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Daily Pivots: (S1) 0.8844; (P) 0.8866; (R1) 0.8905; More...

EUR/GBP's rise form 0.8753 resumed by breaking 0.8895 temporary top and intraday bias is back on the upside. Current development suggests that correction from 0.8977 has completed with three waves down to 0.8753. Further rally should be seen to retest 0.8977 high next. Firm break there will resume the whole rally from 0.8545.

In the bigger picture, outlook is rather mixed for now, except that price actions from 0.9267 (2022 high) are part of the long term range pattern from 0.9499 (2020 high). With 0.8720 support intact, rise from 0.8545 is in favor to continue through 0.8977. However, firm break of 0.8720 will argue that such rebound has completed, and open up deeper fall through this support level.

Daily Pivots: (S1) 0.6708; (P) 0.6739; (R1) 0.6762; More...

AUD/USD's break of 0.6693 confirms resumption of the decline from 0.7156. The development also argues that rise from 0.6169 has finished. Intraday bias is back on the downside. Next target is 161.8% projection of of 0.6854 to 0.7028 from 0.6854 at 0.6539. For now, break of 0.6782 resistance is needed to indicate short term bottoming. Otherwise, outlook will stay bearish in case of recovery.

In the bigger picture, the break of 0.6721 structural support suggest that rise from 0.6169 (2022 low) has completed at 0.7156, after rejection by 55 month EMA (now at 0.7164). Deeper decline would then be see back to 61.8% retracement of 0.6169 to 0.7156 at 0.6546, even as a corrective fall. Sustained break there will bring retest of 0.6169 low.

Daily Pivots: (S1) 1.0638; (P) 1.0667; (R1) 1.0711; More...

At this point, the favored case is still that correction from 1.1032 has completed at 1.0532 already. Further rise is expected to 1.0803 resistance first. However, on the downside, break of 1.0575 support will dampen this bullish view again and turn bias back to the downside.

In the bigger picture, as long as 1.0482 support holds, rise from 0.9534 (2022 low) should continue to 61.8% retracement of 1.2348 (2021 high) to 0.9534 at 1.1273. However, sustained break of 1.0482 will bring deeper fall to 61.8% retracement of 0.9534 to 1.1032 at 1.0106, even as a corrective pull back.

Daily Pivots: (S1) 1.1996; (P) 1.2023; (R1) 1.2052; More...

Intraday bias in GBP/USD stays neutral at this point. On the downside, break of 1.1914 will resume the decline from 1.2446, as the third leg of the corrective pattern from 1.2445, for 1.1840 support and possibly below. On the upside, break of 1.2142 resistance will turn bias back to the upside for further rebound to 1.2269 and above.

In the bigger picture, as long as 1.1840 support holds, rise from 1.0351 medium term bottom (2022 low) should still continue to 61.8% retracement of 1.4248 (2021 high) to 1.0351 at 1.2759. However, decisive break of 1.1840 will complete a double top pattern (1.2445, 1.2446) after rejection by 55 week EMA (now at 1.2243). Deeper decline should be seen back to 38.2% retracement of 1.0351 to 1.2445 at 1.1645.

Daily Pivots: (S1) 135.47; (P) 135.83; (R1) 136.29; More...

Intraday bias in USD/JPY remains neutral and outlook is unchanged. On the downside, break of 135.24 support will indicate short term topping, after rejection by 38.2% retracement of 151.93 to 127.20 at 136.64. Intraday bias will be turned back to the downside for 55 day EMA (now at 134.05) first. Sustained break of 55 day EMA will indicate that whole rebound from 127.20 has completed. On the upside, however, sustained break of 136.64 will indicate that fall from 151.93 has completed, and bring further rally to 61.8% retracement at 142.48.

In the bigger picture, focus remains on 38.2% retracement of 151.93 to 127.20 at 136.64. Sustained break there will indicate that price actions from 151.93 medium term are merely a corrective pattern. Such development will maintain long term bullishness. Rejection by 136.64 will, on the other hand, extend the fall from 151.93 to 61.8% retracement of 102.58 to 151.93 at 121.43 at a later stage.

Daily Pivots: (S1) 0.9286; (P) 0.9330; (R1) 0.9353; More...

USD/CHF recovered notably after brief breach of 0.9289 resistance turned support, and intraday bias is turned neutral first. The favored case is still that corrective rebound from 0.9058 has completed at 0.9439, ahead of 38.2% retracement of 1.0146 to 0.9058 at 0.9474. Sustained break of 0.9289 resistance turned support will pave the way to retest 0.9058 low. However, break of 0.9358 minor resistance will revive near term bullishness and turn bias back to the upside for 0.9439 again.

In the bigger picture, decline from 1.0146 is seen as part of a long term sideway pattern. As long as 38.2% retracement of 1.0146 to 0.9058 at 0.9474 holds, another fall is in favor through 0.9058. However, sustained trading above 0.9474 will indicate that the medium term trend has reversed, and open up further rally to 61.8% retracement at 0.9730 and above.

Dollar is gaining strength across the board as markets prepare for Fed Chair Jerome Powell's semi-annual testimony in Congress. Powell's views on the disinflationary process are expected to be a key focus, with traders also hoping for hints on the size of the upcoming rate hike and the outlook for the terminal rate.

Quick update: Fed Powell: Higher ultimate rate, ready to hike faster, no premature loosening

Australian Dollar is the worst performing currency of the day, following a sell-off post RBA meeting. Sterling and Swiss franc follow closely behind as the second weakest performers. Meanwhile, Kiwi and Euro are the second strongest. Canadian Dollar and Yen remain mixed, awaiting the BoC and BoJ rate decisions later in the week.

Technically, Gold's pull back from 1858.06 gains some momentum today. Focus is now on 1829.78 support. Firm break there will argue that rebound from 1804.48 has completed, ahead of 38.2% retracement of 1959.47 to 1804.48. If that happens, the development will keep near term outlook in Gold bearish for another fall through 1804.48 low. That could be a leading signal of revival in Dollar's rally.

In Europe, at the time of writing, FTSE is up 0.35%. DAX is up 0.11%. CAC is up 0.09%. Germany 10-year yield is down -0.0711 at 2.675. Earlier in Asia, Nikkei rose 0.25%. Hong Kong HSI dropped -0.33%. China Shanghai SSE dropped -1.11%. Singapore Strait Times rose 0.18%. Japan 10-year JGB yield rose 0.0017 to 0.505.

BoE Mann: There could be depreciation pressure on Sterling

BoE MPC member Catherine Mann warned that there could be depreciation pressure on Pound exchange rate if investor haven't fully priced in recent hawkish message from Fed and ECB. Meanwhile, she reiterated that more are needed to be done regarding inflation.

"The important question for me with regard to the pound is how much of that existing hawkish tone (of Fed and ECB) is already priced into the pound", Mann told BloombergTV. If it's already priced in, then what we see is what we get. But if it's not completely priced in, then there could be depreciation pressure" on Sterling.

Regarding interest rates, Mann said, "I've had recent speeches where I've indicated that I thought more needed to be done in order to ensure that expectations in particular are for a declining rate of inflation and the embeddedness to be mitigated."

RBA hikes 25bps, notes lower risk of prices-wages spiral

RBA raised the cash rate target by 25bps to 3.60%, which was widely anticipated. The bank also signaled the need for further tightening of monetary policy. Nevertheless, there was a notable dovish twist in the the statement about a lower risk of prices-wages spiral.

The central bank said monthly CPI indicator suggested that "inflation has peaked in Australia". The central forecasts is for inflation to decline this year and next to around 3% in mid-2025. Medium-term inflation expectations remain "well anchored".

Growth over the next couple of years is expected to be "below trend". Labor markets remains "very tight, although conditions have eased a little". Wage growth is "still consistent with the inflation target" and "recent data suggest a lower risk of a cycle in which prices and wages chase one another".

It indicated that "further tightening of monetary policy will be needed". The timing and extent of further interest rate hikes will depend on "developments in the global economy, trends in household spending and the outlook for inflation and the labour market".

China exports and imports continued to contract, but trade with Russia surged

Latest trade data from China showed that both exports and imports continued to declined in the first two months of the year. Trade with the US and the EU contracted, but trade with Russia was having extraordinary growth.

In the January-February period, China's exports contracted -6.8% yoy, better than expectation of -9.4% yoy. Imports contracted -10.2% yoy, much worse than expectation of -5.5% yoy. Trade surplus ballooned to USD 116.9B, much larger than expectation of USD 82.5B

The data also revealed that exports to the US decreased by -21.8% yoy while imports dropped -5% yoy. Exports to the EU were also down -12.2% yoy while imports decreased -5.5% yoy. On the other hand, exports to Russia surged 19.8% yoy while imports also jumped by 31.3% yoy

In related news, Chinese Foreign Minister Qin Gang stated today the need to strengthen ties with Russia and suggested using "whatever currency that is efficient, safe and credible."

Japan's Wage Growth Disappoints in January, Real Earnings Fall the Most Since 2014

Japan's nominal labor cash earnings rose by 0.8% yoy in January, below expectations of 1.9% yoy. The strong growth rate of 4.1% yoy in December was an anomaly due to lump-sum payments, rather than regular wage rises. The level of wage growth is far below the required level needed to maintain a 2% inflation rate, as indicated by outgoing BoJ Governor Haruhiko Kuroda.

Moreover, real cash earnings of workers have declined by -4.1% yoy, indicating that their real wages have fallen the most since 2014. The continuous decline in real wages for ten consecutive months shows that inflation has surpassed earnings.

Later in the week, BoJ is expected to keep its ultra-loose monetary policy unchanged, including the negative short-term interest rate of -0.10% and the 10-year yield cap at 0.50% at Kuroda's final meeting before handing over the reins to Kazuo Ueda. The declining real wages poses a challenge for the incoming governor to achieve the inflation target set by the central bank.

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.9286; (P) 0.9330; (R1) 0.9353; More...

USD/CHF recovered notably after brief breach of 0.9289 resistance turned support, and intraday bias is turned neutral first. The favored case is still that corrective rebound from 0.9058 has completed at 0.9439, ahead of 38.2% retracement of 1.0146 to 0.9058 at 0.9474. Sustained break of 0.9289 resistance turned support will pave the way to retest 0.9058 low. However, break of 0.9358 minor resistance will revive near term bullishness and turn bias back to the upside for 0.9439 again.

In the bigger picture, decline from 1.0146 is seen as part of a long term sideway pattern. As long as 38.2% retracement of 1.0146 to 0.9058 at 0.9474 holds, another fall is in favor through 0.9058. However, sustained trading above 0.9474 will indicate that the medium term trend has reversed, and open up further rally to 61.8% retracement at 0.9730 and above.

Economic Indicators Update

USD/CHF has rebounded on Tuesday, ending a rally that saw the Swiss franc climb over 1%. In the European session, USD/CHF is trading at 0.9344, up 0.40%.

Swiss inflation higher than expected

Switzerland released the February inflation report on Monday and the reading was higher than expected. CPI rose 0.7% m/m, up from 0.6% in February and above the 0.4% forecast. On an annualized basis, CPI climbed 3.4%, edging up from 3.3% and higher than the forecast of 3.1%.

These inflation numbers would be a dream come true for most major central banks, which are struggling with inflation levels two or three times higher. Still, the Swiss National Bank is concerned about high inflation, as its target is 0-2%. The SNB was widely expected to raise rate by 50 basis points at the rate meeting on March 23 and the uptick in February inflation cements the likelihood of such a move. Swiss National Bank Chair Jordan will make an appearance later today and is likely to address the rise in inflation.

The SNB does not provide forward guidance for its rate policy, but the central bank has projected an inflation rate of 2.4% for 2023. With the cash rate currently at 1%, it’s a safe bet that we’ll see another hike in June of either 25 or 50 basis points. The continuing tightening should provide a boost to the Swiss franc, but traders should keep in mind that the SNB has not hesitated to intervene in the foreign exchange market when the Swiss franc became too strong for its liking.

In the US, Federal Reserve Chair Powell will be in the spotlight as he testifies before a Senate committee later today. The Fed has remained hawkish and after a host of strong January releases, the markets have shifted their expectations closer to the Fed’s stance. It was only a few weeks ago that the markets were projecting a pause followed by rate cuts, but this has changed to pricing in three more rate hikes this year. There is a lot of uncertainty in the air about inflation and interest rates and the markets are hoping that Powell’s comments will provide some clarity.

USD/CHF Technical

• There is resistance at 0.9381 and 0.9420
• 0.9304 and 0.9224 are providing support

For the past six trading sessions, an ounce of silver has been trading above $21.0 in both directions. The price has been falling for most of February, losing more than 17% from its high ($24.62) to its low ($20.41).

Last month’s sell-off brought the price back to the 200-day moving average and created a medium-term oversold condition, which promises to be positive in the short term, creating the potential for a return to $24.0.

At the end of last month, silver was buying back on declines to $21.0. This level also acted as local support (May and November) and resistance (August and October) several times last year. Silver was also held above this level in 2014 and 2016, reinforcing the importance of this area. In our case, silver could find extended downside support here or quickly reverse to the upside.

In addition to the historical significance of current price levels, the mid-points of key moving averages are also worth noting. Last week, the 50-week moving average fell below the 200-week moving average at $21.50. Technically, this is a bearish signal, but we now see that the 200-week is pointing up, and the price has corrected significantly in recent weeks.

On the daily timeframe, silver is now struggling around the 200-day average. It is worth noting that silver experienced strong buying from this level in late November. This level is now a magnet for bargain hunters.

The February sell-off in silver took the daily chart’s RSI into the oversold territory. A stabilisation in recent days has taken the index above 30, which often signals the exhaustion of selling momentum and the start of a corrective bounce.

Silver has a chance of forming much more than just a corrective bounce. The dollar is losing traction in the currency market, creating a new bearish reversal. Equity indices defended key technical levels last week and are enjoying an influx of new money. However, a rebound in risk appetite may need to be faster to support silver and gold as key players continue to operate in more liquid markets.

BoE MPC member Catherine Mann warned that there could be depreciation pressure on Pound exchange rate if investor haven't fully priced in recent hawkish message from Fed and ECB. Meanwhile, she reiterated that more are needed to be done regarding inflation.

"The important question for me with regard to the pound is how much of that existing hawkish tone (of Fed and ECB) is already priced into the pound", Mann told BloombergTV. If it's already priced in, then what we see is what we get. But if it's not completely priced in, then there could be depreciation pressure" on Sterling.

Regarding interest rates, Mann said, "I've had recent speeches where I've indicated that I thought more needed to be done in order to ensure that expectations in particular are for a declining rate of inflation and the embeddedness to be mitigated."