear the burden of the downbeat US Treasury bond yields as the SVB fallout highlights the US banking sector’s fragility even as the policymakers stay ready to tame financial market risk. The fears of the market’s ability to stay afloat, as well as without any financial crisis, seem to weigh on the US Treasury bond yields and the Fed fund futures.

That said, US two-year Treasury bond yields marked the biggest daily slump since October 1987 by declining more than 13.0% on a day as US banking regulators rushed to defend the Silicon Valley Bank (SVB) and the Signature Bank. Further, the US 10-year Treasury bond yields slumped to the monthly low amid a sudden shift in the market’s Fed bets due to the financial market risks emanating from the stated banks.

On the other hand, the US Fed Fund Futures have priced in a 69% chance of a 25-bps hike at next week's Fed policy meeting, with a more than 30% probability of a pause. The market last week was poised for a 50-bps increase prior to the SVB collapse, reported Reuters. On the same line could be CME mentioned, “Traders see 33% chance Fed holds rates this month, market pricing shows rate cuts expected as early as June.”

Amid these plays, plays Wall Street closed mixed while the US Treasury bond yields lick their wounds ahead o the key US Consumer Price Index (CPI) data for February. Forecasts suggest the US CPI is likely to ease to 6.0% YoY versus 6.4% prior while CPI ex Food & Energy may slide to 5.5% YoY from 5.6% prior. Although the US inflation numbers could help better understand the market’s recent shift in the Fed bets, mainly due to the last week’s upbeat US jobs report, major attention should be given to the yields and the market’s risk catalysts for better directions.

Also read: US Inflation Preview: Five scenarios for trading the Core CPI whipsaw within the SVB storm

Technical analysis

A daily closing below the 50-DMA support, around 103.45 by the press time, becomes necessary for the US Dollar Index (DXY) bears to keep the reins.

 

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