Financial data to move the markets 

The USD remained relatively unchanged yesterday, allowing for other currencies to take the initiative. US stockmarkets were in the reds yesterday, as the Fed’s hawkish talk tended to intensify market worries for a possible overtightening of the Fed’s monetary policy, while the rise of US yields to their highest level since November, with the 2-year yield reaching 4.5% and tended to also contribute to the drop of US stock market indexes. It was characteristic that Richmond Fed President Barkin was reported yesterday stating that it is important that the Fed has to  “stay the course”, ie keep hiking rates in order to ensure that inflation slows back down to the bank’s 2% target. North of the US border, CAD traders tend to focus on the release of Canada’s employment data for January, and forecasts show that the employment change figure is expected to drop from December’s stellar 104k to 15k and the unemployment rate to tick up to 5.1%. Despite an easing of the Canadian employment market’s tightening the unemployment rate remains at low levels and the employment market seems to remain in a healthy state that could provide some grounds for BoC to hike rates should it be necessary. On the other hand though should the actual rates and figures meet their respective forecasts a slight disappointment could weaken the CAD somewhat. Across the Atlantic, hawkish talk from BoE Governor Bailey tended to support the sterling, as the Governor expressed his concerns about the risks of a persistently high inflation in the UK economy. As for financial releases we note that UK’s GDP rate slowed down for Q4, remaining in the positives as expected on a year-on-year level, yet the worrying part was that the rate on a month-on-month level showed a wider contraction than expected catching analysts’ eyes. Overall, we tend to maintain our worries for the cost-of-living crisis tormenting the UK economy, while we note that a continuation of BoE’s monetary policy tightening could have an adverse effect on growth. Last but not least in Japan, news just emerged that the Japanese government is considering to appoint former BoJ policy board member and economist Kazuo Ueda as the next governor of BoJ. The report by Nikkei.com also stated that the Government had initially approached current BoJ Deputy Governor Amamiya, yet he steadily refused the appointment, note that JPY strengthened at the release against USD.

GBP/USD was on the rise yesterday temporarily breaking the 1.2115 (R1) resistance line, before dropping below it once again. Since the upward movement initiated since the 7^a. of February was abruptly interrupted, we tend to switch our bullish outlook in favour of a sideways bias initially. Should the bulls be in charge we may see the pair breaking the 1.2115 (R1) resistance line and aim for the 1.2270 (R2) level. Should the bears take over, we may see cable aiming if not breaking the 1.1925 (S1) support line.

USD/CAD edged higher yet remained in a wide sideways motion as it respected the 1.3465 (R1) resistance line. We tend to maintain our bias for the sideways motion to continue between the 1.3465 (R1) and the 1.3335 (S1) levels, yet Canada’s employment data may alter the pair’s direction. Should a selling interest be expressed by the market, we may see USD/CAD dropping and breaking the 1.3335 (S1) support line. Should the pair find extensive fresh buying orders along its path we may see the pair breaking the 1.3465 (R1) resistance line and aim for the 1.3570 (R1) resistance level.  

Other highlights for the day:

During today’s European session we note the acceleration of Norway’s CPI rates for January and note the release of the Czech Republic’s CPI rates for the same month later on. In the American session, we note from the US, the preliminary University of Michigan consumer sentiment for February. On the monetary front, we note that Fed Governor Waller and Philadelphia Fed President Harker are scheduled to speak. No major financial releases are expected during Monday’s Asian session.    

GBP/USD H4 Chart

Support: 1.1925 (S1), 1.1740 (S2), 1.1595 (S3)

Resistance: 1.2115 (R1), 1.2270 (R2), 1.2465 (R3)

USD/CAD H4 Chart

Support: 1.3335 (S1), 1.3230 (S2), 1.3140

Resistance: 1.3465 (R1), 1.3570 (R2), 1.3685 (R3)

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