Fed Chair Jerome Powell will testify today at 19:05 MT time. This event is crucial for traders as the tone of the speech may set the risk tone for the markets for the next two weeks.
Forex today: political tensions are in the arena
- It seems like the US-North Korea deal is near the end. North Korea announced it will never have an economic trade with the United States in exchange for giving up its nuclear program; will reconsider summit with the US whether it insists on North giving up the nuclear program; Mr. Trump will remain as a failed leader if he follows in the footsteps of previous US presidents. Such comments may lead to a conflict between countries.
- Despite negative news from North Korea, the greenback is continuing to set new highs. The US dollar index is near 93.40.
- Based on the North Korean comments, the yen managed to gain some points against the US dollar. USD/JPY returned to the 200-day MA at 110.20. The trading is not extensive. The rising USD may pull the pair back above 110.20. However, if tensions increase, the pair will break the support at 110.
- The euro is continuing to suffer. Although economic data were similar to the forecast (Final CPI y/y 1.2% vs 1.2%; Final Core CPI y/y 0.7% versus 0.7%), it didn’t support the falling euro. Traders are waiting for comments of ECB’s president Mr. Draghi (15:30 MT time). As the European economic data is not positive, there is a possibility that the President will sound not so hawkish. If you look at the daily chart, you will see that indicators are signaling the further fall. 50-day MA crossed 100-day MA; the Ichimoku cloud is showing a wider depreciation. Based on the above, EUR/USD may reach the support at 1.1750.
- The pound cannot find a support. The deputy governor of the Bank of England said that the British economy was entering a "menopausal" phase after passing peak productivity. It can cause a further pressure on the pound. As a strong economy always supports the rate hike and as a result, a currency, a slow growth can lead to pound’s further decline. GBP/USD is moving to the support at 1.3450. No notable data is anticipated neither on Wednesday nor on Thursday. If the pair breaks 1.3450, the further aim is at 1.3380.
- The Australian dollar did not react highly to weak economic data. Wage Price Index was 0.5% versus 0.6% forecast. However, AUD/USD is rising. The pair rebounded from the support at 0.7450 and is moving to 0.75. However, the aussie remains unstable because of the weak economic data and the RBA’s policy. On Thursday, employment change and unemployment rate will be out at 4:30 MT time. The forecast is encouraging. Whether the actual data is greater than the forecast one, AUD/USD will be above the pivot point at 0.75.
- Oil lost some points on Tuesday, as private data showed a surplus in crude inventories. Official data will be out on Wednesday at 17:30 MT time. If the actual data shows a surplus as well, the oil will suffer. Otherwise, it will be able to return to previous highs. WTI managed to recover after Tuesday’s fall. The oil benchmark is trading above $71. However, Brent could not gain a foothold. It is below $78 (Tuesday’s high is $79.45). News on the Iranian deal might put pressure on the benchmark as Europe authorities vowed to keep the deal without the US. An easing of the tensions leads to the weaker Brent.
That is all for today. Follow markets news with us!
Non-farm payrolls, the most awaited economic report, will be out on March 5 at 15:30 MT time.
Australian GDP rose by 3.1%, exceeding analysts’ forecasts of 2.5%. The Australian dollar climbed after the release, but then joined its peers in falling against the USD.
Great news for oil bulls! OPEC and its allied producers agreed to expand output cuts for the next month.
The USD skyrocketed after Fed Powell’s speech. OPEC and allied producers agreed to extend production cuts for another month. Oil surged.
The European Central Bank publishes its monetary policy statement that includes an announcement of the interest rate on March 11, at 14:45 MT time.