US February employment report in focus

The weakening of the USD continued Fed Chairman Powell reiterated that rate cuts are coming before US lawmakers yesterday. Today attention is expected to turn towards the release of the US employment report for February. The Non-Farm Payrolls figure is expected to drop to 200k, if compared to January’s 353k, the unemployment rate to remain unchanged at 3.7% and the average earnings growth rate to tick down to 4.4%yoy. Should the actual rates and figures meet their respective forecasts we may see the USD slipping as the drop of the NFP figure may disappoint traders, yet the fact that the unemployment rate is to remain unchanged at 3.7%, which is quite low, implying a relatively tight US employment market, may soften the blow. At the same time, such data are not expected to shift the Fed’s stance materially. Please note that the uncertainty for the actual rates and figures remains high, which may increase volatility at the time of the release. Also, the release is expected to have ripple effects beyond the USD, on US stock markets and gold and a possible easing of the US employment market’s tightness could support both gold and equities.

USD/JPY seems to have hit a floor at the 147.75 (S1) support line. Yet, despite the relative stabilisation of the pair, we tend to maintain a bearish outlook for the pair as the RSI indicator remains below the reading of 30, showcasing a strong bearish sentiment for the pair yet at the same time implying that the pair may be in oversold territory and may be ripe for a correction higher. Should the bears maintain control over the pair we may see it breaking the 147.75 (S1) line and aiming for the 145.90 (S2) level. Should the bulls take over, we may see the pair aiming if not breaching the 149.55 (R1) level and aiming for the 150.85 (S2) line.

At the same time with February’s US employment report, we also get Canada’s employment data for the same month. The employment change figure is expected to drop to 20.0k and the unemployment rate to tick up to 5.8%. Should the actual rates and figures meet their respective forecasts, we may see the CAD losing some ground, as the release would imply further easing of the Canadian employment market and could shift BoC’s monetary policy stance towards a more dovish aspect.      

USD/CAD dropped breaking the 1.3485 (R1) support line, now turned to resistance. We tend to maintain our bearish outlook as long as the downward trendline remains intact, yet the pair seems about to put it to the test. Also note that the RSI indicator dropped below the reading of 30, signaling a strong bearish sentiment for the pair, yet at the same time may imply that the pair is at oversold levels and a correction higher is possible. For the time being, we note that the price action is still above the lower Bollinger band, which implies that the bears have still some room to play. Should the bears renew their influence over the pair’s direction, we may see it breaking the 1.3365 (S1) line paving the way for the 1.3265 (S2) line. Should the bulls take over, we may see the pair breaking the downward trendline guiding it, signaling an interruption of the downward motion, breaking the 1.3485 (R1) line and taking aim of the 1.3610 (R2) level.      

Across the Atlantic the ECB remained on hold as was widely expected, keeping the refinancing rate at 4.5%. In the . and the ECB’s staff projections, inflation is expected now to slow down at a faster pace, which may enable the bank to proceed with a rate cut in June if not earlier, practically weighing on EUR yesterday.

دیگر نکات مهم امروز:

Today in the European session, we note the release of Germany’s industrial output for January, Sweden’s GDP rate for January and the Eurozone’s revised GDP rate for Q4. On Saturday we note the release of China’s inflation metrics for February, while during Monday’s Asian session, we get the revised GDP rate of Japan for Q4.

نمودار چهار ساعته دلار آمریکا / ین ژاپن

Support: 147.75 (S1), 145.90 (S2), 144.35 (S3)

Resistance: 149.55 (R1), 150.85 (R2), 151.90 (R3)

نمودار چهار ساعته دلار امریکا به دلار کانادا

Support: 1.3365 (S1), 1.3265 (S2), 1.3180 (S3)

Resistance: 1.3485 (R1), 1.3610 (R2), 1.3710 (R3)

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