Sample Category Title

• FTSE 100 broke support zone
•  Likely to fall to support level 8600.00

FTSE 100 Index previously broke the support zone between the support level 8700.00 (which created daily Bullish Engulfing earlier this month) and the 38.2% Fibonacci correction of the upward impulse from January.

The breakout of this support zone accelerated the active short-term ABC correction 4, which belongs to the upward impulse sequence (C) from last year.

FTSE 100 Index can be expected to fall to the next support level 8600.00 (target price for the completion of the active correction 4 intersecting with the support trendline of the daily up channel from December).

Markets

US Treasury Secretary Bessent said in an interview with Bloomberg Television that the Treasury team under the previous president had shortened the duration in Treasury sales. While he’s not shortening any further, the US Treasury is also a long way off in terming out the debt. He noted that elevated inflation and competition by the Fed (via quantitative tightening) currently hamper such a move. Fed governor Waller last year suggested that Fed could stop its balance sheet runoff once US reserves drop to 10%-12% of US GDP. That’s approximately $2800-3000bn compared to current reserves of $3220bn. The US Note future ticked marginally higher after the comments in today’s only noticeable market move. The US yield curve bull flattens slightly with yields losing 0.8 bps (2-yr) to 2.3 bps (10-yr). The US eco calendar contained near consensus but still very low weekly jobless claims (219k from 214k) and the expected setback in Philly Fed Business Outlook. The indicator reached its second best level since 1983 in January (44.3) before retreating to a still solid 18.10 in February (vs 14.3 expected). New orders fell back from 42.9 to 21.9, but that’s still the second best outcome since November 2021. Shipments equally remain strong at 26.3 (from 41). Both prices paid and received pointed at accelerating inflationary pressures. Companies turned less optimistic on the six months outlook since September though. Markets ignored the numbers. Daily changes on the European curves are neglectable with EUR/USD marginally stronger near 1.0450. European stock markets recover some of yesterday’s corrective losses (+0.30%). ECB Makhlouf warned after yesterday’s hawkish comments by ECB Schnabel that the disinflation process faces dangers. ECB Simkus was more neutral, aligning himself with the three additional 25 bps rate cuts the market discounts over the course of 2025. Everybody agrees that a 25 bps move at the March policy meeting is a done deal, but the outlook becomes more uncertain afterwards. The EMU money market is currently split on the possibility of a pause in April. The next couple of days/weeks remains full of event risk with global PMI surveys, a speech by ECB chief economist Lane and first talks between the US and China tomorrow, German parliamentary elections on Sunday and everything related to the Russian conflict in Ukraine and slow but steadily approaching tariff deadlines.

News & Views

The National Bank of Belgium’s consumer confidence indicator rose sharply in February. The 7-point surge from -11 to -4 was together with December 2022 the largest one-month improvement since May 2021. From a level point of view it is the highest since September of last year. Belgian households were much less concerned over the labour market: the unemployment series hit its lowest since early 2022. The NBB noted that “More stringent government regulations may be the reason for this.” The widespread pessimism surrounding expectations for the Belgian economic situation abated as well but this is not yet fully being reflected in household’s view on their personal situation. They downgraded their expectations concerning their own financial situation while slightly increasing saving intentions.

The European Central Bank (ECB) incurred a record loss of almost €8bn in 2024. It’s the second straight loss after booking a €1.27bn shortfall in 2023. They are a direct result of the central bank’s aggressive tightening campaign against the post-Covid inflation surge. That pushed up interest expenditures well beyond the income generated by the (extremely) low-yielding bonds purchased over the previous years. While the ECB may still incur losses in coming years, they should be lower than in the past two due to the central bank’s bond portfolio shrinking and after a series of rate cuts. The combined €9.21bn shortfall will be carried forward to be offset against future profits. The central bank stressed that it can still “operate effectively and fulfill its primary mandate of maintaining price stability regardless of any losses.”

Daily Pivots: (S1) 1.0395; (P) 1.0428; (R1) 1.0455; More...

Intraday bias in EUR/USD remains neutral as consolidation from 1.0176 is still extending. Stronger rebound might be seen but outlook will remain bearish as long as 38.2% retracement of 1.1213 to 1.0176 at 1.0572 holds. On the downside, break of 1.0176 will resume whole fall from 1.1213. However, decisive break of 1.0572 will raise the chance of reversal, and target 61.8% retracement at 1.0817.

In the bigger picture, immediate focus is on 61.8 retracement of 0.9534 (2022 low) to 1.1274 (2024 high) at 1.0199. Sustained break there will solidify the case of medium term bearish trend reversal, and pave the way back to 0.9534. However, reversal from 1.0199 will argue that price actions from 1.1274 are merely a corrective pattern, and has already completed.

Daily Pivots: (S1) 1.2552; (P) 1.2597; (R1) 1.2631; More...

Intraday bias in GBP/USD remains neutral and attention stays on 38.2% retracement of 1.3433 to 1.2099 at 1.2609. Rejection by 1.2609 will keep near term outlook bearish. Break of 1.2331 support will suggest that the rebound from 1.2099 has completed as a correction, and bring retest of 1.2099 low. However, firm break of 1.2609 will raise the chance of near term reversal, and target 61.8% retracement at 1.2923.

In the bigger picture, rise from 1.0351 (2022 low) should have already completed at 1.3433 (2024 high), and the trend has reversed. Further fall is now expected as long as 1.2810 resistance holds. Deeper decline should be seen to 61.8% retracement of 1.0351 to 1.3433 at 1.1528, even as a corrective move. However, firm break of 1.2810 will dampen this bearish view and bring retest of 1.3433 high instead.

Daily Pivots: (S1) 0.9027; (P) 0.9041; (R1) 0.9060; More…

No change in USD/CHF's outlook as consolidation from 0.9200 is still extending. Intraday bias stays neutral at this point. While deeper pull back might be seen, outlook will stay mildly bullish as long as 38.2% retracement of 0.8374 to 0.9200 at 0.8884 holds. On the upside, firm break of 0.9223 key resistance will carry larger bullish implication. However, sustained break of 0.8884 will indicate bearish reversal, and target 61.8% retracement at 0.8690 instead.

In the bigger picture, decisive break of 0.9223 resistance will argue that whole down trend from 1.0342 (2017 high) has completed with three waves down to 0.8332 (2023 low). Outlook will be turned bullish for 1.0146 resistance next. Nevertheless, rejection by 0.9223 will retain medium term bearishness for another decline through 0.8332 at a later stage.

Daily Pivots: (S1) 151.06; (P) 151.68; (R1) 152.12; More...

Intraday bias in USD/JPY remains on the downside for the moment. Fall from 158.86 is seen as the third leg of the pattern from 161.94 high. Deeper decline should be seen to 61.8% retracement of 139.57 to 158.86 at 146.32 next. On the upside, above 151.22 minor resistance will turn intraday bias neutral again first. But near term outlook will now stay bearish as long as 154.79 resistance holds.

In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low). In case of another fall, strong support should be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

Yen continues to dominate the relatively quiet forex markets today, with USD/JPY slipping below the key 150 psychological. The move is largely fueled by rising speculation that BoJ may tighten policy again sooner than expected, a sentiment that's also reflected in 10-year JGB yield's rally to another 15-year high. While the base case for BoJ’s next rate hike remains in the second half of the year, traders are increasingly betting on an earlier move—especially if this year’s Shunto wage negotiations deliver wage increases in line with last year’s strong outcomes.

The next major test for Yen will be Japan’s January CPI release in the upcoming Asian session. The market is expecting core CPI to rise slightly from 3.0% to 3.1%. Any upside surprise, particularly if core-core CPI (which excludes fresh food and energy) also rises, could strengthen market conviction that BoJ may need to act sooner than currently anticipated. A hot inflation print, combined with rising wage pressures, would likely push traders to further price in an earlier rate hike and adding to Yen strength.

Beyond Yen’s rally, Nikkei 225 is also worth watching, as its technical outlook could provide further signals. Firm break of 38401.82 support could be an earlier sign that corrective rebound from 31156.11 has finally completed. That would set up deeper fall to 38.2% retracement 31156.11 to 40398.23 at 36867.74. If realized, deeper decline in Nikkei should also be accompanied by extended fall in USD/JPY.

In the broader currency market, Aussie ranks as the second-strongest performer today so far, supported by robust employment data and hawkish commentary from a senior RBA official. Kiwi is also firm, after RBNZ Governor Adrian Orr reaffirmed a slower pace of rate cuts ahead. Meanwhile, Dollar is under pressure, ranking as the weakest currency of the day, followed by Sterling and then Euro. Swiss Franc and Loonie are positioning in the middle.

In Europe, at the time of writing, FTSE is down -0.40%. DAX is up 0.19%. CAC is up 0.24%. UK 10-year yield is up 0.019 at 4.632. Germany 10-year yield is down -0.005 at 2.555. Earlier in Asia, Nikkei fell -1.24%. Hong Kong HSI fell -1.60%. China Shanghai SSE fell -0.02%. Singapore Strait Times fell -0.17%. Japan 10-year JGB yield rose 0.0106 to 1.450.

US initial jobless claims rise to 219k vs exp 216k

US initial jobless claims rose 5k to 219k in the week ending February 15, above expectation of 216k. Four-week moving average of initial claims fell -1k to 215k.

Continuing claims rose 24k to 1869k in the week ending February 8. Four-week moving average of continuing claims fell -8k to 1863k.

RBA’s Hauser: Rate cut justified, but inflation fight not a done deal

RBA Deputy Governor Andrew Hauser explained the 25bps rate cut to 4.10% earlier this week, highlighting that the decision was influenced by an “alternative version” of the inflation forecast. Under a scenario where rates remained unchanged, inflation would have undershot inflation target midpoint, albeit slightly. This factor played a key role in the board’s decision to ease policy.

However, Hauser struck a cautious tone on further cuts, emphasizing that core inflation at 3.2% remains above target. He reinforced that RBA’s remains “rigorously” focused on controlling price pressures, stating that the battle against inflation is “not a done deal” . He explained that RBA is not “whamming down on the accelerator”, but has simply “eased back on the brake a little bit”.

Regarding the strong January employment report release today, Hauser welcomed the figures, calling them part of a “striking employment growth” trend in Australia. He noted that Australia’s labor market performance stands out internationally, with strong participation rates and employment growth exceeding many other developed economies.

Australia’s employment grows 44k in Jan, outpacing population growth rate

Australia’s employment surged by 44k in January, more than double the expected 20k gain. The increase was driven by a 54.1k rise in full-time jobs, while part-time employment declined by -10.1k. However, the number of unemployed people also grew by 23k.

Employment growth at 0.3% mom matched 2024 monthly average, but outpacing population growth of 0.2%.

Unemployment rate edged up from 4.0% to 4.1%, in line with expectations, as the participation rate hit a record high of 67.3%, up from 67.2% in December. Meanwhile, monthly hours worked fell by -0.4% mom.

RBNZ’s Orr: No more 50bps cuts without a shock, sees stable inflation ahead

RBNZ Governor Adrian Orr reaffirmed that a 50bps rate cut would only happen again in the event of an economic shock, reinforcing the central bank’s guidance for two 25bps cuts in the first half of 2025.

Speaking before a parliamentary committee today, Orr noted that New Zealand is now in an environment of low and stable inflation, though global uncertainty remains a key risk.

He expressed optimism, stating that “GDP growth, employment growth, and low and stable inflation” should support an improving economic environment throughout the year. However, he warned that “geoeconomic fragmentation” is weighing on global growth, leading to increased price volatility in international markets.

RBNZ Chief Economist Paul Conway told the committee that escalating trade tensions will contribute to higher inflation, weaker global growth, and reduced economic efficiency. He stressed that "The best thing we can do is have headline inflation at 2% so that we can sort of absorb that future volatility."

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 151.06; (P) 151.68; (R1) 152.12; More...

Intraday bias in USD/JPY remains on the downside for the moment. Fall from 158.86 is seen as the third leg of the pattern from 161.94 high. Deeper decline should be seen to 61.8% retracement of 139.57 to 158.86 at 146.32 next. On the upside, above 151.22 minor resistance will turn intraday bias neutral again first. But near term outlook will now stay bearish as long as 154.79 resistance holds.

In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low). In case of another fall, strong support should be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

US initial jobless claims rose 5k to 219k in the week ending February 15, above expectation of 216k. Four-week moving average of initial claims fell -1k to 215k.

Continuing claims rose 24k to 1869k in the week ending February 8. Four-week moving average of continuing claims fell -8k to 1863k.

Full US jobless claims release here.

USDJPY was sharply down on Thursday morning as yen received fresh boost from growing expectations of BoJ’s more aggressive approach to monetary policy.

The price fell almost 1% during Asian/ early European trading and cracked psychological 150 support for the first time since Dec 9.

The support is reinforced by lower 20-d Bollinger band and provided temporary footstep, where bears may pause for consolidation.

Upticks should stay capped under 151.00 zone to keep bears intact for fresh push lower and firm break of 150 trigger which would signal bearish continuation and expose next targets at149.22 and 148.64 (50% retracement of 139.57/158.87 / Dec 3 higher low respectively).

Negative daily studies (MA’s in bearish setup / strong negative momentum) with latest formation of 20/100DMA bear-cross, support scenario.

Caution on lift above 151.00 and violation of 151.50 (broken Fibo 38.2%) which would sideline bears and open way for stronger recovery.

Res: 151.00; 151.50; 152.05; 152.59.
Sup: 150.00; 149.22; 149.00; 148.64.