FOREX: BBDXY Off Fed-Driven Lows, Slight Outperformance For Havens, Antips Lag
Mar-20 07:32
The broader USD has edged away from its Fed-driven lows.
- A reminder that we saw a combination of dovish repricing of the market-implied Fed rate path and related USD weakness after the Fed’s median dots were left unchanged, while there was also some focus on the downside adjustments to the GDP forecasts, a slower for longer approach to QT and with Powell suggesting that any tariff related increases in inflation would prove “transitory”.
- Still, the broader BBDXY has not retested Monday’s multi-month low as of yet, with a downtick in Asia-Pac cash equities and European equity futures providing support in more recent trade (e-minis are more resilient).
- Marginal outperformance seen for the havens against this backdrop (USD/JPY & USD/CHF a handful of pips lower on the day).
- Elsewhere, a downtick in the Australian employment change weighed on the Antipodeans, although our Asia team notes that the data likely overstated the extent of labour market weakness.
- AUD & NZD underperform G10 peers as a result but stick within multi-week ranges vs. the USD.
- Technical focus still remains on the upside for both pairs, AUD/USD & NZD/USD bulls still target this week’s respective highs (0.6391 & 0.5831).
- GBP/USD is lower, but that is a function of the wider USD move as opposed to the in line/slightly stronger-than-expected UK labour market data. EUR/GBP is little changed.
- Central banks dominate today, with the BoE (unchanged exp., eyes on vote split), SNB (markets and economists lean towards a cut, some focus on FX comms also apparent) and the Riksbank (unchanged exp.) all due.
- There will also be a raft of ECBspeak, U.S. weekly jobless claims data and EU ReArm talks to digest.
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UK DATA: AWE and PAYE Wage Data Both Softer - But RTI Data Showing Trend Lower
Feb-18 07:27
- Looking at the change in private regular AWE (which came in at 6.22%Y/Y in the 3-months to December, a little lower than the 6.29% pencilled in by the BOE's MPR), we think that the slight downside surprise was broadly equally attributable to both the fresh December data and a downward revision to November.
- There was no revision to the high 6.68%Y/Y for the single month October print, but the single month November print was revised down to 5.90%Y/Y from 6.12%Y/Y (leaving the 3-month November print at 5.89%Y/Y, down from 5.96%). The single month print for December was 6.09%Y/Y.
- However, looking at the PAYE RTI wage data, there was a more meaningful revision and continued downside momentum. The flash estimate for January 2025 came in at 5.01%Y/Y - that is the lowest since April 2022. December was revised down to 5.20%Y/Y from 5.41%. Like in the AWE data there is a temporary spike higher in the October print.
- As can be seen from the chart below, the HMRC PAYE RTI median pay growth continues to trend downwards.
EGB OPTIONS: Bund put fly
Feb-18 07:22
RXM5 127.50/126.50/125.50p fly, bought for 5.5 in 3k.
GOLD TECHS: Trend Needle Points North
Feb-18 07:19
- RES 4: $3000.0 - Psychological round number
- RES 3: $2996.9 - 4.0% 10-dma envelope
- RES 2: $2962.2 - 2.00 proj of the Nov 14 - Dec 12 - 19 price swing
- RES 1: $2942.7 - High Feb 11 and the bull trigger
- PRICE: $2913.8 @ 07:19 GMT Feb 18
- SUP 1: $2864.2 - Low Feb 12
- SUP 2: $2833.2 - 20-day EMA
- SUP 3: $2807.3 - Low Feb 4
- SUP 4: $2756.5 - 50-day EMA
A bull cycle in Gold remains in play and the yellow metal continues to hold on to the bulk of its recent gains. Fresh highs once again confirm a resumption of the uptrend and maintain the bullish price sequence of higher highs and higher lows. Moving average studies are in a bull mode position too, highlighting a dominant uptrend. Sights are on the $2962.2, a Fibonacci projection. The first key support to watch is $2833.2, the 20-day EMA.
