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Started by PocketOption, Feb 15, 2023, 11:44 am

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Markets Hopeful Fed Pivot is Near

Investors either hope for a slow CPI report for January data, for the Fed’s cycle to end soon enough or both. So Monday saw risk returning as markets looked towards the Fed’s pivot while neglecting increasing geopolitical tensions. Key US indices rose partly due to corporate earnings, and the dollar fell, giving FX some space for respite.


Key Factors for Today

  • Risk back on as markets look towards Fed pivot

  • Gold hits 1-month low despite geopolitical escalation

  • Europe cuts inflation outlook in surprising forecast

  • BOE continues to worry about entrenched inflation

  • Kuroda replacement confirmed, and he’s leaning dovish

  • RBA’s Lowe to be replaced before term

Gold at 1-Month Low Despite Geopolitical Tensions

Geopolitics are back to the fore with tensions between US and China; US and Canada shot down 4 “objects” at high altitudes, presumed to be balloons. China accused the US of floating ten balloons across its airspace. Taiwan said it has had frequent balloons crossing its airspace. Despite the safehaven call, gold was seen trading 0.66% lower ahead of the CPI release later today. The dollar was also down some 0.34%. Gold reached a 1-month low at $1850/oz, with $1833/oz being the next significant support. Upwardly, resistance is at $1866/oz and 1875/oz.

EC Cut Inflation and Raised GDP Outlooks, Supporting EUR

The EC published its winter forecast, where it cut its inflation outlook for 2023 and 2024, saying peak inflation likely passed. It also raised the EU-19 GDP growth forecast for 2022 to 3.5% from 3.2%, and 2023 sees growth of 0.9%, up from 0.3%. EU ambassadors were gathering to discuss a 10th sanctions package on . Fulled by risk sentiment, EUR/USD advanced 0.44% at $1.0725, with the next resistance at $1.0767. Yesterday’s open at $1.0677 remains a critical floor.

BOE Focus on Inflation Aids Cable Rise

BOE’s Jonathan Haskel repeated the line that the bank had to avoid the worst outcome of inflation, saying he would focus on how data evolves while emphasising wanting to prevent “second-round” inflation effects. Cable rose 0.68%, primarily pushed up by the weakness in the dollar, recapturing $1.2150. $1.2225 remains a firm resistance going up, with $1.20 being the short-term base.

Japan Confirms Proposal of ‘Dovish’ BOJ Head

The Japanese government confirmed previous press reports that it would nominate former BOJ official and current University of Tokyo professor Kazuo Udea as governor of the BOJ. The appointment is expected to be confirmed without issue with a majority in Parliament. Following press speculation he might be the new BOJ, Ueda provided a TV interview in which he said the current BOJ policy was appropriate. USD/JPY spiked 1.15% higher on Monday to form a double top shy off the 133.00 handle. It then retraced its steps back to 132.42, with the next support at 131.42. A break past the peak could bring the 134.00 handle back in focus. The pair was probably influenced by Japan’s downbeat GDP figures too.

Possible New RBA Governor

Press reports circulated that the government might replace Philip Lowe as head of the RBA following the conclusion of the review next month. Lowe’s term ends in September. Australia’s PM will appear in Parliament over the next couple of days, and some clarity will likely be provided. Aussie was boosted by risk, though, closing in the 70-cent hurdle, where it might fund a local ceiling. $0.6918 is Monday’s open and a near-term base for bears.

On The Docket

  • UK Claimant Count and Average Earnings

  • EU Employment Change and GDP

  • US Core and Headline CPI Inflation

  • API Crude Oil Stock Change

  • OPEC Monthly Report

Fx 1-Day Relative Performance (USD)

  • Japanese Yen 0.36% higher

  • Pound and Aussie 0.08% higher

  • Loonie and kiwi down 0.19% and 0.06%

  • Swissy and euro 0.17% and 0.22% higher

  • Gold and silver 0.46% and 0.55% higher

  • Crude and brent 0.74% and 0.35% down

  • Natural gas up by 0.75%

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