Sample Category Title

Daily Pivots: (S1) 1.0702; (P) 1.0746; (R1) 1.0783; More...

Intraday bias in EUR/USD remains neutral first. On the downside, break of 1.0668 will resume the correction from 1.1032 short term top and target 38.2% retracement of 0.9534 to 1.1032 at 1.0463. Nevertheless, firm break of 4 hour 55 EMA (now at 1.0783) will bring retest of 1.1032 high instead.

In the bigger picture, current development suggests that the rally from 0.9534 low (2022 low) is a medium term up trend rather than a correction. Further rise is in favor to 61.8% retracement of 1.2348 (2021 high) to 0.9534 at 1.1273 next. This will remain the favored case as long as 1.0482 support holds.

Daily Pivots: (S1) 1.2052; (P) 1.2123; (R1) 1.2189; More...

Intraday bias in GBP/USD stays neutral at this point. On the upside, break of 1.2192 will affirm the case that corrective pattern from 1.2445 has completed with three waves to 1.1960. Further rise would be seen back to 1.2445/6. Decisive break there will resume larger rise from 1.0351. On the downside, through break of 1.1960 will extend the corrective pattern with another fall to 1.1840 support and possibly below.

In the bigger picture, rise from 1.0351 medium term bottom is at least correcting whole down trend from 1.4248 (2021 high). Further rise is expected as long as 1.1644 resistance turned support holds. Next target is 61.8% retracement of 1.4248 to 1.0351 at 1.2759. Sustained break there will pave the way back to 1.4248.

Daily Pivots: (S1) 0.9179; (P) 0.9204; (R1) 0.9247; More...

Intraday bias in USD/CHF remains neutral for the moment. On the upside, firm break of 0.92879 resistance will confirm short term bottoming at 0.9058, and bring stronger rise to 0.9407 resistance. On the downside, however, sustained break of 0.9058 will resume larger decline from 1.0146 instead.

In the bigger picture, rise from 0.8756 (2021 low) has completed at 1.0146, well ahead of 1.0342 long term resistance (2016 high). Based on current downside momentum, fall from 1.0146 should be a medium term down trend itself. Next target is a test on 0.8756 low. Strong support should be seen there to bring rebound. Still, further decline will now be expected as long as 0.9407 resistance holds, in any case.

Daily Pivots: (S1) 130.63; (P) 131.23; (R1) 132.12; More...

USD/JPY spiked through 130.33 minor support but quickly recovered. For now, deeper fall is in favor as long as 131.88 minor resistance holds. Corrective rebound from 127.20 could have completed with three waves up to 132.89. Retest of 127.20 would be seen next and decisive break there will resume larger down trend from 151.93. On the upside, above 131.88 will likely resume the rebound through 132.89 to 38.2% retracement of 151.93 to 127.20 at 136.64.

In the bigger picture, prior of 55 week EMA (now at 131.39) raises the chance of medium term bearish reversal, but that's not confirmed yet. Strong rebound from current level, followed by sustained break of 38.2% retracement of 151.93 to 127.20 at 136.64 will argue that price actions from 151.93 is merely a corrective pattern. However, rejection by 136.64 will solidify medium term bearishness for 61.8% retracement of 102.58 to 151.93 at 121.43 and 38.2% retracement of 75.56 to 151.93 at 122.75.

Canadian Dollar steals the show in early US session after astonishingly strong employment data. It's followed by Yen, which had some jitters regarding new rumors about BoJ Governor nomination. European majors, on the other hand, are the weaker ones for today, in order of Euro, Swiss Franc and Sterling for now. Aussie and Kiwi are mixed, awaiting some guidance from risk markets.

Technically, EUR/CAD resumed the decline from 1.4640. Prior rejection by 4 hour 55 EMA is a near term bearish signal. Next focus is 1.4232 support. Firm break there should confirm that a correction to whole rally from 1.2867 has started, and target 38.2% retracement of 1.2867 to 1.4640 at 1.3963. If that happens, it will more likely be accompanied by extended correction in EUR/USD, than breaking of 1.3224 key support in USD/CAD.

In Europe, at the time of writing, FTSE is down -0.64%. DAX is down -1.34%. CAC is down -1.17%. Germany 10-year yield is up 0.039 at 2.340. Earlier in Asia, Nikkei rose 0.31%. Hong Kong HSI dropped -2.01%. China Shanghai SSE dropped -0.30%. Singapore Strait Times rose 0.04%. Japan 10-year JGB yield is down -0.0069 at 0.491.

Canada employment grew 150k in Jan, unemployment rate unchanged at 5%

Canada employment grew strongly by 150k, or 0.8% mom, in January, well above expectation of 15k. Full-time work increased 121k.

Unemployment rate was unchanged at 5.0%, matched expectations, just shy of the record-low 4.9% in June and July last year. Participation rate rose 0.3% to 65.7%.

Total hours worked rose 0.8% mom, 5.6% yoy. Average hourly wages rose 4.5% yoy.

ECB Vujcic: Likely to see more rate action beyond March

ECB Governing Council member Boris Vujcic, Croatian central bank Governor, said, "we are likely to see more rate action beyond March." But policymakers are going to wait for data to come in, " then decide in May, June, July what we're going to do."

While the markets are pricing in a 3.4-3.5% terminal rate, Vujcic said, "It's the market's job to try to figure out what the terminal rate is, but it's not something we have to do at this point in time...  I would leave the issue of the terminal rate for later."

Vujcic believed that headline inflation has peaked. He added, "already in November I argued that my worry was not a further increase in inflation, but the persistence."

UK GDP contracted -0.5% mom in Dec, flat in Q4

UK GDP contracted notably by -0.5% mom in December, even worse than expectation of -0.3% mom. Services declined by -0.8% mom. Production rose 0.3% mom. Construction was flat for the month.

In Q4, GDP showed 0.0% qoq growth, matched expectations. Services sector was flat on the quarter. Production dropped -0.2% qoq while construction grew 0.3% qoq.

For 2022 as a whole, GDP grew 4.0%, following a 7.6% expansion in 2021.

Also released, industrial production came in at 0.3% mom -4.0% yoy in December, versus expectation of -0.2% mom, -5.3% yoy. Manufacturing was at 0.0% mom, -5.7% yoy, versus expectation of -0.2% mom, -6.1% yoy. Goods trade deficit widened from GBP -14.7B to GBP -19.3B, above expectation of GBP -17.2B.

Yen up and down on BoJ governor candidate news

Yen jumped earlier today on reports that Prime Minister Fumio Kishida is going to make a surprised nomination of academic Kazuo Ueda as the next BoJ Governor. Some interpreted that as a signal of a change in BoJ's course for finally exiting ultra loose monetary policy.

However, Yen was then shot down after Ueda told Nippon TV BoJ' current policy is "appropriate", noting the need to continue with monetary easing. Ueda also noted, "it's important to make decisions logically and explain clearly

Ueda, a former member of the BOJ's policy board and an academic at Kyoritsu Women's University. On the other hand, earlier rumor of appointing Deputy Governor Masayoshi Amamiya was seen as a sign of continuing currency policies.

The government is expected to present the nomination on February 13 and there would be hearings at the lower house on February 24.

Japan PPI slowed to 9.5% yoy in Jan, CGPI staying at record high

Japan PPI slowed from 10.5% yoy to 9.5% yoy in January, below expectation of 11.2% yoy. Sitting at 119.8 and unchanged from prior month, corporate goods price index matched the record high made in December.

On Yen basis, export price index slowed further to 9.0% yoy, comparing to the peak of 20.1% yoy made in September. Import price index also slowed to 17.8% yoy, comparing to the peak of 49.2% made in July. For the month, export price index declined for the third month, by -1.9% mom. Import price index dropped for the fourth month, by -3.9% mom.

RBA SoMP: No GDP contraction, trimmed mean inflation to stay higher and longer

In the Statement on Monetary Policy, RBA reiterated that "further increases in interest rates will be needed to ensure that the current period of high inflation is only temporary."

"In assessing how much further interest rates need to increase, the Board will be paying close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market."

The economy is not forecast to contract within the projection horizon. Meanwhile, trimmed mean inflation is projected to stay higher and longer till mid 2024.

Year-average GDP growth forecast to be (from 3.75% in 2022):

• 2.25% in 2023 (unchanged from prior forecast).
• 1.50% in 2024 (unchanged).
• 1.75% in 2024/25 year (new).

Headline CPI (7.8% in December 2022) is projected to slow to:

• 6.75% in June 2023 (unchanged).
• 4.75% in December 2023 (unchanged).
• 3.50% in June 2024 (down from 4.25%).
• 3.25% in December 2024 (unchanged).
• 3.00% in June 2025 (new).

Trimmed mean CPI (6.9% in December 22) is projected to slow to:

• 6.25% in June 2023 (up from 5.50%).
• 4.25% in December 2024 (up from 3.75%).
• 3.25% in June 2024 (down from 3.50%).
• 3.00% in December 2024 (down from 3.25%).
• 3.00% in June 2025 (new).

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 130.63; (P) 131.23; (R1) 132.12; More...

USD/JPY spiked through 130.33 minor support but quickly recovered. For now, deeper fall is in favor as long as 131.88 minor resistance holds. Corrective rebound from 127.20 could have completed with three waves up to 132.89. Retest of 127.20 would be seen next and decisive break there will resume larger down trend from 151.93. On the upside, above 131.88 will likely resume the rebound through 132.89 to 38.2% retracement of 151.93 to 127.20 at 136.64.

In the bigger picture, prior of 55 week EMA (now at 131.39) raises the chance of medium term bearish reversal, but that's not confirmed yet. Strong rebound from current level, followed by sustained break of 38.2% retracement of 151.93 to 127.20 at 136.64 will argue that price actions from 151.93 is merely a corrective pattern. However, rejection by 136.64 will solidify medium term bearishness for 61.8% retracement of 102.58 to 151.93 at 121.43 and 38.2% retracement of 75.56 to 151.93 at 122.75.

Economic Indicators Update

Canada employment grew strongly by 150k, or 0.8% mom, in January, well above expectation of 15k. Full-time work increased 121k.

Unemployment rate was unchanged at 5.0%, matched expectations, just shy of the record-low 4.9% in June and July last year. Participation rate rose 0.3% to 65.7%.

Total hours worked rose 0.8% mom, 5.6% yoy. Average hourly wages rose 4.5% yoy.

Full release here.

ETHUSD is moving sideways today following yesterday’s sizeable loss. It broke the January 4 upward sloping trendline, prompting the first decent correction since the start of the year. It is currently settling nicely inside the 1,500-1,700 rectangle that has formed since January 16, just above the 23.6% Fibonacci retracement level of the April 4, 2022 –June 18, 2022 downtrend of 1,510. The bears have failed to break this level on two separate occasions during January.

The momentum indicators appear to be on the bears’ side at this juncture. The RSI has been on a downward path, and it is currently testing the 50-level threshold. Similarly, the stochastic oscillator has turned lower, moving almost in a vertical fashion and thus revealing the strength of the current move. On the other hand, a golden cross between the 50- and 200-day simple moving averages (SMAs) could offer the bulls some reason to rejoice.

Should the bears manage to break below the 1,510 level and the rectangle, the next target could be at the 1,359-1,452 range, populated by the 50-, 200- and 100-day SMAs. Even lower, the 1,262 level set by multiple lows and highs during 2022 could prove even tougher to crack.

On the other hand, the bulls would be content with a move above the January 4 upward sloping trendline and a subsequent test of the upper boundary of the rectangle at 1,700. Higher, the September 11 high of 1,790 and the 38.2% Fibonacci retracement at 1,907 could prove to be stronger resistance points.

To sum up, yesterday's drop seems to have woken up the bears. A move below the 1,500 area could prove a catalyst for further correction towards the 1350s area.

The Euro returned to weakness on Friday, signaling that brief consolidation might be over and extension of pullback from 1.1032 (Feb 2 peak) would be likely near-term scenario.

Repeated upside rejections of the action in past two days (daily candles with long upper shadows) points to strong supply and contribute to prevailing bearish stance on daily chart (rising negative momentum / 5/10; 5/20; 10/20 DMA bear crosses.

The pair is also on track for the second consecutive bearish weekly close, which contributes to formation of reversal pattern on weekly chart, as the action is additionally weighed by a bull-trap above weekly Ichimoku cloud.

Bears pressure cracked pivotal support at 1.0679 (Fibo 23.6% of 0.9535/1.1032 rally, reinforced by 55DMA), loss of which would risk deeper drop and expose next key levels at 1.0590 (top of ascending daily cloud and 1.0483/60 (Jan 6 trough / weekly cloud base / Fibo 38.2%).

Bearish bias is expected to remain intact on repeated close below daily Kijun-sen (1.0757).

Res: 1.0757; 1.0790; 1.0807; 1.0850.
Sup: 1.0679; 1.0590; 1.0519; 1.0483.

Yen jumped earlier today on reports that Prime Minister Fumio Kishida is going to make a surprised nomination of academic Kazuo Ueda as the next BoJ Governor. Some interpreted that as a signal of a change in BoJ's course for finally exiting ultra loose monetary policy.

However, Yen was then shot down after Ueda told Nippon TV BoJ' current policy is "appropriate", noting the need to continue with monetary easing. Ueda also noted, "it's important to make decisions logically and explain clearly

Ueda, a former member of the BOJ's policy board and an academic at Kyoritsu Women's University. On the other hand, earlier rumor of appointing Deputy Governor Masayoshi Amamiya was seen as a sign of continuing currency policies.

The government is expected to present the nomination on February 13 and there would be hearings at the lower house on February 24.

ECB Governing Council member Boris Vujcic, Croatian central bank Governor, said, "we are likely to see more rate action beyond March." But policymakers are going to wait for data to come in, " then decide in May, June, July what we're going to do."

While the markets are pricing in a 3.4-3.5% terminal rate, Vujcic said, "It's the market's job to try to figure out what the terminal rate is, but it's not something we have to do at this point in time... I would leave the issue of the terminal rate for later."

Vujcic believed that headline inflation has peaked. He added, "already in November I argued that my worry was not a further increase in inflation, but the persistence."