US: FED Reverse Repo Operation

• RES 4: 1.3808 High Nov 34
• RES 3: 1.3795 2.0% 10-dma envelope
• RES 2: 1.3705 Dec 16 and the bull trigger
• RES 1: 1.3665 High Feb 24
• PRICE: 1.3508 @ 16:29 GMT Mar 3
• SUP 1: 1.3515 Low Feb 22
• SUP 2: 1.3476 50-day EMA
• SUP 3: 1.3400 Round number support
• SUP 4: 1.3358 Low Feb 16

USDCAD bulls remain in the driver’s seat for now and short-term pullbacks are considered corrective, Sights are on the key near-term resistance at 1.3705, Dec 16 high. A clear break of this hurdle would strengthen bullish conditions and clear the way for a test of the 1.3800 handle. The support to watch lies at the 50-day EMA. It intersects at 1.3476 and a clear break would be seen as a short-term bearish development.

Tsys finish near late session highs, yield curves bull flattening - completely reversing the prior session move: 2s10s -6.376 at -89.840. Bonds lead the rally early, similar drift in EGBs with no new inflation metric surprises overnight.

• Tsys pared gains briefly after higher than expected ISM Services composite of 55.1 (54.5 est), components: Business: 56.3; Prices Paid: 65.6 (-2.2); New Orders: 62.6 (+2.2); Employment 54.0 (+4.0).
• Tsys quickly rebounded with Bonds to early Wednesday levels (pre-ISM prices paid driven sell-off). Short end, however, lagged the move: Fed funds implied hike steady for Mar'23 at 31.2bp, but gained in May'23 cumulative 59.4bp (+2.0) to 5.170%, Jun'23 77.0bp (+2.1) to 5.345%. Fed terminal climbed to 5.480% high in Oct'23, but receded to 5.450% at the close.
  
  
• Salient events later in the week:
  • Fed Chair Powell semi-annual mon-pol report to Congress, Tue 1000ET
  • Fed Chair Powell report to Congress: House Fncl Srvcs, Wed 1000ET
  • ADP employment data for Feb (106k prior, 200k est), Wed 0815ET
  • NFP employment data for Feb (517k prior, 200k est), Fri 0830ET

• RES 4: 0.6989 High Feb 15
• RES 3: 0.6921 High Feb 20
• RES 2: 0.6857 Former trendline support drawn from Oct 13 2022 low
• RES 1: 0.6784 High Mar 1
• PRICE: 0.6750 @ 16:28 GMT Mar 3
• SUP 1: 0.6695 Low Mar 01
• SUP 2: 0.6664 50% retracement Oct - Feb bull cycle
• SUP 3: 0.6629 Low Dec 20 and a key support
• SUP 4: 0.6585 Low Nov 21

AUDUSD’s February downtrend remains intact with price trading closer to its recent lows. The recent consolidation appears to be a bear flag - reinforcing the downtrend. The recent breach of both the 200-dma and 100-dma, reinforced bearish conditions and note too that the pair has cleared a trendline support drawn from the Oct 13 2022 low. The focus is on 0.6629, the Dec 20 low and the next key support. Resistance to watch is at 0.6857.