USDCAD is moving in an Ascending channel and the market has reached the higher low area of the channel
USDCAD – Canadian Dollar Rises as Fed Maintains Rates at 5.5%
The Canadian CPI Data for the month of February came at 2.8% it is well below forecast of 3.1% and 2.9% printed in previous month. The Bank of Canada may be rate cuts in the market if this data taken into consideration.
Canadian Dollar Reacts to Fed Decision; BoC Minutes Released
Following the Federal Reserve’s decision to keep rates at 5.5%, in line with expectations, the Canadian Dollar experienced volatility. Despite the Fed’s optimistic growth outlook and Chair Jerome Powell’s dismissal of persistent inflation misses, investors leaned towards riskier assets.
The Bank of Canada released its Summary of Deliberations just ahead of the Fed’s Economic Projections, revealing no significant new information from its latest rate meeting. Canadian Consumer Price Index (CPI) inflation moderated in February, with YoY CPI easing to 2.8% from 2.9%, surprising markets expecting a rise to 3.1%. This easing inflation suggests further rate hikes are unlikely, but not enough to prompt immediate rate cuts.
Daily Digest Market Movers: Canadian Dollar Strengthens Post-Fed
The Fed kept rates steady at 5.5%, meeting market expectations. Investors interpreted Powell’s comments as indicating potential rate cuts sooner rather than later, leading to increased risk appetite despite the Fed’s upward revisions to growth and interest rate forecasts.
The Fed’s Dot Plot forecasts one-year interest rates around 3.9%, down from the previous 4.6%, while long-term interest rate projections increased slightly to 2.6% from 2.5%.
The CME’s FedWatch Tool now suggests a 70% probability of a rate cut in June, up slightly from 65% prior to Powell’s press conference.
XAUUSD – GOLD Approaches All-Time Highs on Fed’s Dovish Stance
The Gold prices are hit all time high price of $2200 after the FED replied Dovish monetary policy settings yesterday. FED Powell words makes US Dollar weaker against Gold. He told we do not change our policy from two months data collections. Inflation is higher, Labor market is robust, Unemployment rate is lower, Benefits of Jobless claims is lower. FED Projections for 2024 GDP data is 2.1% from 1.4% projected in December month. Inflation reading stood at 4.6% for 2024. Overall FED Powell words and monetary policy outcome is not helpful for US Dollar strength in the market.
XAUUSD Gold price has broken the Descending triangle pattern in upside
Gold prices experienced a significant surge during the latter part of the North American trading session subsequent to the Federal Reserve’s decision to maintain interest rates at their current level. However, the Federal Funds Rates (FFR) projections for 2025 were revised upwards, prompting a bullish reaction in the gold market. At the time of reporting, the XAU/USD currency pair exhibited notable volatility, fluctuating within the range of $2170 to $2180, with gains exceeding 1%.
The Federal Reserve opted to keep the benchmark rates unchanged within the range of 5.25% to 5.50%, a stance that has been consistent since May 2023. Additionally, the central bank continued with its pace of balance sheet reduction. In the Fed’s official statement, emphasis was placed on the resilience of the US economy and the strength observed in the labor market. While acknowledging advancements in curbing inflation, officials also underscored the ongoing challenges, signaling that the task remains unfinished. They further emphasized the evolving balance of risks associated with achieving their dual mandate and reiterated their commitment to data-driven decision-making processes.
Federal Reserve Chair Jerome Powell echoed previous sentiments shared by himself and fellow policymakers, emphasizing the necessity for additional evidence before considering any adjustments to interest rates. Addressing inquiries regarding the Fed’s tolerance for heightened inflation, Powell acknowledged expectations for a potentially tumultuous journey in achieving the central bank’s 2% inflation target. He noted that despite unexpectedly high inflation figures earlier in the year, the broader narrative suggests a deceleration in price increases.
In terms of recent economic indicators, mixed signals were observed in business activity, rendering projections of the US economic deceleration challenging. While there were signs of cooling in the labor market, the economy witnessed a greater-than-expected addition to the workforce, coupled with a decline in new unemployment benefit applications. Notably, recent inflation data surpassed expectations both on the consumer and producer fronts, indicating a stickier inflationary trend than previously anticipated.
Given the prevailing economic landscape, the remarks made by Fed Chair Jerome Powell during his testimony before the US Congress earlier in the month, hinting at potential rate cuts, appeared warranted. However, recent inflation figures and retail sales data prompted a reassessment of market expectations regarding future Fed rate cuts. This realignment in expectations aligns with the Federal Reserve’s projected trajectory of a 75 basis point easing by the end of 2024.
According to the CME FedWatch Tool, the probability of a rate cut in June currently stands at 64%, down from 72% reported a week prior, reflecting the evolving sentiment among market participants regarding the future monetary policy stance of the Federal Reserve.
EURUSD – Surges Above 1.0900 Post-Fed Rate Hold
The Euro currency surged against US Dollar yesterday after the Dovish FED Comments and policy settings. FED Powell said Growth in 2024-2025 is robust it is offset by rate cuts in the second half of 2024. We do not consider the two months of inflation rate increases for change the monetary policy settings.
EURUSD is moving in an Ascending channel and the market has reached the higher low area of the channel
EUR/USD Surges After Fed Holds Rates
Following the Federal Reserve’s rate decision, which kept rates at 5.5% as expected, EUR/USD saw a significant jump. Despite the Fed projecting stronger growth, market expectations of additional easing in 2024 drove the surge. Fed Chair Powell highlighted concerns over inflation and the complexity of future rate cuts amidst tight labor market conditions. EUR/USD crossed 1.0890 post-Fed’s announcement.
USDJPY – BoJ’s Ueda Plans to Maintain Accommodative Monetary Policy
The Bank of Japan Governor Kazhao Ueda said accommodative monetary policy will be maintained until the wage data sync with inflation reading instead of cost push inflation pressure. Service prices ismoving slight higher in the economy, if inflation target 2% achieved then we tighten the monetary policy settings.
USDJPY is moving in an Ascending trend line and the market has rebounded from the higher low area of trend line
Bank of Japan Governor Kazuo Ueda stated on Thursday that the central bank anticipates maintaining its accommodative monetary policy in the near term. Here are some key quotes from his remarks:
– “The BoJ expects to uphold an accommodative monetary policy for the time being.”
– “An accommodative monetary policy is likely to provide support to the economy.”
– “While cost-push pressure on inflation is diminishing, service prices continue to experience moderate increases.”
– “Recent wage negotiation data and feedback from companies indicate a strengthening wage-inflation cycle.”
– “Medium and long-term inflation expectations are moving towards 2%.”
– “The BoJ will sustain the economy and price levels by continuing accommodative monetary conditions for now.”
– “We could have waited until inflation reached 2% for an extended period before tapering massive stimulus, but this approach could have posed significant upside risks to price outlooks.”
USDCHF – Swiss Franc Sells Off Before SNB Meeting
The Swiss Franc is depreciated against counter pairs due to SNB like to hold the rates in this today meeting.The Inflation for the month of February came as 1.2% it more lower than 2% target of SNB. The SNB like to maintain the rates at possible today.
USDCHF is moving in the Box pattern and the market has reached the resistance area of the pattern
Swiss Franc Weakens Ahead of SNB Meeting
The Swiss Franc (CHF) is trending lower before the Swiss National Bank (SNB) policy meeting. Traders anticipate potential rate changes due to declining inflation and growth.
Decline in Growth and Inflation
Swiss inflation fell from 3.2% in Q1 to 1.6% in Q4 2023, below SNB’s forecast. February 2024 CPI rose 1.2% YoY, lower than expected.
Economic Slowdown
Swiss GDP growth in 2023 slowed to 1.3% from 2.5% in 2022.
SNB Policy Expectations
SNB may consider policy easing; Reuters reports a 29% chance of rate cut. Lower rates could weaken the Swiss Franc by reducing capital inflows.
USD INDEX – USD Falls to Weekly Lows Post-Fed Decision and Powell’s Press Conference
The DXY Index slides after the FED Powell speech and monetary policy meeting happened yesterday. FED Powell said two months of inflation data would not use for rate cuts. We need sustained inflation lower to 2% target then only we do rate cuts in market.
USD INDEX is moving in an Ascending channel and the market has reached the higher low area of the channel
DXY Slides as Fed Holds Rates and Powell Speaks
The US Dollar Index (DXY) dipped towards the 103.50 level post-Fed decision. Economic forecasts were revised upwards, while interest rate projections remained steady at 4.6%. Stocks edged higher and Treasury yields fell, weighing on the USD.
The US economy shows resilience, with inflation and labor market signals mixed. Powell emphasized that recent inflation readings won’t sway the Fed’s approach.
Daily Digest Market Movers: DXY Falls as Fed Maintains Rates and Powell Speaks
– Fed keeps interest rates steady at 5.25%-5.50%.
– Statement highlights strong US economy and robust labor market.
– Decisions to remain data-driven, balancing the dual mandate.
– 2024 interest rate expectations hold at 4.6%, with 2025 FFR projection raised to 3.9%.
– GDP for 2024 revised upwards to 2.1%, Unemployment Rate forecast at 4.0%.
– PCE Price Index target remains at 2.4%, core PCE expected at 2.6% by end of 2024.
– Powell emphasizes Fed won’t overreact to short-term data, decisions to be based on incoming reports.
GBPUSD – Approaches 1.2800 Barrier, Focus on BoE Rate Decision
The Bank of England is expected to keep the rates at 5.25% in today meeting due to inflation data for the month February came at 3.4% from 4.0% in January and below the expected the reading of 3.6%.
GBPUSD is moving in an Ascending channel and the market has reached the higher high area of the channel
GBP/USD Rises Amidst Dovish Fed; BoE Rate Decision and US Data in Focus
During early Asian trading hours on Thursday, the GBP/USD pair gains momentum, supported by a weaker US Dollar (USD) following Federal Reserve (Fed) Chair Powell’s dovish press conference. Investors are closely monitoring the Bank of England (BoE) interest rate decision, along with the preliminary US S&P Global PMI for March. Currently, GBP/USD is trading at 1.2797, up 0.09% on the day.
The Fed opted to maintain its benchmark overnight borrowing rate between 5.25% and 5.5% on Wednesday. While Powell didn’t specify the timing of rate cuts, he suggested a potential decrease before year-end. Markets have priced in a 75% chance of rate cuts starting in the June meeting, according to the CME FedWatch Tool.
Powell emphasized that recent high inflation reports haven’t altered the gradual easing of price pressures in the US. Fed officials project three quarter-percentage-point cuts by the end of 2024, expecting solid economic growth to persist. Updated economic projections indicate a 2.6% rise in the Core PCE by year-end, compared to 2.4% in December’s projections.
In the UK, the BoE is expected to maintain interest rates at 5.25% on Thursday. February’s CPI inflation data might influence the BoE’s decision, with CPI climbing 3.4% YoY, below the market consensus of 3.6%. Additionally, Core CPI eased to 4.5% YoY in February from 5.1% in January, worse than the estimated 4.6%.
Market participants will closely monitor the BoE interest rate decision and preliminary UK S&P Global PMI for March. On the US front, the US S&P Global PMI, weekly Initial Jobless Claims, and Existing Home Sales data are due, potentially providing direction for the GBP/USD pair.
AUDUSD – Australia’s Unemployment Rate Falls to 3.7% in February, Below 4.0% Expectation
The Australian Unemployment rate came at 3.7% February month from 4.1% printed in January month. The Employment job numbers increased to 116.5K in February from 15.3K in January month compared with the forecast of 40.0K. The Australian Dollar moved higher after the Robust data came.
AUDUSD is moving in an Ascending channel and the market has reached the higher high area of the channel
Australia’s Unemployment Rate Falls to 3.7% in February, Beating Expectations
Australia’s unemployment rate dropped to 3.7% in February, surpassing the expected 4.0% and the previous figure of 4.1%, as per data released by the Australian Bureau of Statistics (ABS) on Thursday.
Additionally, Australian Employment Change surged to 116.5K in February from 15.3K in January, exceeding the consensus forecast of 40.0K.
Bjorn Jarvis, ABS head of labour statistics, provided key insights:
– “With employment growing by around 116,000 people and the number of unemployed falling by 52,000 people, the unemployment rate fell to 3.7 percent, approximately the level six months earlier.”
– “The increase in employment in February followed a weaker-than-usual outcome in December (-62,000) and a modest increase in January (15,000), resulting in 70,000 more employed people in February compared to November, consistent with the underlying trend.”
– “The significant rise in employment in February was due to larger-than-usual numbers of individuals in December and January who had a job waiting to commence or return. This resulted in a greater-than-usual influx of people into employment in February, surpassing last February’s figures.”
– “In 2022 and 2023, about 4.3% of employed individuals in February were not employed in January, while in 2024, this proportion increased to 4.7%, well above the pre-pandemic average of around 3.9% from 2015 to 2020.”
– “Conversely, only about 3.1% of employed individuals in January left employment by February, a rate similar to last year’s and relatively consistent over time. This indicates a wider gap than usual between the number of individuals entering employment and those leaving it.”
NZDUSD – New Zealand GDP Shows Shallow Recovery, -0.1% from -0.3%
NZ Q4 GDP Data came at -0.10% from -0.30% in the previous quarter and 0.10% is expected.Annualised GDP came at -0.30% from previous print of -0.60% and Forecasted 0.10%.
NZDUSD is moving in the Box pattern and the market has rebounded from the support area of the pattern
NZ Side Wholesale Grocery, Liquor, Machinery and Equipments is down compared to previous quarter, NZ election contributed public administration, Safety and defence as per National accounts and senior manager Ruvani Ratnayake said.
New Zealand’s GDP Shrinks by -0.1% in Q4, Missing Market Expectations
New Zealand’s Gross Domestic Product (GDP) experienced a contraction of -0.1% in the fourth quarter, showing a recovery from the previous quarter’s -0.3% but falling short of the median market forecast of a 0.1% increase.
The year-on-year (YoY) GDP for Q4 also missed expectations, registering at -0.3%. Quarterly GDP, when annualized, rebounded from the previous figure of -0.6% but fell short of the market forecast of 0.1%.
Ruvani Ratnayake, the senior manager for national accounts industry and production, highlighted that wholesale trade, particularly in grocery and liquor wholesaling, as well as machinery and equipment wholesaling, contributed significantly to the downturn this quarter.
Despite this, Ratnayake noted that increased activity associated with the NZ General Election contributed to growth in public administration, safety, and defense sectors.
XTIUSD – Oil Maintains Above $80 After EIA Stockpile Drawdown
The Energy information administration shows drawdown of 1.519 million barrels in the US stockpile of inventories. So Oil prices pushed up against US Dollar, China is imports oil from Venezuela since 2019. Russia have maintenance work on Baltic port of Primorsk and severe weather conditions makes oil shipments from Kozmino delayed to other countries.
XTIUSD is moving in an Ascending channel and the market has fallen from the higher high area of the channel
On Wednesday, oil prices hovered around session lows following the release of the US Crude stockpile data by the Energy Information Administration (EIA). Despite an unexpected drawdown of 1.519 million barrels, contrary to the small anticipated build, West Texas Intermediate (WTI) crude continued to decline. This has intensified pressure on the $80 threshold, with two nearby support levels becoming crucial.
Simultaneously, the US Dollar has been on a winning streak for five consecutive days, gaining momentum during Asian trading hours on Tuesday, driven by the Bank of Japan’s rate decision. Market attention is now focused on the US Federal Reserve’s monetary policy decision scheduled for Wednesday. Aside from Fed Chairman Jerome Powell’s speech, investors are keenly awaiting the release of economic projections, including the dot plot, which are deemed critical.
As of the current writing, WTI crude is trading at $80.90 per barrel, while Brent crude is at $85.19 per barrel.
In oil-related news and market movements, recent developments indicate significant shifts:
- Chinese Customs data revealed that China imported oil from Venezuela in February for the first time since 2019, according to Bloomberg.
- Russian crude exports have been impacted by maintenance work at the Baltic port of Primorsk and adverse weather conditions, particularly strong winds around Kozmino on the Pacific Coast, resulting in delays in loading and shipping.
- China secured an additional 2 million barrels from Abu Dhabi, with the purchase made by Cnooc.
- The American Petroleum Institute reported further drawdowns in US crude stockpiles. Last week saw a drawdown of 5.521 million barrels, compared to the 1.519 million barrels drawdown reported this week.
- The Energy Information Administration released its US stockpile figures, which were expected to show a minor build of 13,000 barrels following last week’s drawdown of 1.536 million barrels. However, the actual number indicated a drawdown of 1.519 million barrels.
In terms of technical analysis, oil prices are indicating potential for further upside. Supply issues coupled with significant drawdowns in the US are driving this momentum. This aligns with the expected outcome envisioned by OPEC+, where US production struggles to keep pace with OPEC+ oil cuts. With US production receding and Russian supply facing delays, a bullish trend is emerging.
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