Forex Today: Dollar firm after Powell, ahead of NFP

Here is what you need to know on Thursday, March 9: 

It the second day of testimony, FOMC Chairman Jerome Powell did not surprise markets, after he left the door wide open to a 50 basis points rate hike at the March meeting, and the US Dollar jumped to monthly highs. After a brief retreat on Wednesday, the Greenback erased losses. If Dollar’s momentum holds, a test of the recent highs during the Asian session seems likely. China will report inflation, and Japan a new estimate of Q4 GDP. 
In the US, Automatic Data Processing (ADP) reported that private sector employment rose by 242K in February, surpassing expectations of 200K. The US Bureau of Labor Statistics (BLS) revealed that January job openings reached 10.8 million, slightly higher than the market expectation of 10.6 million. The numbers continue to show a tight labor market, helping the US Dollar and supporting Fed’s hawkish tone. On Thursday, the weekly Jobless Claims report is due. Market participants await the Nonfarm payrolls on Friday and next week’s Consumer Price Index. 

Markets stabilized somewhat following Tuesday’s sell-off, but risk aversion dominates. US Treasury yields moved in tandem with the US Dollar, falling and then rebounding toward Tuesday’s highs. The US 10-year yield settled around 3.97%, and the 2-year rose back above 5%. 

EUR/USD rose to 1.0575, only to decline later below 1.0550. Despite mixed data from the Eurozone, market participants are looking to a higher terminal rate from the European Central Bank, supporting the Euro. 

GBP/USD remains under pressure, although it holds near, but above, the critical 1.1800 area. EUR/GBP is hovering around 0.8900. Bank of England’s Swati Dhingra called for a no change in interest rates.

USD/JPY posted a close above 137.00 but, at the same time, far from the daily high and below the 200-day Simple Moving Average. On Friday, the Bank of Japan will announce its decision on monetary policy. 

The Bank of Canada kept interest rates unchanged and signaled it will continue on pause. As a result, the Loonie fell across the board. USD/CAD rose to four-month highs above 1.3800. 

Reserve Bank of Australia Governor Philip Lowe said the central bank will be guided by incoming data to decide on another hike or a pause at the next monetary policy meeting. His comments echoed Tuesday’s monetary policy meeting. AUD/USD rebounded after hitting a fresh four-month low; however, it failed to hold above 0.6600 and remains under pressure.

Gold showed a strong negative correlation to Treasury yields and the DXY. XAU/USD remained above the critical $1,800, unable to stage a recovery. Silver settled around $20.00 after testing levels below that psychological mark. 

Gold Price Forecast: Bulls losing the battle, $1,800 at sight

Crude oil prices kept going south, hitting fresh weekly lows. Cryptocurrencies oscillated between gains and losses on Wednesday. Bitcoin is moving around $22,000, while Ethereum around $1,560.