FOREX: Greenback Weakness Extends, USDCHF Slides Below 0.8900
Mar-04 18:36
- Tariff considerations have been a primary driver of FX sentiment on Tuesday, with Mexican peso & Canadian dollar weakness persisting across the session. Their depreciation may have been somewhat offset by broader dollar weakness, as the ongoing stagflationary concerns regarding the US economy also gain traction. This has placed the Ice Dollar index at its lowest level since December 09, printing a low of 105.88.
- The DXY break to new yearly lows coincided with several key technical levels giving way across the majors. For EURUSD, spot has broken a cluster of resistance between 1.0525/33 which has been the key focus in recent sessions. The pair was given an additional late boost from Germany’s conservative leader, who provided details on changing the debt brake, prompting EURUSD to extend to ~1.0575. A close at current levels would highlight an important technical break, providing the foundation for a stronger bullish short-term theme, initially opening 1.0630, the Dec 6 high.
- USDJPY also broke below 148.60 support, a level that had been building in significance. Spot traded as low as 148.10 but has bounced back closer to 149.00 ahead of the APAC crossover. Today’s breach does strengthen the current bearish condition and signal scope for a more protracted move lower to 146.95, a Fibonacci retracement.
- USDCHF is down 0.86% on the session, standing out in G10. In recent sessions, both 20- and 50-day exponential moving averages have moved into a bear-mode, signalling scope for further downside. Support levels remain scant, with a 50% Fibonacci retracement point (drawn from 2024 low – 2025 high) at 0.8788, the immediate technical level of note.
- Lower US yields and equities prompted further pressure on AUDJPY, which briefly extended its 3-week slide to 5.6%, reaching a low of 91.86 and narrowing the gap to key support ~90.20. Australian GDP data is due on Wednesday, before Swiss CPI. US ADP and ISM Services PMI are also scheduled.
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FED: Powell To Deliver Semi-Annual Testimony In Mid-Feb
Jan-31 21:48
The House Financial Services Committee's website confirms that Fed Chair Powell will deliver his semi-annual Monetary Policy Report on Wednesday Feb 12 at 1000ET.
- The Semi-annual testimony will be closely eyed as Powell's first scheduled appearance since the January FOMC - and the House testimony on the 12th is the same day as the release of January CPI (and the week after nonfarm payrolls and benchmark revisions) so will be of particular interest.
US OUTLOOK/OPINION: Nonfarm Payrolls, Revisions Highlight Next Week In US Macro
Jan-31 21:39
Friday’s nonfarm payrolls for January highlights the US macro week. It's a highly anticipated report that could alter recent trends considering it will include annual benchmark revisions along with seasonal factors and an updated birth-death model.
- The preliminary estimate for the benchmark revision pointed to the level of payrolls being some 818k lower than currently reported for back in March 2024. There’s a broad expectation from what we can gather that the hit seen next week won’t be as large but it could still be significant. We also watch the seasonal revisions closely, as whilst they should have a zero-sum impact over the calendar year, we’ve noted some particularly favorable seasonal factors in recent months that have biased seasonally adjusted jobs growth higher.
- With these considerations in mind, the early days of the Bloomberg consensus points to nonfarm payrolls growth of 150k after a solid three-month average of 170k. Note that the unemployment rate from the separate household survey won’t be affected by these revisions, having already seen its own seasonal factor revisions last month. A population control will complicate month-on-month changes in the levels of employment and unemployment but shouldn’t be significant for the rate, which is seen unchanged at 4.1% having surprised lower with 4.09% in December. The recent high is technically 4.23% in November having first popped to 4.22% back in July.
- Two other special mentions for the week are: 1) rare remarks from FOMC Vice Chair Jefferson speaking on the economic outlook and monetary policy late on Tuesday with both text and Q&A, having last spoke on Oct 9. 2) ISM services on Wednesday after its priced paid series jumped 5.9pts to 64.4 in December for the highest since Feb 2023.
- Away from macro but still material, the coming week brings the US Treasury's quarterly refunding process - our preview is here.
