GBP/CAD Long-Term Trend: Bullish Key Resistance Levels: 1.70452, 1.70825, 1.71125 Key Support Levels: 1.69750, 1.69508, 1.69185 Daily Chart: The price on the higher time frame has recently been in an uptrend after it tested a major support level of 1.66070 and bounced back. The pair has continued to break a few resistance levels which suggests …
S&P 500 futures have turned higher in the past hour, climbing from flat levels to +0.35%. The index closed at a record high of 5087 yesterday, fuelled by a 16% gain in Nvidia. Shares of the chipmaker are once again driving gains today, with shares up $20, or 2.5%, to $805 in the premarket.
There is some FOMO kicking in. This is looking like a market that wants a bubble and if that's what it wants, that's what it's going to get.
The US dollar is moderately lower today as the market sorts through another week of data and Fedspeak.
We heard from Fed Governor Waller in Asia-Pacific trading and he was candid as usual. He said the recent CPI report was a reminder that progress on inflation was not assured but once again emphasized seasonal factors as the likely driver. Waller said more data is needed to see if it's more signal that noise.
The Fed Governor said he still expects to ease policy this year and that several indicators suggest some slowing in growth. He wants to see "a couple more months" of inflation data to be sure January was a fluke.
The 'couple' commentary was also used by the Fed's Harker who said,
"I think we're close. Just give us a couple [of] meetings,"
The market is currently pricing in an 80% chance of a cut in June and 81 bps in cuts this year. That's basically in-line with the Fed's dot plot showing 75 bps in cuts this year.
I don't see the comments today as a significant departure from previous commentary but they put the focus on economic data and are a reminder that the Fed will cut rates if/when economic data turns lower.
WTI crude oil is down $1.40 to $77.21 today in large part due to the possibility of a ceasefire in Gaza over the weekend.
Israeli officials have arrived in Paris for talks that also include Egypt, Qatar and the United States.
In late January there was a proposed a six-week pause in the conflict and the release of between 200 and 300 Palestinian prisoners in exchange for 35 to 40 hostages held by Hamas.
Hamas has asked for a permanent ceasefire while Israel says there won't be one until there is "total victory" and the destruction of Hamas.
Hamas has said there is no change in their positions but bravado in public often fades during private negotiations.
The market is 95% priced for a first cut on June 6. You could make a compelling argument for an earlier cut given poor German economic data, including the -0.3% GDP number today.
For year end, 88 bps of cuts are priced in, virtually the same as the Fed.
Monday
Over the weekend
the PBoC left the MLF rate unchanged at 2.50% as expected.
The New Zealand
Services PMI jumped back into expansion in January:
The Canadian
January PPI came in line with expectations with a negative revision to the
prior figure:
Tuesday
The PBoC left the 1-year
LPR rate unchanged but delivered the biggest 5-year LPR cut on record:
The RBA released the
Minutes of its February Monetary Policy Meeting:
The Eurozone Q4
wages data eased slightly from the prior quarter:
The Canadian
January CPI missed expectations across the board by a big margin:
The US Leading
Economic Index (LEI) fell further in January:
"The U.S. LEI
fell further in January, as weekly hours worked in manufacturing continued to
decline and the yield spread remained negative," said Justyna Zabinska-La
Monica, Senior Manager, Business Cycle Indicators, at The Conference Board.
"While the declining LEI continues to signal headwinds to economic activity,
for the first time in the past two years, six out of its ten components were
positive contributors over the past six-month period (ending in January 2024).
As a result, the leading index currently does not signal recession ahead. While
no longer forecasting a recession in 2024, we do expect real GDP growth to slow
to near zero percent over Q2 and Q3."
Wednesday
The Australian Q4
Wage Index came in line with expectations:
Fed's Barkin
(neutral - voter) downplayed the January's inflation data as the Fed is still
confident on the disinflationary trend and wants to see more evidence of that
in the next couple of months:
BoE's Dhingra
(uber dove - voter) continues to support her case for rate cuts due to policy
lags and risks around overtightening:
ECB's Wunsch (hawk
- non voter in March) doesn't expect early rate cuts due to tightness in the
labour market and high wages:
The Federal
Reserve released the Minutes of its January Monetary Policy Meeting:
Nvidia reported
earnings for Q4 2023, and it beat expectations by a big margin:
Q4 2023 Nvidia (NVDA) earnings:
More:
"Accelerated
computing and generative AI have hit the tipping point. Demand is surging
worldwide across companies, industries and nations." - Co-founder & CEO,
Jensen Huang
Thursday
The Australian
February PMIs showed Manufacturing falling into back into contraction while
Services jumping back into expansion:
The Japanese
February PMIs showed both Manufacturing and Services falling further:
BoJ's Ueda
continues to sound optimistic on reaching their inflation target sustainably:
The Eurozone
February PMIs showed Manufacturing falling further and Services jumping back
into expansion:
The UK February
PMIs showed both Manufacturing and Services matching the prior readings:
The ECB released
the Accounts of its January Monetary Policy Meeting:
The Canadian
December Retail Sales beat expectations although the January advance reading
was soft:
The US Jobless
Claims beat expectations:
The US February PMIs
showed both Manufacturing and Services improving further:
Fed's Jefferson (neutral
- voter) continues to support a patient approach before cutting rates given the
uncertainty around inflation:
Fed's Harker (neutral -
non voter) echoed his colleague in cautioning against premature rate cuts:
Fed's Cook (dove - voter)
supports the current patient stance as she wants to see more data before
considering rate cuts.
Fed's Waller
(neutral - voter) stressed about being patient as the inflation progress could
stall with premature rate cuts:
Friday
The German IFO
improved slightly in February:
ECB's Holzmann
(uber hawk - voter) continues to stress patience regarding rate cuts:
ECB's Schnabel
(neutral - voter) sounded optimistic about achieving a soft landing although a
bit disappointed from weaker impact of monetary policy to the services sector:
ECB's Nagel (hawk
- voter) stressed about patience on the rate cuts front and suggested to think
about them only after Q2 data:
ECB's Lagarde
(neutral - voter) welcomed the Q4 2023 wage data and hinted that if the Q1 2024
figures will be good, the central bank will likely have the confidence to
deliver the first rate cut:
The
highlights for next week will be:
That's all folks.
Have a nice weekend!
Happy Friday.
It's a particularly happy one if you don't like economic data or central bankers. There is nothing on the US economic calendar today at all. That's been the theme for most of the week but thankfully, NVDA made it interesting.
I'm keeping an eye on falling oil prices and the latest tick lower in Treasury yields but it's tough to imagine there will be much drama today. S&P 500 futures are up 3 points.
Headlines:
Markets:
It was a quiet session as major currencies trended more sideways after some back and forth action in the dollar yesterday.
The greenback is marginally lower at the balance today but the ranges for the day are leaving a lot to be desired. The action in bonds and stocks are also largely muted, so that isn't really helping ahead of US trading. After the bustling gains in equities, we'll see if Wall Street can follow that up later in the day.
In terms of data, the German Ifo business survey reaffirmed sluggish sentiment in Europe's largest economy. Meanwhile, the final GDP reading served to confirm a technical recession for Germany in the second half of last year.
Besides that, ECB policymakers kept up with their pushback as they push markets to wait on the next set of wages data in May before perhaps proceeding with the first rate cut in June.
In the commodities space, oil is seen retreating again as price continues to struggle to get past the $78.40-70 mark for the time being. And gold is looking flattish around $2,023 in hanging on to its gains on the week.
USD
AUD
AUDUSD Technical Analysis -
Daily Timeframe
On the daily chart, we can see that AUDUSD broke
above the key resistance level
where we had also the red 21 moving average for confluence and
extended the rally to new highs. The buyers are targeting the next resistance
at 0.6623 but the momentum seems to be waning a bit. The sellers, on the other
hand, will likely wait for the price to reach the 0.6620 level before piling in
for new shorts or look for some key breakouts on the lower timeframes.
AUDUSD Technical
Analysis - 4 hour Timeframe
On the 4 hour chart, we can see that the price has
been diverging with the
MACD recently.
This is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we got pullbacks into the red 21 moving average where
the buyers kept on stepping in to target the 0.6620 level. The moving average
and the black trendline will now
be key levels for the sellers as they will need to break through them to gain
more conviction for a bearish trend and target new lows.
AUDUSD Technical Analysis -
1 hour Timeframe
On the 1 hour chart, we can see that we
have a resistance zone around the 0.6580 level which the buyers will need to
break to increase the bullish bets into the 0.6620 level. There is no important
data till next Tuesday, so the market will likely be driven by the technicals
until then.
This ties together with Nagel's earlier remarks here. And it reaffirms the narrative that the ECB wants to wait on the next set of wages data in May before acting in June at the earliest.
Page created in 0.034 seconds with 13 queries.