Powell upset buyers in all markets except oil

On Thursday, March 4, trading in the euro ended in decline. By the end of the day, the euro fell in price against the US dollar by 0.81%, to 1.1964. Market activity was low, as market participants were waiting for the speech of the US Federal Reserve Chairman Jerome Powell.

The euro was stable until the American session at 1.2030. In trading in Europe, buyers were tied on the back of weak retail sales data. Retail sales in the euro area in January decreased by 5.9% compared to the previous month. The decrease in the indicator became the maximum since April 2020 and is caused by the extension of quarantine measures in many countries of the eurozone. The forecast was expected to decline by 1.1%.

The British pound rate rose to 1.4017. Its growth was boosted by UK Treasury Secretary Rishi Sunak, who unveiled a new £ 65bn package of measures to support the country’s economy to bounce back from the crisis caused by the coronavirus pandemic.

At the American session, the head of the US Federal Reserve System sent all currencies into negative territory. He said nothing about profitability control. He only noted that he sees an increase in inflationary pressure in the future, but does not expect it to be strong enough to push the central bank to raise interest rates. His comments were interpreted by market participants as unwillingness to fight rising bond yields.

The yield on 10-year US bonds jumped to 1.57%, hitting a 1.56% high hit last week on concerns that rising inflation will force the Fed to tighten monetary policy faster than the market anticipates. The dollar has strengthened throughout the market. American stock indices declined.

Scheduled statistics (GMT + 3)

  • At 10:00, Germany is to publish data on changes in the volume of orders in the industry for January.
  • At 11:00 Switzerland will announce a change in the SNB’s foreign exchange reserves for February.
  • At 11:30 Britain will release the Halifax House Price Index for February.
  • At 16:30 in the US there will be a report on the labor market: data on changes in the unemployment rate and the number of people employed in the non-agricultural sector in February. At the same time, the United States and Canada will announce changes in the balance of foreign trade for January.
  • At 6:00 pm, Canada is to publish the Ivey Executive PMI for February.
  • At 21:00 Baker Hughes will release a report on the number of active oil drilling rigs.

Current situation

At the auctions in Asia, the euro fell to 1.1952 amid growth in the yield on 10-year US bonds to 1.58% per annum. The focus of market participants is on the labor market report (NFP). It is expected that the United States in February created 182 thousand new jobs in the non-agricultural sector, and unemployment was 6.3%. Goldman Sachs expects an increase in the number of new jobs by 225 thousand. The NFP indicator is unpredictable, so today we can expect high volatility at 16:30 Moscow time. Market participants react to several indicators of the report (unemployment, share of active population, hourly salary, revision of values ​​for the previous two months).

Powell upset buyers in all markets except oil. The price is near the important support for the Gann levels. If the 135th degree fails, buyers risk being at 180-202 degrees (1.1892-1.1866) like on March 2. On the daily TF, the lower line of the descending channel passes through the level of 1.1886, which is built according to three values: H1.2349 (maximum on 01/06/21), H1.2243 (maximum on 02/05/21), L1.1952 (minimum on 02/05/21). With weak data, the euro may rebound. Here you need to watch how the Treasury yield and the stock market react to the report on the employment market, and then draw conclusions.

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