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Daily Pivots: (S1) 0.7062; (P) 0.7079; (R1) 0.7093; More...

AUD/USD's up trend resumed by breaking through 0.7093 resistance. Intraday bias is now on the upside for 100% projection of 0.5913 to 0.6706 from 0.6420 at 0.7213. On the downside, below 0.7063 minor support will turn intraday bias neutral again. But retreat should be contained above 0.6896 support to bring another rally.

In the bigger picture, current development argues that rise from 0.5913 (2024 low) is reversing whole down trend from 0.8006 (2021 high). Further rally should be seen to 61.8% retracement of 0.8006 to 0.5913 at 0.7206. This will remain the favored case as long as 0.6706 resistance turned support holds, even in case of deep pullback.

Yen and Aussie are outperforming today as markets await the delayed US non-farm payroll report, while Dollar remains under pressure. Yen’s advance builds on momentum established after Japan’s election results. Investors believe Prime Minister Sanae Takaichi now has sufficient authority to pursue coherent fiscal strategy without accommodating a broad range of competing stimulus demands from oppositions.

Her pro-market approach is also expected to encourage renewed foreign participation in Japanese equities, strengthening capital inflow prospects. In that sense, Yen strength reflects both domestic political factors and external rate dynamics.

At the same time, Yen gains are being amplified by developments in US bond markets. US 10-year Treasury yields have fallen sharply this week and extended losses overnight, providing a clear tailwind for the currency through narrower yield differentials.

The precise catalyst for the yield decline remains debated. Yet, the technical setup points to scope for further downside in yields. That brings today’s NFP report into sharper focus. A weak print could push yields lower and accelerate downside in USD/JPY.

Meanwhile, Aussie strength reflects hawkish rhetoric from RBA Deputy Governor Andrew Hauser, who reiterated that inflation remains unacceptably high and pledged that policy will stay restrictive if needed. Hauser noted that renewed price pressures may reflect stronger demand meeting supply constraints, warning that persistent inflation cannot be tolerated. Markets now imply roughly a 70% probability of another hike to 4.10% in May, pending first-quarter inflation data.

For the week to date, Yen leads performance, followed by Aussie and Swiss franc. Dollar sits at the bottom of the pack, trailed by Sterling and Kiwi. Euro and Loonie are positioning in the middle.

In Asia, Japan was on holiday. Hong Kong HSI is up 0.30%. China Shanghai SSE is up 0.13%. Singapore Strait Times is up 0.39%. Overnight, DOW rose 0.10%. S&P 500 fell -0.33%. NASDAQ fell -0.59%. 10-year yield fell -0.051 to 4.147.

Low-bar NFP to set up yield-driven USD/JPY reaction

The delayed January US non-farm payroll report finally lands today, but expectations are already deeply tempered. Markets are braced for just 66k job growth, with unemployment seen holding at 4.4%. While hiring is seen slow, wage pressure is expected to remain firm. Average hourly earnings are forecast to rise 0.3% mom. Labor demand may be cooling, but without translating into meaningful disinflation pressure.

Meanwhile, officials from the US administration appeared keen to talk down expectations around job creation. National Economic Council Director Kevin Hassett said this week that tighter immigration enforcement and rapid productivity gains driven by artificial intelligence are suppressing demand for new workers. Those dynamics, he argued, could keep payroll growth low even as output remains strong.

Despite that, Hassett struck an upbeat tone, suggesting the economy could still deliver a powerful mix of lagging job creation alongside surging productivity, profits, and GDP. That framing implies that slower hiring should not automatically be read as economic stress.

Markets, however, are unlikely to to put too much attention on rhetoric. The more immediate focus remains on Treasuries. US 10-year yields have fallen sharply this week, extending losses after yesterday’s retail sales miss. The question now is whether bonds are genuinely front-running a more aggressive Fed easing path, or whether investors are simply reassessing “Sell America” narrative as overstated once hard data failed to confirm it. Today’s reaction to payrolls release could help resolve that ambiguity.

Technically, 10-year yield's strong break below 55 D EMA suggests the rebound from the 3.947 low may already have completed at 4.311 as a corrective bounce. Decisive break below 4.108 support would solidify that view and reopen downside toward the 3.947 area.

In the currency markets, the corresponding pair to watch is USD/JPY. The pair initially dives this week as reaction to Japan's election results. But the last leg was clearly driven by the fall in US yields. Decline from 157.65 is seen as part of the corrective pattern from 159.44. While deeper fall could be seen to 152.07, strong support is expected from 38.2% retracement of 139.87 to 159.44 at 151.96 to bring rebound. However, decisive break of 151.96 would argue that USD/JPY is already in bearish trend reversal.

Fed’s Logan says inflation, not jobs, now bigger risk

Dallas Fed President Lorie Logan struck a cautious tone on further easing, arguing that downside risks to the US labor market "appear to have meaningfully dissipated" following last year’s three interest-rate cuts. Speaking overnight, Logan said those moves had helped stabilize employment conditions but had also introduced fresh risks on the inflation side.

While she expects inflation to make progress this year, Logan laid out a series of concerns that argue against complacency. She pointed to pending tariff effects, supportive fiscal policy, buoyant financial conditions, and the possibility that deregulation and new technologies could add to price pressures rather than dampen them.

Against that backdrop, Logan said she is “cautiously optimistic” that the Fed’s current policy stance can steer inflation back toward its 2% target without destabilizing the labor market. The next few months of data, she stressed, will be critical in determining whether that balance is being achieved.

For now, her bias is clearly toward holding steady. If inflation slows while the labor market weakens materially, further cuts could become appropriate. But as things stand, Logan said, "I am more worried about inflation remaining stubbornly high."

Fed’s Hammack signals extended hold, favors patience

Cleveland Fed President Beth Hammack signalled little urgency to adjust policy, saying the Fed is in a good position to hold rates steady and let recent easing work through the economy. "we could be on hold for quite some time”, she added.

Hammack said she prefers to "err on the side of patience" rather than attempt to fine-tune the funds rate, noting that a steady policy stance would itself reflect a healthy economic backdrop. With rates close to a neutral level, she argued that holding steady allows policymakers to better judge how growth and inflation evolve.

She expects economic activity to pick up modestly this year, supported by easier financial conditions, recent interest rate reductions, and fiscal support, among other factors." Labour market conditions also appear broadly stable. Hammack described current dynamics as “low-hire, low-fire,” with businesses reluctant to expand payrolls aggressively but also avoiding large-scale layoffs.

China CPI at 0.2% misses, but CNH breaks higher on Dollar weakness

The offshore Chinese yuan surged to its strongest level against Dollar in more than 33 months, with upside momentum showing signs of acceleration. However, the move has been driven far more by broad-based Dollar weakness than by any material improvement in China’s domestic fundamentals.

Today's Chinese data continue to highlight persistent deflationary pressure. January inflation slowed sharply from a three-year high of 0.8% yoy to just 0.2%, undershooting expectations of 0.4% and reinforcing doubts that the economy has decisively turned the corner on pricing power. Underlying details offered little reassurance. Core CPI rose 0.8% from a year earlier, easing from 1.2% in December.

At the producer level, prices remained firmly in deflation, with PPI improving from -1.9% to -1.4% yoy, extending a factory-gate deflation streak that has now lasted more than three years.

Despite efforts to curb destructive price wars across industries plagued by overcapacity, excess supply continues to weigh on margins and pricing.

Policy signals offer little near-term support for the currency. The PBoC reiterated this week that it will maintain a moderately loose monetary stance, prioritizing growth support and gradual price recovery. That guidance reinforces the view that Yuan strength is unlikely to be domestic policy-driven.

Technically, the break below the medium-term falling channel floor suggests USD/CNH’s decline from the 2025 high at 7.4287 is entering a renewed acceleration phase. Near-term outlook remains bearish as long as 6.9956 resistance caps rebounds, with the next downside target seen at 138.2% projection of 7.4287 to 7.1608 from 7.2224 at 6.8522.

AUD/USD Daily Report

Daily Pivots: (S1) 0.7062; (P) 0.7079; (R1) 0.7093; More...

AUD/USD's up trend resumed by breaking through 0.7093 resistance. Intraday bias is now on the upside for 100% projection of 0.5913 to 0.6706 from 0.6420 at 0.7213. On the downside, below 0.7063 minor support will turn intraday bias neutral again. But retreat should be contained above 0.6896 support to bring another rally.

In the bigger picture, current development argues that rise from 0.5913 (2024 low) is reversing whole down trend from 0.8006 (2021 high). Further rally should be seen to 61.8% retracement of 0.8006 to 0.5913 at 0.7206. This will remain the favored case as long as 0.6706 resistance turned support holds, even in case of deep pullback.

Gold (XAUUSD) reached an all-time high of $5610.8 on 29 January 2026, marking the completion of wave I. Since then, the metal has been correcting a larger cycle that began from the September 2022 low, unfolding within wave II. The correction is developing as a double three Elliott Wave structure, reflecting a complex adjustment in price action.

From the wave I peak, wave (W) ended at $4941.61, followed by wave (X) at $5145.73. The decline continued with wave (Y), which terminated at $4402.06. This sequence completed wave ((W)) of the higher degree. The market has since entered a rally in wave ((X)), which is also subdividing as another double three.

Within this advance, wave (W) ended at $5091.4. A pullback in wave (X) followed, reaching $4654.35. The current move higher is unfolding as wave (Y) in a zigzag formation. From the wave (X) low, wave A advanced to $5086.53. A corrective wave B is expected before the market resumes higher in wave C, with potential to retest the $5610.82 peak.

Completion of this rally would finalize wave (Y) of ((X)). As long as the pivot at $5610.82 remains intact, gold retains scope to turn lower again in wave ((Y)). This level is therefore critical, serving as a decisive reference point for traders assessing the next stage of the cycle.

Gold (XAUUSD) 60 minute chart

XAUUSD Elliott Wave Video

https://www.youtube.com/watch?v=zIdLtmrwMKA

The delayed January US non-farm payroll report finally lands today, but expectations are already deeply tempered. Markets are braced for just 66k job growth, with unemployment seen holding at 4.4%. While hiring is seen slow, wage pressure is expected to remain firm. Average hourly earnings are forecast to rise 0.3% mom. Labor demand may be cooling, but without translating into meaningful disinflation pressure.

Meanwhile, officials from the US administration appeared keen to talk down expectations around job creation. National Economic Council Director Kevin Hassett said this week that tighter immigration enforcement and rapid productivity gains driven by artificial intelligence are suppressing demand for new workers. Those dynamics, he argued, could keep payroll growth low even as output remains strong.

Despite that, Hassett struck an upbeat tone, suggesting the economy could still deliver a powerful mix of lagging job creation alongside surging productivity, profits, and GDP. That framing implies that slower hiring should not automatically be read as economic stress.

Markets, however, are unlikely to to put too much attention on rhetoric. The more immediate focus remains on Treasuries. US 10-year yields have fallen sharply this week, extending losses after yesterday’s retail sales miss. The question now is whether bonds are genuinely front-running a more aggressive Fed easing path, or whether investors are simply reassessing “Sell America” narrative as overstated once hard data failed to confirm it. Today’s reaction to payrolls release could help resolve that ambiguity.

Technically, 10-year yield's strong break below 55 D EMA suggests the rebound from the 3.947 low may already have completed at 4.311 as a corrective bounce. Decisive break below 4.108 support would solidify that view and reopen downside toward the 3.947 area.

In the currency markets, the corresponding pair to watch is USD/JPY. The pair initially dives this week as reaction to Japan's election results. But the last leg was clearly driven by the fall in US yields. Decline from 157.65 is seen as part of the corrective pattern from 159.44. While deeper fall could be seen to 152.07, strong support is expected from 38.2% retracement of 139.87 to 159.44 at 151.96 to bring rebound. However, decisive break of 151.96 would argue that USD/JPY is already in bearish trend reversal.

Key Highlights

• WTI Crude Oil prices started a decent increase above $63.50.
• A key bullish trend line is forming with support at $63.70 on the 4-hour chart.
• Gold started a fresh increase above $4,950 and $5,000.
• EUR/USD found support near 1.1780 and corrected some losses.

WTI Crude Oil Price Technical Analysis

WTI Crude Oil price started a decent increase above $61.50 against the US Dollar. The price settled above $62.50 to enter a positive zone.

Looking at the 4-hour chart of XTI/USD, the price tested the $65.25 zone before there was a downside correction. The price retested the $62.50 support and recently recovered some losses. It remained well above the 100 simple moving average (red, 4-hour) and the 200 simple moving average (green, 4-hour).

On the upside, immediate resistance is near the $65.30 level. The first key hurdle for the bulls could be $66.50. A close above $66.50 might send Oil prices toward $68.00. Any more gains might call for a test of $70.00 in the near term.

On the downside, the first major support sits near the $63.70 zone. There is also a key bullish trend line forming with support at $63.70. The next support could be $62.40 and the 100 simple moving average (red, 4-hour).

A daily close below $62.40 could open the doors for a larger decline. In the stated case, the bears might aim for a drop toward $60.50 and the 200 simple moving average (green, 4-hour).

Looking at Gold, the bulls remained in action, and the price started a fresh increase above the $5,000 resistance.

Economic Releases to Watch Today

• US nonfarm payrolls for Jan 2026 – Forecast 70K, versus 50K previous.
• US Unemployment Rate for Jan 2026 - Forecast 4.4%, versus 4.4% previous.

The offshore Chinese yuan surged to its strongest level against Dollar in more than 33 months, with upside momentum showing signs of acceleration. However, the move has been driven far more by broad-based Dollar weakness than by any material improvement in China’s domestic fundamentals.

Today's Chinese data continue to highlight persistent deflationary pressure. January inflation slowed sharply from a three-year high of 0.8% yoy to just 0.2%, undershooting expectations of 0.4% and reinforcing doubts that the economy has decisively turned the corner on pricing power. Underlying details offered little reassurance. Core CPI rose 0.8% from a year earlier, easing from 1.2% in December.

At the producer level, prices remained firmly in deflation, with PPI improving from -1.9% to -1.4% yoy, extending a factory-gate deflation streak that has now lasted more than three years.

Despite efforts to curb destructive price wars across industries plagued by overcapacity, excess supply continues to weigh on margins and pricing.

Policy signals offer little near-term support for the currency. The PBoC reiterated this week that it will maintain a moderately loose monetary stance, prioritizing growth support and gradual price recovery. That guidance reinforces the view that Yuan strength is unlikely to be domestic policy-driven.

Technically, the break below the medium-term falling channel floor suggests USD/CNH’s decline from the 2025 high at 7.4287 is entering a renewed acceleration phase. Near-term outlook remains bearish as long as 6.9956 resistance caps rebounds, with the next downside target seen at 138.2% projection of 7.4287 to 7.1608 from 7.2224 at 6.8522.

Cleveland Fed President Beth Hammack signalled little urgency to adjust policy, saying the Fed is in a good position to hold rates steady and let recent easing work through the economy. "We could be on hold for quite some time”, she added.

Hammack said she prefers to "err on the side of patience" rather than attempt to fine-tune the funds rate, noting that a steady policy stance would itself reflect a healthy economic backdrop. With rates close to a neutral level, she argued that holding steady allows policymakers to better judge how growth and inflation evolve.

She expects economic activity to pick up modestly this year, supported by easier financial conditions, recent interest rate reductions, and fiscal support, among other factors." Labour market conditions also appear broadly stable. Hammack described current dynamics as “low-hire, low-fire,” with businesses reluctant to expand payrolls aggressively but also avoiding large-scale layoffs.

Dallas Fed President Lorie Logan struck a cautious tone on further easing, arguing that downside risks to the US labor market "appear to have meaningfully dissipated" following last year’s three interest-rate cuts. Speaking overnight, Logan said those moves had helped stabilize employment conditions but had also introduced fresh risks on the inflation side.

While she expects inflation to make progress this year, Logan laid out a series of concerns that argue against complacency. She pointed to pending tariff effects, supportive fiscal policy, buoyant financial conditions, and the possibility that deregulation and new technologies could add to price pressures rather than dampen them.

Against that backdrop, Logan said she is “cautiously optimistic” that the Fed’s current policy stance can steer inflation back toward its 2% target without destabilizing the labor market. The next few months of data, she stressed, will be critical in determining whether that balance is being achieved.

For now, her bias is clearly toward holding steady. If inflation slows while the labor market weakens materially, further cuts could become appropriate. But as things stand, Logan said, "I am more worried about inflation remaining stubbornly high."

• Our first Economic Overview of 2026 includes a revised view on the shape of the RBNZ’s tightening cycle.
• We continue with our longstanding view of a first hike in the OCR to 2.50% in December 2026.
• But in 2027 the RBNZ will pick up the pace and tighten at each meeting from February to September 2027. The OCR is expected to reach 4% by end-2027 and peak at 4.25% in early 2028.
• Excess capacity will likely be exhausted by early 2027 implying a need for the RBNZ to return the OCR to neutral levels more quickly in 2027.
• But the RBNZ will take time in 2026 to be sure the recovery takes hold and as headline inflation falls towards 2%.
• Interest rates will remain stimulatory for all of 2026 and early 2027 and will drive a need for modestly restrictive conditions over 2028.
• We continue to assume a neutral OCR of 3.75%. Hence to achieve restrictive levels, the OCR will need to peak at 4.25% in early 2028.

Picking up speed.

Westpac’s inaugural 2026 Economic Overview will be released early Thursday morning. These forecasts depict an improved economic outlook for 2026 and beyond as the combination of low interest rates, strong commodity returns and a supportive exchange rate drive above trend growth in 2026 and 2027.

It now appears that, if recent growth trends are sustained, excess capacity in the economy will be exhausted more quickly and that the output gap will be closed by early 2027. The unemployment rate should accordingly be noticeably lower and below 5%.

Inflation remains too high but should fall over 2026 as factors that boosted inflation in 2025 – especially higher food and petrol prices – rise more slowly in 2026. But underlying inflation pressures remain persistent and should leave the RBNZ progressively less comfortable in maintaining stimulatory interest rates as 2026 wears on.

We think the prospect of declining headline inflation will give the RBNZ cover to leave the OCR on hold for most of 2026 so they can take the maximum time to assess the strength and durability of the economic recovery. But once they have achieved confidence that above trend growth will endure through 2026, it will be time to act and return the OCR to more neutral levels.

The RBNZ sees the neutral OCR in the 3-3.5% range while Westpac sees a 3.75% neutral OCR. Hence any way you cut it, there will be quite a bit of action required to even achieve neutral levels from December 2026. Fast action will be required given excess capacity should be exhausted by then.

Hence, we have revised up our view of how quickly the RBNZ will lift the OCR over 2027. We expect a standard cycle where the OCR is raised by 25bp at each meeting from February to September 2027, by which time the OCR will have reached our view of the neutral OCR.

From September 2027 we see a slower pace of OCR increases as at this stage policy will be moving into restrictive territory. We think at this point just modestly restrictive interest rates of around 4.25% will be ultimately required to keep inflation close to 2%. We see the OCR remaining at 4.25% over 2028 before returning to a neutral 3.75% setting in 2029.

More details on our new macroeconomic outlook will be available in our February Economic Overview, which will be released at 5am Thursday 12 February NZT.

• The Dow Jones Industrial Average achieved a third consecutive record high, while the S&P 500 and Nasdaq closed in the red.
• Market anxiety increased due to flat US retail sales data and massive projected capital expenditures for AI infrastructure.
• The S&P 500 shows signs of a potential breakout above 7000.
• Caution is advised in the near term, with the Fear and Greed Index in "extreme greed" territory and significant volatility expected from upcoming US jobs and CPI data.

Market performance was mixed on Tuesday as the Dow Jones Industrial Average secured its third consecutive record high, while the S&P 500 and Nasdaq ended the session in the red.

Market participants were primarily focused on flat retail sales data and the anticipation of an upcoming labor market report.

The communication services sector suffered the most significant decline, largely due to a 1.8% drop in Alphabet shares following the company’s $20 billion bond sale. This move intensified broader market anxieties regarding the massive capital expenditures required for AI infrastructure, with industry giants like Amazon, Alphabet, Meta, and Microsoft projected to spend hundreds of billions of dollars collectively throughout 2026.

S&P 500 Heatmap

Source: TradingView

Economic indicators added to the cautious sentiment, as US retail sales remained stagnant in December, missing the 0.4% growth forecasted by economists. This lack of growth, driven by reduced spending on big-ticket items like vehicles, suggests a cooling economy as the new year begins. Despite the sluggish data, expectations for a dovish shift from the Federal Reserve increased, with the probability of an April rate cut rising to 36.9% from Monday's 32.2%.

Nevertheless, the consensus remains that rates will hold steady until June, coinciding with the potential leadership transition to Fed chair nominee Kevin Warsh, pending Senate approval.

The Dow Jones Industrial Average rose to 50609, an intraday record high earlier in the day before a pullback to close the session around the 50348 handle.

Is the S&P 500 poised for a breakout beyond 7000?

The S&P 500 has all but recovered from the selloff which began on February 3 and culminated in a low print of 6735 on February 5.

There are signs from both a technical and fundamental perspective which hint at a potential upside breakout.

First we have the technical picture where we have a golden cross pattern which hints at further upside.

The period-14 RSI remains above the 50 handle, hinting at the bullish momentum still in play.

Price does need to hold above the swing low at 6905 to keep the bullish structure intact. A four-hour candle close below this level could open up a deeper correction.

SP 500 Four-Hour Chart, February 10, 2026

Source: TradingView (click to enlarge)

Looking at other factors that hint at more upside and Goldman Sachs' US Equity Sentiment Indicator is stuck at 0.0, a neutral reading that in the past has tended to precede gains in the S&P 500 over the following month.

Source: Isabelnet

If history is to repeat itself, the S&P 500 could be setting up for another rally with hopes of consolidation above the 7000 handle.

In the near-term though there could be a temporary pause. The fear and greed index is currently in extreme greed territory, around the 75.86 mark. The bulls appear to be holding their ground as it looks like the rally still has its fans.

Source: Isabelnet

Up next we have US data which could have significant implications for US equity markets. The jobs data and CPI print could both influence rate cut expectations and thus drive significant volatility.