For the 24 hours to 23:00 GMT, the GBP rose 0.1% against the USD and closed at 1.2278 on Friday.

Macroeconomic data showed that Britain's Markit services PMI eased more-than-expected to a level of 53.3 in February, hitting its lowest level in five-months, suggesting that UK's economy may be losing momentum in 2017, after showing unexpected resilience post the historic Brexit vote. Investors expected the PMI to fall to a level of 54.1, after registering a level of 54.5 in the previous month.

In the Asian session, at GMT0400, the pair is trading at 1.2283, with the GBP trading marginally higher against the USD from Friday's close.

The pair is expected to find support at 1.2230, and a fall through could take it to the next support level of 1.2177. The pair is expected to find its first resistance at 1.2318, and a rise through could take it to the next resistance level of 1.2353.

With no major economic releases in UK today, investor sentiment would be governed by global macroeconomic events.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.24% against the JPY and closed at 114.11 on Friday.

In the Asian session, at GMT0400, the pair is trading at 113.83, with the USD trading 0.25% lower against the JPY from Friday’s close.

The pair is expected to find support at 113.43, and a fall through could take it to the next support level of 113.04. The pair is expected to find its first resistance at 114.48, and a rise through could take it to the next resistance level of 115.14.

Amid a lack of economic releases in Japan today, investors will look forward to global macroeconomic factors for further direction.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

Daily Pivots: (S1) 113.61; (P) 114.18; (R1) 114.56; More...

USD/JPY dips mildly today on broad based rebound in Yen. The rejection from 114.94 resistance argues that the correction from 118.65 is possibly not completed yet. But still, in case of another fall, we'd still expect strong support from 38.2% retracement of 98.97 to 118.65 at 111.13 to contain downside and bring rebound. On the upside, decisive break of 114.94 will indicate that it's completed with a double bottom pattern (111.58, 111.68). In such case, intraday bias will be turned to the upside for retesting 118.65.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. The impulsive structure of the rise from 98.97 suggests that the correction is completed and larger up trend is resuming. Decisive break of 125.85 will confirm and target 61.8% projection of 75.56 to 125.85 from 98.97 at 130.04 and then 135.20 long term resistance. Rejection from 125.85 and below will extend the consolidation with another falling leg before up trend resumption.

For the 24 hours to 23:00 GMT, the USD declined 0.38% against the CHF and closed at 1.0091 on Friday.

In the Asian session, at GMT0400, the pair is trading at 1.0081, with the USD trading 0.1% lower against the CHF from Friday’s close.

The pair is expected to find support at 1.0056, and a fall through could take it to the next support level of 1.0032. The pair is expected to find its first resistance at 1.0121, and a rise through could take it to the next resistance level of 1.0162.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

The Japanese Yen jumps broadly in Asian session today on risk aversion as North Korea fired four ballistic missiles into nearby waters. Some analysts pointed out that the missile tests reminded the markets of the unpredictability of Kim Jong Un leadership. Japan prime minister Shinzo Abe warned that the missile launches "clearly show that this is a new level of threat" from North Korea". Nikkei responded by trading down around -0.5% at the time of writing and stays in red for the whole session. Yen surges against all most currencies today. In particular, USD/JPY's rejection from 114.94 near term resistance since last Friday maintains it's neutral outlook for the moment. Released in Asia, Australia TD securities inflation dropped -0.3% mom in February. Australia retail sales rose 0.4% mom in January, in line with consensus.

China to target 6.5% growth this year

In China, Chinese Premier Li Keqiang suggested at the National People's Congress that the government's GDP growth target for this year is "around 6.5%, or higher if possible", down from 2016's 6.5-7.0%. Inflation target stays at around 3% and a fiscal deficit at around 3% of GDP. The growth target of money supply M2 has been lowered, by -1 percentage point, to 12%. As suggested in the Work Report, the RMB exchange rate will "be further liberalized, and the currency's stable position in the global monetary system will be maintained". A number of Chinese macroeconomic data would be released including trade balance and inflation.

NFP to highlight the week, with RBA and ECB featured

The economic calendar is rather light today with only Eurozone retail sales PMI, Sentix investor confidence and US factory orders featured. RBA and ECB will meet this week. And both central banks are expected to stand pat. Main focus will be on US non-farm payroll report this week. Fed chair Janet Yellen's speech last Friday proved hawkish, indicating that the FOMC would "evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate". CME's 30-day Fed funds futures priced in almost 80% chance of a rate hike next week. We do not expect the February employment (due Friday) and inflation (due next week) would derail the scenario. But a strong set of NFP report will solidify the case for a March hike and push Dollar further higher.

• Tuesday: RBA rate decision; German factory orders; Eurozone GDP; Swiss foreign currency reserves; US trade balance, Canada trade balance, Ivey PMI
• Wednesday: China trade balance; German industrial production; Swiss CPI; UK budget release; Canada housing starts, labor productivity, building permits; US non-farm productivity
• Thursday: China CPI and PPI; Swiss unemployment rate; ECB rate decision; Canada new housing price index; US import price index, jobless claims
• Friday: Japan BSI large manufacturing; Australia home loan; Germany trade balance; UK productions, trade balance; Canada employment; US non-farm payroll

USD/JPY Daily Outlook

Daily Pivots: (S1) 113.61; (P) 114.18; (R1) 114.56; More...

USD/JPY dips mildly today on broad based rebound in Yen. The rejection from 114.94 resistance argues that the correction from 118.65 is possibly not completed yet. But still, in case of another fall, we'd still expect strong support from 38.2% retracement of 98.97 to 118.65 at 111.13 to contain downside and bring rebound. On the upside, decisive break of 114.94 will indicate that it's completed with a double bottom pattern (111.58, 111.68). In such case, intraday bias will be turned to the upside for retesting 118.65.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. The impulsive structure of the rise from 98.97 suggests that the correction is completed and larger up trend is resuming. Decisive break of 125.85 will confirm and target 61.8% projection of 75.56 to 125.85 from 98.97 at 130.04 and then 135.20 long term resistance. Rejection from 125.85 and below will extend the consolidation with another falling leg before up trend resumption.

Economic Indicators Update

For the 24 hours to 23:00 GMT, the USD marginally rose against the CAD and closed at 1.3399 on Friday.

In the Asian session, at GMT0400, the pair is trading at 1.3396, with the USD trading slightly lower against the CAD from Friday’s close.

The pair is expected to find support at 1.3366, and a fall through could take it to the next support level of 1.3336. The pair is expected to find its first resistance at 1.3431, and a rise through could take it to the next resistance level of 1.3466.

With no economic releases in Canada today, trading trends in the CAD are expected to be determined by global macroeconomic news.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

Yellen: hints at rate hike unless the jobs report is very weak

In Friday's speech, Fed Chair Janet Yellen confirmed that the Fed is set to hike rates at the upcoming meeting ending on 15 March, unless the jobs report for February due on Friday is extremely weak. We probably need to see jobs growth below 100,000, a higher unemployment rate and no improvement in the weak earnings data in January before the FOMC members change their minds. As we expect the jobs report for February to be good, we expect the Fed to deliver and change our Fed call to a March hike (previously June). Markets have priced in an 85% probability of a Fed hike at the upcoming meeting.

It is still a bit surprising to us that the Fed has turned so hawkish so quickly. There were not many signs in neither the last FOMC statement, the minutes from the latest meeting nor Yellen's hearing in Congress that the Fed was going to hike already in March. It seems as if the Fed considers the meeting as a window of opportunity due to strong economic data, a tight labour market, easy financial conditions and record-high stocks.

Due to the high probability of a Fed hike later this month, the interesting question is how many hikes to expect for the rest of the year. Yellen said in her speech that the hiking pace would be faster than in 2015 and 2016, as the Fed is close to having met both its criteria, in her view. If the Fed continues at the current hiking pace, it would imply four hikes this year, which, however, we think is a bit too much. Although the FOMC members have signalled a March hike, they have also repeated that they think three hikes are appropriate. We expect the Fed to maintain the ‘dot' signal for this year unchanged at three hikes in the updated projections. It is worth keeping in mind that the Fed is data dependent and will not hike unless data support the case – remember the Fed signalled four hikes during 2016 back in December 2015 but only delivered one.

Still, we raise our forecast and now think the Fed is set to hike three times this year in March, July and December (previously we expected two hikes with risk skewed towards a third hike), as the Fed seems less worried about inflation and has increased its weight on labour market and growth data. We stick to our view that the Fed is only set to hike once in H1 17 but now twice in H2 17 when we get more information about Trumponomics. By hiking at one of the small meetings in July, the Fed shows that it means that every meeting is ‘live'. Markets price in 2.5 hikes this year.

We still expect three-four hikes next year. Markets are pricing in a total of 4.7 hikes before year-end 2018, so there is still room for higher US rates, in our view. We expect the Fed to begin the reduction of its balance sheet in Q1 18.

We want to highlight that it is not without risks to tighten monetary policy at this time. Core inflation is still somewhat below 2% and has not been at or above 2% since April 2012. Both market and survey-based inflation expectations remain low in a historical perspective. Monetary tightening in the US has been a key negative factor for commodity prices in recent years and thus something to watch out for. Commodity prices in general could take a hit if the Fed speeds up the path of normalisation of rates, which could result in a repetition of what happened in 2015 and the first half of 2016.

Key Points:

• The pair should now range after its massive slip last week.
• 100 day EMA currently capping downside risks.
• RBA Cash Rate announcement should be the news to watch.

The AUDUSD had a rather torrid week and the resulting rout back to the 0.7576 mark now leaves the pair's future somewhat up in the air. Consequently, it may be worth taking stock of what happened and what is coming down the line in order to form a bias for the week to come.

Starting with how we got to where we are, the Aussie Dollar was beset by some immense selling pressure last week which came as some surprise given that fears of a recession had largely abated following a quarterly GDP result of 1.1%. Specifically, Thursday's plunge sent the pair reeling by more than 100 pips during the session. Interestingly, the only really fundamental explanation for the move came from an Australian Trade Balance of 1.30B and a US Unemployment Claims result of 223K. Ultimately, buying pressure did return on Friday as the 100 day EMA provided dynamic support, seeing the pair close up at 0.7593.

As for what lies ahead on the fundamental side of things, the week is fairly data-rich which should generate some strong price movements for the AUD. However, much of the volatility will be centred around Tuesday's session as the RBA will be making a decision on the Cash Rate. Currently, expectations are that the central bank will leave rates steady at 1.50% but it's worth watching out for any surprises. On the US front, the ADP and official NFP numbers are due out which could likewise cause some decent movements in the week ahead.

As for the technicals, the AUD will be dealing with some competing forces which should keep it somewhat neutral this week. On the one hand, the 12 and 20 day EMA's are now bearish alongside the Parabolic SAR readings. On the other hand, the 100 day moving average will continue to limit downsides as it is acting as a source of dynamic support. Moreover, RSI is staunchly neutral which leaves the pair free to range without consequence whilst also not predisposing the AUD to move in one direction or the other.

Ultimately, it looks as though we could have a ranging phase on our hands this week which could offer some good range-bound trading opportunities. Moreover, economic news should be more prone to moving the AUD within the sideways channel, rather than seeing a bullish or bearish trend form. However, pay close attention to these fundamentals as the pair approaches the key zones of support and resistance around the 0.7542 and 0.7634 levels as they could spark an unexpected breakout that could catch the market off guard.

Key Points:

• Cable likely to be impacted by NFP result.
• Market struggling for data points ahead of FOMC meeting.
• Watch for volatility around the US NFP and UK NIESR GDP results.

The Cable had a relatively torrid week as the pair reacted to the ongoing hawkish rhetoric from various US Federal Reserve members. This saw a sharp Dollar rally early in the week, and largely overshadowed solid gains in the UK Nationwide HPI and Manufacturing PMI figures,before a late session Dollar pullback gave the pair a much needed respite. Subsequently, it remains to be seen if the Cable will continue to decline in the coming week. It therefore makes sense to review last week's machinations with a view to seeing what could be potentially looming on the horizon.

Last week was highly negative for the Cable as the pair declined sharply following a range of hawkish rhetoric from US FOMC members. It would appear that the central bank is attempting to strongly prepare the market for a March rate hike with most members now suggesting tightening is on the cards. This largely rendered the stronger UK data moot despite the UK Nationwide HIP and Service PMI growing at 0.6%, and 53.3, respectively. However, the Cable managed to find a bottom around the 1.22 handle following a Dollar selloff late in the week which saw the pair close around the 1.2289 mark.

Looking ahead, the coming week will be a volatile one for the embattled Cable given that the UK NIESR GDP Estimate and US NFP figures are due out. The GDP estimates are likely to fall around the 0.6% mark, for the quarter, which isn't an altogether bad result considering the ongoing uncertainty around a Brexit. However, the market's major focus is likely to fall on the NFP numbers given the looming rate hike meeting. The estimates put the result around the 190k mark but it will need to be robust indeed with speculators looking for a solid result to stump up the argument for near term rate hikes from the Fed. Ultimately, regardless of the results, the Cable faces a critical choice on trend direction and is likely to swing strongly in the week ahead.

From a technical perspective, out initial bias for the week ahead remains neutral given that the pair will need to hold above 1.2213 to signal the end of the recent breakdown. However, there is some encouraging signals from the RSI Oscillator given that it is relatively close to oversold levels and appears to have flattened. Ultimately, the bias remains cautiously neutral but with the caveat to watch for a challenge of 1.2382 as a break of this level would signal a sharp rally to come. Support is currently in place for the pair at 1.2213, 1.2120, and 1.1987. Resistance exists on the upside at 1.2382, 1.2512, and 1.2567.

Ultimately, the Cable is likely to demonstrate some sideways action over the next few days but the NFP and NIESR GDP releases are likely to kick the pair's volatility up a notch. Subsequently, watch for plenty of swings in the latter part of the week and a potential test of the key 1.2380 resistance level.

Global Markets:

• Asian stock markets: Nikkei down 0.50 %, Shanghai Composite gained 0.40 %, Hang Seng and ASX both rose 0.30 %
• Commodities: Gold at $1234 (+0.60 %), Silver at $17.90 (+0.85 %), WTI Oil at $53.10 (-0.45 %), Brent Oil at $55.70 (-0.40 %)
• Rates: US 10-year yield at 2.47, UK 10-year yield at 1.18, German 10-year yield at 0.36

News & Data:

• Australia Retail Sales (MoM) (Jan) 0.40% (est 0.40%, prev -0.10%)
• Australia Melbourne Institute Inflation Gauge (Feb) MoM: -0.30% (prev 0.60%)
• Australia Melbourne Institute Inflation Gauge (Feb) YoY: 2.10% (prev 2.10%)
• Stocks drop as markets wary of Fed, geopolitical tensions – RTRS
• Oil prices fall on doubts over Russian output curbs – RTRS
• Dollar on back foot, slips from rate rise-inspired peak – RTRS

CFTC Positioning Data:

• EUR short 51K vs 58K short last week. Shorts trimmed by 7K
• GBP short 71K vs 66K short last week. Shorts increased by 5K
• JPY short 50K vs 50K short last week. No change
• CHF short 12K vs 9K short last week. Shorts increased by 3K
• CAD long 30K vs 25K long. Longs increased by 5K
• AUD long 52K vs 33K long. Longs increased by 19K
• NZD long 3K vs long 3K last week. No change

Markets Update:

Risk appetite decreased somewhat after news that North Korea has fired four ballistic missiles, of which three landed in Japanese waters. S&P 500 futures declined, while the Yen was in demand.

USD/JPY started the day around 114.15, and declined to 113.70 during the session. Support is now seen at 113.50, followed by 112.80. Resistance lies at 114.70 and 115.50.

EUR/USD opened slightly lower in Asia, but quickly filled the gap and rose to a high of 1.0620. Later in the session, it fell back to 1.0600. Key resistance is seen at 1.0670, while support lies at 1.0540/50.

GBP/USD consolidated in a 1.2280-1.23 range in Asia. The Pound came under pressure on Friday following weak services PMI data.

Upcoming Events:

• 09:10 GMT – Euro Zone Retail PMI
• 15:00 GMT – US Factory Orders
• 20:00 GMT – FOMC Member Kashkari speaks
• 22:30 GMT – Australia AIG Construction Index

The Week Ahead:

Tuesday, March 7th

• 03:30 GMT – RBA Interest Rate Decision
• 07:00 GMT – German Factory Orders
• 08:30 GMT – UK Halifax House Price Index
• 10:00 GMT – Euro Zone GDP
• 13:30 GMT – US Trade Balance
• 13:30 GMT – Canadian Trade Balance
• 15:00 GMT – Canadian Ivey PMI
• 23:50 GMT – Japanese GDP
• 23:50 GMT – Japanese Current Account

Wednesday, March 8th

• 07:00 GMT – German Industrial Production
• 07:45 GMT – French Trade Balance
• 08:15 GMT – Swiss CPI
• 13:15 GMT – US ADP Nonfarm Employment Change
• 15:30 GMT – US Crude Oil Inventories

Thursday, March 9th

• 06:45 GMT – Swiss Unemployment Rate
• 12:45 GMT – ECB Interest Rate Decision
• 13:30 GMT – ECB Press Conference
• 13:30 GMT – US Initial Jobless Claims

Friday, March 10th

• 00:30 GMT – Australian Home Loans
• 07:00 GMT – German Trade Balance
• 09:30 GMT – UK Industrial Production
• 09:30 GMT – UK Manufacturing Production
• 09:30 GMT – UK Trade Balance
• 13:30 GMT – US Unemployment Rate
• 13:30 GMT – US NFP
• 13:30 GMT – US Average Hourly Earnings
• 13:30 GMT – Canadian Unemployment Rate
• 13:30 GMT – Canadian Employment Change
• 15:00 GMT – UK NIESR GDP Estimate
• 20:30 GMT – US CFTC Positioning Data