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ForexLive European FX news wrap: The post-NFP vibes continue to play out

Mon, Feb 6, 2023 12:47 PM

<p>Headlines:</p><ul><li><a href="">Mind the gap</a></li><li><a href="">Risk stays in retreat mode to start the new week</a></li><li><a href="">Japan reportedly likely to present nominees for BOJ governor next week</a></li><li><a href="">Japan denies that it is close to nominating a list of potential BOJ governors</a></li><li><a href="">ECB's Kazaks: There will be a 50 bps rate hike in March barring significant data shock</a></li><li><a href="">ECB's Holzmann: The risk of doing too little dwarfs risk of overtightening policy</a></li><li><a href="">Eurozone February Sentix investor sentiment -8.0 vs -12.8 expected</a></li><li><a href="">UK January construction PMI 48.4 vs 48.8 prior</a></li><li><a href="">Germany January construction PMI 43.3 vs 41.7 prior</a></li><li><a href="">Germany December industrial orders +3.2% vs +2.0% m/m expected</a></li><li><a href="">SNB total sight deposits w.e. 3 February CHF 528.1 bn vs CHF 528.0 bn prior</a></li></ul><p>Markets:</p><ul><li>GBP leads, JPY lags on the day</li><li>European equities lower; S&P 500 futures down 0.6%</li><li>US 10-year yields up 6.7 bps to 3.598%</li><li>Gold up 0.5% to $1,873.82</li><li>WTI crude up 0.6% to $73.82</li><li>Bitcoin down 0.1% to $22,912</li></ul><p style="" class="text-align-justify">The day started off with a focus on Japan after the yen opened with a gap lower amid a report stating that BOJ deputy governor Amamiya was called on to succeed Kuroda as governor of the central bank. In typical fashion, Japanese officials denied that and the yen's losses were pared slightly but not by much.</p><p style="" class="text-align-justify">But as we got into European trading, the focus stayed on the mood from Friday as the strong US jobs report continues to reverberate across markets. Risk remained on the defensive with stocks and bonds being sold during the session.</p><p style="" class="text-align-justify">As such, the dollar inched higher with EUR/USD keeping below 1.0800 around 1.0760-70 levels and GBP/USD also losing some ground to 1.2025 before picking itself up to 1.2070 now. The commodity currencies remain weak amid softer risk tones with AUD/USD down 0.1% to 0.6910 and NZD/USD down 0.2% to 0.6320 currently.</p><p style="" class="text-align-justify">USD/JPY opened with a gap higher at 132.50 early in Asia before falling to 131.50 and is now trading at 131.95, still up 0.6% on the day.</p><p style="" class="text-align-justify">It's now over to Wall Street to digest the mood to start the new week and we shall see if <a href="" target="_blank" rel="follow">the penchant for dip buying</a> will continue.</p> This article was written by Justin Low at

Does the balance seem to be just right for a soft landing?

Mon, Feb 6, 2023 12:37 PM

<p style="" class="text-align-justify">Meanwhile, the Fed is also playing ball as Powell changed up his communique to one that is softer last week. As much as there might be skepticism to the strength of Friday's jobs report, at most one can argue that it isn't as strong as the headline suggests. But that's about it in my view.</p><p style="" class="text-align-justify">All else being equal, the continued trend in recent data (inflation and the labour market) should reaffirm hopes for a soft landing. Will that encourage the Fed to be more aggressive or keep an aggressive stance? Perhaps. However, they have slowly relented on that in recent months and as long as consumer inflation continues to progressively move lower, that sort of communication should continue.</p><p style="" class="text-align-justify">So, as much as we are seeing a bit of a tantrum in risk trades yesterday, it definitely beats any tantrum that could have been if there was reason for a hard landing.</p><p style="" class="text-align-justify">At this point, we're still caught in between the narrative that bad news is good news and the classic narrative that bad news is bad news; vice versa. But at some point, we're going to flip from the former to the latter although that would require inflation to continuously push lower and for markets to take that as a given.</p><p style="" class="text-align-justify">Looking ahead to this week, Powell will be up to speak again tomorrow in an <a href="" target="_blank" rel="nofollow">interview event</a> at the Economic Club of Washington. That might act as another trigger point for markets before next week's pivotal US CPI data.</p> This article was written by Justin Low at

Where them dip buyers at?

Mon, Feb 6, 2023 11:59 AM

<p style="" class="text-align-justify">Will we get a repeat today? S&P 500 futures are down 33 points, or 0.8%, as the selling momentum from Friday last week continues to reverberate. However, let's not forget that even with the hotter US jobs report, there was a brief period that stocks pared losses in Wall Street before the late stumble again.</p><p style="" class="text-align-justify">Despite some early stumbles in the past two weeks, we can see how Wall Street has the appetite to turn things around as dip buying becomes more prevalent. Is that a sign of changing sentiment in the market? Well, we'll have to wait and see.</p><p style="" class="text-align-justify">But if anything, Friday's drop after the early recovery is a sign that perhaps dip buyers won't have it so easy as there are certain quarters of the market which are more cautious and/or perhaps <a href="" target="_blank" rel="follow">scaring themselves</a>.</p><p style="" class="text-align-justify">Also, from a technical perspective, there are some challenges despite the attempted breakout by buyers in the S&P 500 last week - as pointed out <a href="" target="_blank" rel="follow">here</a>.</p> This article was written by Justin Low at

FX Majors Weekly Outlook (6-10 February)

Mon, Feb 6, 2023 11:22 AM

<p>UPCOMING EVENTS:</p><p>Tuesday: RBA Policy Decision, Fed Chair Powell speaks.</p><p>Thursday: US Jobless Claims.</p><p>Friday: University of Michigan Consumer Sentiment.</p><p>What an end of the week it was last Friday. The <a href="" target="_blank" rel="follow">labour market report</a> showed 517K jobs added vs. 185K expected, which is almost double even the most optimistic forecasts. The unemployment rate came in at 3.4% vs. 3.6% expected, which is the lowest since May 1969. People rushed to call it “too good to be true”, maybe it is but recent beats in <a href="" target="_blank" rel="follow">Job Openings</a> and <a href="" target="_blank" rel="follow">Jobless Claims</a> are testimony of the extremely tight labour market.</p><p>Later on that day, we got another big beat in the <a href="" target="_blank" rel="follow">ISM Services PMI</a> report, which bounced back strongly from the contractionary territory to 55.2 vs. 49.2 in the previous month. New orders sub-index, which is a proxy for demand, went from expansion to contraction in the previous report to expansion again with the latest one. Looks like the easing in financial conditions sparked immediately a reacceleration in economic activity. </p><p>This is something that will make the Fed’s job much trickier going forward as they try to bring inflation back to their 2% target while getting close to their projected pause. If this trend is to continue, we may see not only a “higher for longer” policy, but a “higher-er for longer” one. The market had a quick rethinking on Friday and is repricing its future interest rates expectations. The <a href="" target="_blank" rel="follow">2 year note’s yield</a>, which is more sensitive to Fed’s policy, jumped by more than 20 bps and reversed completely the drop seen in the aftermath of the FOMC Policy Decision. The market’s expectation for the terminal rate also rose to 5.04% vs. 4.90% before Friday. </p><p>The US Dollar gained across the board on Friday, and given the Friday’s data, we should see some repricing going forward. Technically, the swing support at 101.25 held and we may see a run to the 108.00 level.</p><p>Tuesday: The RBA is expected to hike by 25 bps bringing its cash rate to 3.35%. The central bank is expected to reiterate its willing to increase rate further and be data dependent until inflation is seen returning to their 2-3% target band. As a reminder, recent inflation data surprised to the upside with the Y/Y figure coming at 7.8% vs 7.5% expected.</p><p>The market will focus more on Fed Chair Powell and see what he has to say about the recent huge beat in the labour market report. There will also be other Fed speakers throughout the week.</p><p>Thursday: Given the focus on the labour market, the US Jobless Claims is something to keep an eye on. We saw beats after beats in the data and the big surprises on either side may be market moving. The expectation for Initial Claims is 194K. </p><p>Friday: The University of Michigan Consumer Sentiment survey is expected to tick up again to 65.0 from the prior 64.9 in January. The market will keep an eye on inflation expectations data in the report. </p><p>This article was written by Giuseppe Dellamotta.</p> This article was written by ForexLive at

S&P500 Technical Analysis – Soft Landing Still in the Cards?

Mon, Feb 6, 2023 11:14 AM

<p>Last Friday the <a href="" target="_blank" rel="follow">NFP report</a> surprised everyone with a huge beat to expectations, 517K jobs added compared to 185K expected, and the unemployment rate fell to 3.4%, the lowest in 53 years. The average hourly earnings though remained unchanged at 0.3% M/M and fell to 4.4% Y/Y. Looks nice with labour market strength and wage disinflation. Soft landing vibes… </p><p>Some time later the <a href="" target="_blank" rel="follow">ISM Services PMI</a> surprised to the upside with a big jump back into expansion. Activity in the services sector seems to have picked up again, which makes wonder if the recent easing in financial conditions led to a reacceleration in economic activity. </p><p>Looking forward, will this make it harder for inflation to come back to the Fed’s 2% target? And will the Fed need to go higher than projected in their December 2022 meeting?</p><p>S&P500 Technical Analysis</p><p>On the daily chart above, we can see that the price couldn’t break the 4175 <a href="" target="_blank" rel="follow">resistance</a> after very strong economic reports. Maybe the bulls are getting cautious as the Fed may be forced to go higher with interest rates or indeed hold for longer than previously expected. </p><p>The bulls will need a clear break out of that resistance to target the next resistance at 4300. The blue minor upward <a href="" target="_blank" rel="follow">trendline</a> for now will act as support for the bullish trend. A break below that trendline and things start to get interesting for the bears.</p><p>On the 4 hour chart above, we can see that the price is struggling at the resistance. From a risk management standpoint, a pullback to the trendline and one of the <a href="" target="_blank" rel="follow">Fibonacci retracement levels</a> would offer a better risk to reward trade. </p><p>Looking at the 1 hour chart, we can see the two possible scenarios: </p><p>· Get above the 4208 resistance and the bulls can try to extend the move to the next resistance at 4300.</p><p>· Get below the 4133 <a href="" target="_blank" rel="follow">support</a> and it opens up a move lower to possibly 4050 with a breakout below the trendline leading to further sell off.</p> This article was written by ForexLive at

Nasdaq Composite Technical Analysis - NFP a Gamechanger?

Mon, Feb 6, 2023 10:36 AM

<p>Last Friday the <a href="" target="_blank" rel="follow">NFP report</a> surprised everyone with a 517K gain vs. 185K expected. The number was much higher than even the most optimistic forecasts. The unemployment rate fell to 3.4%, the lowest in 53 years. This brought back fears of a possible reacceleration in inflation as the labour market is still extremely tight and wages may start to rise again. </p><p>The Fed is trying to get inflation back to its 2% target and it’s hard to envision such a scenario with a labour market this strong. Inflation may get to 3% or 4%, which would be a failure for the Fed and if too much time passes by, people may start to change their expectations around the 2% inflation, which would make the Fed’s job even harder.</p><p>The <a href="" target="_blank" rel="follow">ISM Services PMI</a> report also showed a reacceleration in economic activity for the Services sector as the data made a big jump back into expansionary territory. If the market had doubts on the Fed’s willing to hike to 5.00-5.25% and stay there for longer, the last week should have cleared those doubts.</p><p>Nasdaq Composite Technical Analysis</p><p>On the daily chart above, we can see that the price after breaking out of the 10200-11500 range, rallied towards the next <a href="" target="_blank" rel="follow">resistance</a> at 12274 where it got rejected after the blockbuster NFP report. Given the new uncertainties on the monetary policy side, we can expect a pullback before another push higher. </p><p>On the 4 hour chart above, we can see that the blue upward <a href="" target="_blank" rel="follow">trendline</a> is now the support for the current uptrend. </p><p>If the price falls below the trendline and the previous resistance now turned <a href="" target="_blank" rel="follow">support</a>, the bears will regain control and target the lower band of the previous range at 10200. For the bulls a break above the 12274 resistance is needed to target the next resistance at 13191.</p><p>Drilling down to the 1 hour chart above, we can see the possible scenarios. From a risk management perspective, the bulls should wait for the price to retrace back to the trendline where there is also support from the previous swing high and a 61.8% <a href="" target="_blank" rel="follow">Fibonacci retracement level</a>. </p><p>The risk would be well defined. In case the price breaks down the trendline and the previous resistance turned support at 11500, it would open up opportunities for the bears to target the next support at 10200. </p> This article was written by ForexLive at

Market Outlook for the Week of 6-10 February

Mon, Feb 6, 2023 10:30 AM

<p>After a busy week with a lot of economic events and the decisions of central banks in focus, this one is likely to be a quiet one, as is usual following the NFP print.</p><p>The BoE and ECB hiked the rates by 50bps and Fed by 25bps, while all of them signalled that more hikes will follow. The market now expects another 50bps hike at the next ECB meeting in March, and a 25bps hike from the BoE. </p><p>The NFP came in high above expectations and the unemployment rate fell to 3.4% -- the lowest it's been in 50 years. The market is now pricing in another 25bps rate hike for the next FOMC meeting in March, but the Fed is data dependent and until then we'll have two more CPI reports and another NFP print. Even so, the bank is unlikely to change its hawkish tone.</p><p>Fed Chair Powell described the labour market as "extremely tight" based on the recent data, which indicates that the Fed wants to see more softening before considering any rate hike pause. However, UBS analysts warn that the payroll growth in January might have been fuelled by temporary factors like the mild winter weather and these are actually broader signs the labour market is cooling off to some extent.</p><p>The focus Tuesday will be on the RBA cash rate and rate statement. Fed Chair Powell is expected to speak in a moderated discussion at the Economic Club of Washington DC and it will be interesting to see what he has to say about the latest jobs report. BoC Governor Macklem is also scheduled to speak on how monetary policy works at a conference hosted by the Chartered Financial Analyst of Quebec. These talks shouldn't create market volatility, but it's worth keeping an eye on them.</p><p>Thursday we'll have the monetary policy report hearing in the U.K., followed by a busy Friday with the U.K. GDP m/m print, the employment change and unemployment rate in Canada and the preliminary UoM consumer sentiment and inflation expectations in the U.S.</p><p>A few Fed members are also scheduled to deliver their remarks this week. </p><p>The RBA is likely to hike the rate by 25bps, but according to some analysts, the market has this priced in already. The stubbornly high inflation in Australia poses a big problem for the bank and suggests the hiking cycle might not be over, but the market will watch for any change in language that could indicate a pause. At the December meeting the RBA stressed that it is not on a pre-set course.</p><p>In the U.S. the focus will be on the consumer sentiment and inflation expectations data. The high gasoline prices will likely lead to an increase of the 1-year inflation expectations median, but the 5-to-10-year expectations will remain the same at 2.9%, according to Citi.</p><p>In Canada, even though the net employment change could see a strong median rise by 25k, the unemployment rate could increase to 5.1% from 5.0% as a result of stronger immigration and therefore higher participation in the labour market, Citi analysts said.</p><p>In the U.K. GDP data will show whether the economy entered a technical recession during the second half of last year, according to Wells Fargo. Overall, the economic situation is expected to be negatively impacted in the near future with consumer spending under pressure.</p><p>USD/CAD expectations</p><p>On the H1 chart the USD/CAD closed the week near the 1.3415 resistance. A correction is expected until the 1.3350 level of support. If that level holds, the next target could be 1.3515.</p><p>The BoC raised the rates to 4.5% and signalled that it will keep them at this level. Other hikes could follow in the future as necessary to keep inflation under control, but for now the pause in the hiking cycle was a dovish surprise. The Governor also noted that rate cuts are not on the table at this point when asked about recession risks.</p><p>USD/CAD has prospects for further appreciation in the near future.</p><p>U.S. Dollar Index (DXY) expectations</p><p>After stronger than expected jobs data the possibility of any rate cuts has been pushed further away. On the H1 chart the DXY looks good for buying opportunities. A correction is expected until the 101.80 level of support and if that level holds, the next target could be 103.90.</p><p>On the downside the next levels of support are at 101.30 and 100.70. </p><p>This article was written by Gina Constantin.</p> This article was written by ForexLive at

Is the market just scaring itself or is the fear justified?

Mon, Feb 6, 2023 10:29 AM

<p style="" class="text-align-justify">Since Jackson Hole last year, it was a case that market participants had continued to keep looking for any signs of a Fed pivot. Eventually, they got their wish as Powell relented on the language in November and we also saw more signs of that in the FOMC meeting and press conference last week.</p><p style="" class="text-align-justify">Under the current circumstances, data talks and we have seen the most important one - that is US inflation - trend in a way that has been more risk positive. That vindicated the broader market view over the past few months and even got the Fed to acknowledge that. Yet, it was the hot US jobs report on Friday which is stealing the spotlight focus as we get into the new week.</p><p style="" class="text-align-justify">We've known for a while now that labour market conditions are still holding up well in the US. So, is the higher non-farm payrolls number really that jarring? Besides, market participants had ignored this statistic for a few months now as CPI data has been the new all-important economic release.</p><p style="" class="text-align-justify">The way I see it, this doesn't really change the Fed's narrative but it perhaps gives a reason for broader markets to think about a question or two. Then again, this has been a market that has been convinced that a Fed pivot is coming since August last year, so is it really a case that we are seeing real fear or is this just market participants spooking themselves slightly based on a hiccup?</p><p style="" class="text-align-justify">It's going to be tough to figure out the answer as data is king in this environment and the best we can do is to work based on what the data says and where it takes us. The next big one to watch will be the US CPI on Tuesday next week. In between now and then, it can get a little messy as the Friday data reverberates against a backdrop that has been so sure that the Fed will continue to relent to the market narrative since Q4 last year.</p> This article was written by Justin Low at

Eurozone December retail sales -2.7% vs -2.5% m/m expected

Mon, Feb 6, 2023 10:00 AM

<ul><li>Prior +0.8%; revised to +1.2%</li><li>Retail sales -2.8% vs -2.7% y/y expected</li><li>Prior -2.8%; revised to -2.5%</li></ul><p style="" class="text-align-justify">That's a notable drop in euro area retail sales towards the end of last year with the volume of retail trade decreasing by 2.9% for food, drinks and tobacco and by 2.6% for non-food products, while it grew by 2.3% for automotive fuels. As a whole for 2022, retail trade in the region grew by 0.7% - in which the figure could have been better if not for higher inflation surely.</p> This article was written by Justin Low at

Risk stays in retreat mode to start the new week

Mon, Feb 6, 2023 9:59 AM

<p style="" class="text-align-justify">And that is weighing on broader market sentiment again, as traders and investors are pumping the brakes on the supposed narrative that central banks - in particular, the Fed - is going to ease up on the tightening cycle. Equities are lower again today with European indices posting roughly 1% losses now and S&P 500 futures are down 0.8%.</p><p style="" class="text-align-justify">Looking to Wall Street later today, it will be a tricky one to work out especially with the S&P 500 index having sought a breakout move last week but is also running into resistance near its 100-week moving average (red line):</p><p style="" class="text-align-justify">Meanwhile, bonds are selling off again today with 10-year Treasury yields up 7 bps to 3.595% as the 200-day moving average (blue line) continues to be a key line in the sand for yields at the moment:</p> This article was written by Justin Low at

Dollar holds slightly firmer on the session

Mon, Feb 6, 2023 9:54 AM

<p style="" class="text-align-justify">The dollar is putting on a solid defense of key levels since last week and Friday's hot US jobs report really helped to tip the scales in favour of the greenback. The currency is higher again today, helped by a more subdued risk mood with both bonds and equities trading lower in European morning trade.</p><p style="" class="text-align-justify">S&P 500 futures are now down 31 points, or 0.8%, while 10-year Treasury yields are up 6.5 bps to 3.591% currently. That is putting the dollar in a firm spot with the charts also helping to solidify a case for a stronger rebound perhaps. Let's take a look.</p><p style="" class="text-align-justify">EUR/USD is seeing a firm rejection at the 1.1000 mark with the weekly close last week also falling short of firmly breaking the 50.0 Fib retracement level of the downswing since 2021 at 1.0942. Adding to that, the 100-week moving average (red line) is also still in play and sits just above 1.1000 for now.</p><p style="" class="text-align-justify">As such, sellers are still staying in the game despite a promising run higher in the early half of last week.</p><p style="" class="text-align-justify">The more dovish BOE is not really providing much assistance for the pound, as cable runs lower in the past few days towards the 1.2000 level again. The start of the year rally failed to result in anything significant as the December highs at 1.2443-46 held and that remains the key upside resistance to watch for now.</p><p style="" class="text-align-justify">Moving over to AUD/USD, the pair looked like it was ready to rip higher in the past two weeks but the August highs at 0.7125-36 is preventing an extended breakout it would seem. The softer risk mood at the end of last week was a drag alongside the stronger dollar, resulting in a fall back below 0.7000.</p><p style="" class="text-align-justify">For buyers, the key downside risk level to watch will be the 200-day moving average (blue line) just above 0.6800 now.</p><p style="" class="text-align-justify">Then, we also have NZD/USD which has failed on multiple occasions now to find a firm break above 0.6500 since January. The huffing puffing continued last week before the Friday drop looks to prove to be a firm rejection of the key level. For buyers, the key downside risk level to watch will be the region around the December and January lows at 0.6190-30 with the 200-day moving average (blue line) at 0.6188 currently also one to be mindful of.</p> This article was written by Justin Low at

North Korean balloon reportedly spotted over South Korea

Mon, Feb 6, 2023 9:38 AM

<p style="" class="text-align-justify">Balloons seem to be all the rage these days but South Korea's military is saying that the one from North Korea that briefly flew over its territory wasn't one intended for spying activities. The military said that it took unspecified "measures" to handle the situation and the balloon left South Korean airspace a few hours later.</p><p style="" class="text-align-justify">This is just something to take note of as tensions have been on the rise between North and South Korea, following the record number of missile tests by the former last year.</p> This article was written by Justin Low at

Eurozone February Sentix investor sentiment -8.0 vs -12.8 expected

Mon, Feb 6, 2023 9:30 AM

<ul><li>Prior -17.5</li></ul><p style="" class="text-align-justify">Euro area investor morale rises for a fourth straight month to its highest since March last year. Sentix notes that this signals that a recession is "off the table" for the time being. The expectations index also improved further to -6.0 from -15.8 in January, to its highest level since February last year.</p> This article was written by Justin Low at

UK January construction PMI 48.4 vs 48.8 prior

Mon, Feb 6, 2023 9:30 AM

<ul><li>Prior 48.8</li></ul><p style="" class="text-align-justify">UK's construction output declined to its weakest since May 2020, led by a sharp drop in house building as new orders and employment also continued to show signs of further weakening. The drop reflects subdued demand conditions as high prices and economic headwinds continue to take a toll on activity. S&P Global notes that:</p><p style="" class="text-align-justify">"A sharp and accelerated decline in house building activity led to the weakest UK construction sector performance for just over two-and-a-half years in January. Construction companies once again cited a headwind from lacklustre market conditions, rising interest rates and fewer new project starts in the residential segment. Commercial building also slipped into contraction as the subdued UK economy weighed on business investment. </p><p style="" class="text-align-justify">"However, there were positive signals for longer-term prospects across the construction sector, with business activity expectations staging a swift rebound from the low point seen last December. For some firms, the recovery in business optimism to its highest for six months was driven by signs of a turnaround in new sales enquires at the start of 2023. Other construction companies simply noted gradual improvements in the general economic outlook and hoped that confidence would return at a later stage this year to alleviate the current lack of momentum in the house building sector."</p><p style="" class="text-align-justify">/<a href="" class="terms__main-term" id="3a5ab7c1-ff09-45ea-87d4-eea6613bb754" target="_blank">GBP</a></p> This article was written by Justin Low at

SNB total sight deposits w.e. 3 February CHF 528.1 bn vs CHF 528.0 bn prior

Mon, Feb 6, 2023 9:05 AM

<ul><li>Domestic sight deposits CHF 509.7 bn vs CHF 511.6 bn prior</li></ul><p style="" class="text-align-justify">Little change to overall sight deposits in the past week but the SNB is still very much in the process of streamlining its policies after the surprise pivot last year.</p> This article was written by Justin Low at

Japan denies that it is close to nominating a list of potential BOJ governors

Mon, Feb 6, 2023 8:53 AM

<p style="" class="text-align-justify">This relates to the report from Kyodo News <a href="" target="_blank" rel="follow">here</a>. The ruling party is out with a comment that there is "no truth" to said media report that they are at the final stages of nominating a successor to Kuroda.</p> This article was written by Justin Low at

Japan reportedly likely to present nominees for BOJ governor next week

Mon, Feb 6, 2023 8:38 AM

<p style="" class="text-align-justify">The race is heating up and BOJ deputy governor Amamiya is the latest to have his name thrown into the hat as seen earlier today. USD/JPY remains higher on the day at 131.90 after the opening gap higher to 132.50 levels at the start of trading today.</p> This article was written by Justin Low at

Germany January construction PMI 43.3 vs 41.7 prior

Mon, Feb 6, 2023 8:30 AM

<ul><li>Prior 41.7</li></ul><p style="" class="text-align-justify">That's a slight improvement to Germany's construction activity but demand conditions remain weak as high prices as rising rates weigh on sentiment. All three broad categories (residential, commercial, civil engineering) showed sustained downturns, so that continues to detail the underlying negativity in the sector to start the new year. S&P Global notes that:</p><p style="" class="text-align-justify">“Germany's construction sector remained mired in contraction territory at the start of the new year, as demand for building work remained strained by soaring prices, tightening credit conditions and still-high levels of economic uncertainty. The rates of decline in activity and new orders eased somewhat in January, coinciding with reduced pessimism among businesses towards the outlook, but each of these indicators remained deep in sub-50 territory to suggest further weakness in the coming months. </p><p style="" class="text-align-justify">"Falling workloads meant that construction companies remained in retrenchment mode, scaling back their purchasing activity as well as trimming workforce numbers. Issues over skill shortages in the sector meanwhile look to be easing, with data showing back-toback improvements in the availability of subcontractors. </p><p style="" class="text-align-justify">"On the supply side, German constructors continued to note longer lead times on building materials, but with far less frequency than around this time last year. The rate of cost <a href="" class="terms__main-term" id="ad51a5a2-1afc-4f42-9e62-ea6faf6f90fa" target="_blank">inflation</a> in January was also well below the highs of the past two years, although a slight uptick suggested a pause in the recent slowing trend."</p> This article was written by Justin Low at

European equities open lower to start the day

Mon, Feb 6, 2023 8:07 AM

<ul><li>Eurostoxx -0.8%</li><li>Germany DAX -0.7%</li><li>France CAC 40 -0.9%</li><li>UK FTSE -0.6%</li><li>Spain IBEX -0.7%</li></ul><p style="" class="text-align-justify">This is but a small dent for European equities as sentiment is shot slightly after the hot US jobs report on Friday last week. S&P 500 futures are also down 18 points, or 0.4%, so the overall risk mood is leaning more defensively at the moment. Elsewhere, the dollar is keeping steadier across the board with light gains being observed mostly.</p> This article was written by Justin Low at

China reaffirms that trade relations with Australia are back on track

Mon, Feb 6, 2023 7:27 AM

<p style="" class="text-align-justify">Since the pandemic started, relations between the two have been rather strained. However, they have improved in the past few months and this is another supportive story to that. China's commerce ministry is out saying that China-Australia ties are important and that a bilateral economic, trade cooperation is mutually beneficial.</p><p style="" class="text-align-justify">Adding that the meeting has been an important step to get things back on track, reaffirming that they are willing to restart economic and trade exchanges with Australia again.</p> This article was written by Justin Low at

Eurostoxx futures -0.7% in early European trading

Mon, Feb 6, 2023 7:06 AM

<ul><li>German DAX futures -0.7%</li><li>UK FTSE futures -0.3%</li></ul><p>This continues from the softer mood since Friday last week, with S&P 500 futures seen down 21 points, or 0.5%, currently. For Europe, it is a bit of a catch up as regional indices did close higher amid the volatile swings at the end of last week - which also saw US indices pare losses before dropping again late on.</p> This article was written by Justin Low at

Japan PM Kishida doesn't comment much about Amamiya speculation for BOJ governor post

Mon, Feb 6, 2023 7:04 AM

<p style="" class="text-align-justify">That's not really giving away much, although we have seen denials from other sources earlier stating that they haven't just outright considered Amamiya for the role at the moment. USD/JPY is down to 131.80 from around 132.50 at the start of the day, but still up 0.5% amid the opening gap higher.</p> This article was written by Justin Low at

Germany December industrial orders +3.2% vs +2.0% m/m expected

Mon, Feb 6, 2023 7:00 AM

<ul><li>Prior -5.3%; revised to -4.4%</li></ul><p style="" class="text-align-justify">After the heavy drop in November, German factory orders are seen bouncing back a little in December. As a whole in 2022, new orders recovered amid a rebound since the pandemic - with the levels at the end of last year being 1.9% higher than in December 2019.</p> This article was written by Justin Low at

Trade ideas thread - European session 6 February 2023

Mon, Feb 6, 2023 6:34 AM

<p style="" class="text-align-justify">Hot. Hot. Hot. 🔥🔥🔥</p><p style="" class="text-align-justify">US labour market conditions continue to stay strong and that sent markets for a ride on Friday with bonds selling off heavily and the dollar recovering strongly. But does that really change the Fed outlook all too much? In all honesty, I don't think so but perhaps markets are now heeding some caution as Powell & co. might just deliver on more hawkish expectations.</p><p style="" class="text-align-justify">The dollar is now making a stand and will we be able to see that momentum keep going?</p><ol><li>EUR/USD backs away from a test of 1.1000</li><li style="" class="text-align-justify">USD/JPY jumps above 130.00, breaks trendline resistance and lower highs, lower lows pattern</li><li style="" class="text-align-justify">GBP/USD inches towards 1.2000 after rejection at December highs</li><li style="" class="text-align-justify">AUD/USD drops back under 0.7000 as August highs hold</li><li style="" class="text-align-justify">NZD/USD fails at another run to get above 0.6500</li></ol><p style="" class="text-align-justify">Meanwhile, equities also suffered a setback at the end of last week as the dip buying momentum faded late in Wall Street trading. That could be a blow to short-term sentiment, especially with the S&P 500 having ran close to a test of its 100-week moving average.</p><p style="" class="text-align-justify">The next few weeks/months is going to be a raging debate on "who is right?" basically. Central banks or markets? It's all about the data now, as such.</p><p style="" class="text-align-justify">What are your views on the market right now? Share your thoughts/ideas with the ForexLive community here.</p> This article was written by Justin Low at

A couple of releases to move things along in Europe today

Mon, Feb 6, 2023 5:47 AM

<p style="" class="text-align-justify">There were some big moves on Friday and plenty of volatility after the <a href="" target="_blank" rel="follow">US non-farm payrolls</a> came in with a strong beat. The dollar rallied as bonds were routed, while equities had a choppy one with the S&P 500 falling by over 1% before paring that drop only to slide back and close the day 1% lower.</p><p style="" class="text-align-justify">It was quite a hectic end to the week, needless to say. Things are looking calmer today though, with the dollar keeping on steadier footing. The yen is the early mover as noted <a href="" target="_blank" rel="follow">here</a> while bond yields are also just a touch higher on the day. In the case of 10-year Treasuries, it looks like bond bears are not giving up on the 200-day moving average (blue line) in yields just yet:</p><p style="" class="text-align-justify">Meanwhile, equities are also leaning slightly towards the softer side today with S&P 500 futures down 17 points, or 0.4%, at the moment.</p><p style="" class="text-align-justify">Looking ahead, there won't be much on the agenda that should be too impactful as risk and broader market sentiment will stay as key drivers to start the new week.</p><p style="" class="text-align-justify">0700 GMT - Germany December industrial orders0830 GMT - Germany January construction PMI0900 GMT - SNB total sight deposits w.e. 3 February0930 GMT - Eurozone February Sentix investor sentiment0930 GMT - UK January construction PMI1000 GMT - Eurozone December retail sales data</p><p style="" class="text-align-justify">That's all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.</p> This article was written by Justin Low at