PLN: Zloty Trades On Firmer Footing Ahead Of NBP Decision
EUR/PLN has moved away from earlier session lows printed at PLN4.6813 and last changes hands -37 pips at PLN4.6882. Should bears manage to force their way through Mar 1 low of PLN4.6620, they would take aim at Dec 26/Jun 21 lows of PLN4.6270/62. On the flip side, bulls initially look for gains towards Feb 22 high of PLN4.7654.
- POLGBs have advanced this morning and last trade 9.2-10.6bp richer across the curve, with some further compression in 10-year POLGB/Bund yield differential seen today. Benchmark WIG20 equity index printed its best levels in nearly three weeks and now sits ~0.3% higher on the session.
- Prime Minister Mateusz Morawiecki yesterday vowed to propose legislation to bring off-budget spending under one roof in a bid to improve the transparency of public finances. State-controlled Bank Pekao commented that the plan may boost liquidity in Poland's domestic bond market.
- The Monetary Policy Council of Poland's central bank is locked in a meeting to decide on interest rates, with the outcome set to be announced tomorrow. The rate-setting panel is widely expected to keep the main monetary policy parameters unchanged. More details can be found in our comprehensive preview.
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USDCAD TECHS: Key Support Remains Exposed
- RES 4: 1.3751 High Nov 4
- RES 3: 1.3705 Dec 16 and the bull trigger
- RES 2: 1.3665 High Jan 6
- RES 1: 1.3472/3521 High Jan 31 / 19 and key short-term resistance
- PRICE: 1.3387 @ 16:34 GMT Feb 3
- SUP 1: 1.3262 Low Feb 2
- SUP 2: 1.3226 Low Nov 15 and bear trigger
- SUP 3: 1.3205 61.8% retracement of the Aug 11 - Oct 13 rally
- SUP 4: 1.3131 0.764 proj of the Oct 13 - Nov 15 - Dec 16 price swing
USDCAD bearish trend conditions remain intact despite the Friday rally and the pair remains closer to recent lows. A continuation would strengthen bearish conditions and signal scope for weakness towards 1.3226, the Nov 13 low and the bear trigger. Moving average studies are in a bear mode position, highlighting a downtrend. On the upside, the pair needs to clear 1.3521, the Jan 19 high, to signal a reversal.
AUDUSD TECHS: Pullback Extends, But Still Looks Corrective in Nature
- RES 4: 0.7245 2.00 proj of the Nov 21 - Dec 13 - Dec 20 price swing
- RES 3: 0.7202 High Jun 9
- RES 2: 0.7172 1.764 proj of the Nov 21 - Dec 13 - Dec 20 price swing
- RES 1: 0.7158 High Feb 2
- PRICE: 0.6963 @ 16:32 GMT Feb 3
- SUP 1: 0.6930 Low Feb 3
- SUP 2: 0.6872 Low Jan 19 and a key support
- SUP 3: 0.6873 50-day EMA
- SUP 4: 0.6722 Low Jan 6
The AUDUSD uptrend remains intact and short-term weakness is considered corrective, although Friday’s dip could signal a more protracted move lower. The print above resistance at 0.7142, Jan 26 high this week, confirms a resumption of the uptrend and maintains the bullish price sequence of higher highs and higher lows. Note that moving average studies are in a bull-mode position, reflecting positive market sentiment. The focus is on 0.7172 next, a Fibonacci projection.
US TSYS: FED Remains in Play Post-NFP/ISM Data
Off lows, Tsy futures remain broadly weaker after this morning's surge in job gains for January of +517k, 2.75x larger than the mean estimate of 188k (and well over 320k high estimate survey of 77 economists by Bbg). Tsy 30YY at 3.6288% +.0840, yield curves extend inversion: 2s10s -6.590 at -78.151%).
- Unemployment rate sank a tenth to 3.4%, the lowest since 1969, the Bureau of Labor Statistics reported Friday. November and December payrolls figures were also revised 71,000 higher.
- Meanwhile, ISM services was far stronger than expected in January at 55.2 (cons 50.5), back at the 55.5 in Nov via December's 49.2. The largest increase since Jun'20 followed the largest downward surprise since 2008.
- Short end rates gapped lower as markets reverted back to more (possibly larger) rate hikes ahead - but moderated somewhat in the second half. Fed funds implied hike for Mar'23 at 22.5bp (vs. 23.3bp post-ISM), May'23 cumulative 37.5bp to 4.957%, Jun'23 41.5bp to 4.997%, terminal climbs to 4.980% in Jun'23.
- Goldman Sachs' chief economist Jan Hatzius tweeted “this morning’s report provides strong evidence of continued economic expansion in January. We continue to expect two more 25bp fed funds rate hikes in March and May, and we continue to expect no rate cuts in 2023."
