Financial Markets Update

The Dollar Index (DXY)
Key news events today
Core PPI m/m
Core Retail Sales m/m
Empire State Manufacturing Index
PPI m/m
DXY From Today
The upcoming data releases may hurt the USD, as the Core PPI m/m is forecasted to be 0.4%, down from the previous month’s reading of 0.5%. Similarly, the Core Retail Sales m/m is predicted to be -0.1%, lower than the previous month’s reading of 2.3%. The Empire State Manufacturing Index is expected to be -7.9, worse than the last reading of -5.8%.
Central Bank Notes:

The Committee has raised the federal funds rate target range to 4.5-4.75% and plans to continue increasing it to return inflation to 2%

The Committee will monitor incoming information and adjust the stance of monetary policy as appropriate to achieve its goals

A majority vote from the Committee supported the decision to raise the target range

Next meeting is on 23 March 2023

Next 24 Hours Bias
Bearish

Oil
Key news events today
No major news events.
Oil today
Fed Chair Powell’s mention of further acceleration in interest rate hikes has caused a significant rally in the US dollar, which could lead to downward pressure on oil prices and broader implications for the global economy. The Fed chief is scheduled to testify again later today.
Next 24 Hours Bias
Weak Bearish

The Dollar Index (DXY)
Key news events today
ADP Non-Farm Employment Change
Fed Chair Powell Testifies
JOLTS Job Openings
DXY
US ADP Non-Farm Employment Change shows a forecasted increase of 197K jobs (previously 106K), potentially strengthening the USD. Fed Chair Powell’s testimony and JOLTS Job Openings data release (10.58M, previously 11.01M) may also impact the currency.
Central Bank Notes:

The Committee has raised the federal funds rate target range to 4.5-4.75% and plans to continue increasing it to return inflation to 2%

The Committee will monitor incoming information and adjust the stance of monetary policy as appropriate to achieve its goals

A majority vote from the Committee supported the decision to raise the target range

Next meeting is on 23 March 2023

Next 24 Hours Bias
Mixed

General Market Analysis 08/03/23
Federal Reserve Bank Chair Jerome Powell smashed global markets yesterday as he advised the Senate to be prepared for bigger rate hikes if economic data continues to suggest that inflation is far from under control. The top US indices all finished comprehensively in the red, the Dow leading the way closing over 1.7% down closely followed by the S&P and Nasdaq which finished 1.5% and 1.3% down respectively. US treasury yields jumped once again with the 2 year yields, which best represents short term interest rate expectations, topping 5% for the first time since 2007.
The dollar surged against all comers after Powell’s testimony with the major currencies taking a hit as market expectations for a 50bps rate hike this month jumped to 70% from 30% just a couple of days ago. Gold was smashed, with dollar buying taking the precious metal down over 1% on the day. Investor concerns were realized after the recent strong data from the US was clearly acknowledged by the Fed Chair, he added that the Fed would not consider moving it’s inflation target from 2% and this is a further indication of higher rates for longer.
Looking ahead at today’s trading sessions and expect the repercussions of Powell’s testimony to reverberate throughout the day and up until his next appearance when the US session opens again. We do have further risk events occurring today with ECB President Lagarde speaking in the European session. Once again though the real action is reserved for the New York trading day, we have two US employment figures released today in the form of the ADP Non-Farm data and the Jolts Job Openings and both will be closely watched as a front runner for Friday’s big NFP release. In addition to this we have the small matter of the Bank of Canada’s rate announcement and statement before Powell hits the newswires again.

OIL:

Looking at the H4 chart, my overall bias for BOC is bearish as the current price is below the Ichimoku cloud, and there is a descending trend line. Expecting the price to head down towards the 1st support level at 79.222 which is the recent overlap swing low, before the price drops to the 2nd support at 75.827.
In an alternate scenario, the price could possibly head up towards the 1st resistance level at 88.598 which is the recent swing high.
Areas of consideration:

H4 time frame, 1st resistance at 88.598

H4 time frame,1st support at 79.587

H4 time frame, 2nd support at 75.827

XAU/USD (GOLD):

Looking at the H4 chart, my overall bias for XAUUSD is bearish due to the current price being below the Ichimoku cloud, indicating a bearish market. To add confluence to this bias, price is also along a descending trendline.If this bearish momentum continues, expect the price to possibly continue heading towards the 1st support at 1782.920 where the overlap support intersects with the -61.8% Fibonacci expansion line.
In an alternative scenario, price could possibly head back up to retest the 1st resistance at 1824.515 where the overlap support is
Areas of consideration:

H4 time frame, 1st resistance at 1824.515

H4 time frame, 1st support at 1782.920

DXY:

Looking at the H4 chart, my overall bias for DXY is bullish due to the current price crossing above the Ichimoku cloud, indicating a bullish market. To add confluence to this bias, price is also along an ascending trendline.If this bullish momentum continues, expect the price to possibly break the 1st resistance at 105.610, where the overlap resistance and 78.6% Fibonacci line is before heading towards the 2nd resistance at 107.207 which is the overlap resistance.
In an alternative scenario, price could head back down to retest the 1st support at 104.667, where the overlap support and 38.2% Fibonacci line is.
Areas of consideration:

H4 time frame, 1st resistance at 105.610

H4 time frame, 2nd resistance at 107.207

H4 time frame, 1st support at 104.667

Upcoming Events:

Monday, February 27, 2023

09:00 AM GMT – (GBP) MPC Member Broadbent Speaks

01:30 PM GMT – (USD) Core Durable Goods Orders m/m

01:30 PM GMT – (USD) Durable Goods Orders m/m

03:00 PM GMT – (USD) Pending Home Sales m/m

Tuesday, February 28, 2023

04:10 AM GMT – (JPY) BOJ Gov-Designate Ueda Speaks

01:30 PM GMT – (CAD) GDP m/m

03:00 PM GMT – (USD) CB Consumer Confidence

03:00 PM GMT – (USD) Richmond Manufacturing Index

Wednesday, March 01, 2023

12:30 AM GMT – (AUD) CPI y/y

12:30 AM GMT – (AUD) GDP q/q

10:00 AM GMT – (GBP) BOE Gov Bailey Speaks

03:00 PM GMT – (USD) ISM Manufacturing PMI

Thursday, March 02, 2023

10:00 AM GMT – (EUR) CPI Flash Estimate y/y

10:00 AM GMT – (EUR) Core CPI Flash Estimate y/y

01:30 PM GMT – (USD) Unemployment Claims

Tentative – (NZD) RBNZ Gov Orr Speaks

09:00 PM GMT – (USD) FOMC Member Waller Speaks

Friday, March 03, 2023

03:00 PM GMT – (USD) ISM Services PMI

Global Markets:

Asian Stock Markets : Nikkei down 0.15%, Shanghai Composite down 0.05%, Hang Seng down 0.25%, ASX down 1.12%

Commodities : Gold at $1815.55 (-0.09%), Silver at $20.71 (-1.08%), Brent Oil at $82.60 (-0.27%), WTI Oil at $76.18 (-0.18%)

Rates : US 10-year yield at 3.945, UK 10-year yield at 3.779, Germany 10-year yield at 2.526

News & Data:

(USD) Revised UoM Consumer Sentiment 67 vs 66.4 expected

(USD) New Home Sales 670K vs 620K expected

(USD) Core PCE Price Index m/m 0.60% vs 0.40% expected

Gold (XAU)
Key news events today
No major news events.
We expect from Gold today
Gold traded down to the support level of 1810 on Friday as the DXY strengthened. Although the price retraced slightly to retest the 1815 price area, look for further downside on Gold, especially if the price breaks below the 1810 price level, with the next key support level at the round number price level of 1800.
Next 24 Hours Bias
Medium Bearish

The Dollar Index (DXY)
Key news events today
No major news events.
We expect from DXY today
On Friday, the Core PCE price index was released at 0.6% (Forecast: 0.4%). This signaled that inflation growth in the US was higher than expected which is likely to spur further interest rate increases from the US Federal Reserve. Following the news release, the DXY climbed steadily from the 104.65 price level up toward the 105.30 price area. Currently consolidating at the 105 price level, look for the price to retrace briefly before trading higher toward the near term resistance of 105.50.
Central Bank Notes:

Federal Reserve hiked rates by 25bps taking interest rates to 4.75%

Next meeting is on 23 March 2023

Ongoing rate increases will be expected

Next 24 Hours Bias
Weak Bullish

CurdeOil
Key news events today
No Major News Events
We expect from Oil today
Energy traded slightly higher following the release of news that Russia plans on cutting oil exports to European and Atlantic buyers. However, while WTI and Brent traded higher, prices are likely to reverse and continue trading lower. Look for WTI to trade down to the 74.00 price level and for Brent to retest the near term support level of 80.00.
Next 24 Hours BiasWeak Bearish