Yen is gaining ground against its major counterparts today, as traders are probably lightening up short positions ahead of BoJ policy decision tomorrow. Sterling is also showing signs of strength. However, overall, market sentiment remains cautious, with Dollar retraces some of this week’s gains. The most significant upcoming events for the week are scheduled for tomorrow, including the release of UK GDP, US non-farm payroll figures, and Canada’s employment report. These data releases are expected to impact market sentiment and drive currency movements in the short-term.
Technically, a major focus for the rest of the week would be on whether selling in US stocks would take off again. S&P 500 is so far holding above last week’s low at 3928.16, and the outlook is neutral at worst. But firm break of 3928.16 will raise the chance that whole rebound from 3491.58 has completed and target 3764.49 support for confirmation.
In Europe, at the time of writing, FTSE is down -0.58%. DAX is down -0.24%. CAC is down -0.29%. Germany 10-year yield is up 0.0235 at 2.669. Earlier in Asia, Nikkei rose 0.63%. Hong Kong HSI dropped -0.63%. China Shanghai SSE dropped -0.22%. Singapore Strait Times dropped -0.38%. Japan 10-year JGB yield closed down -0.0026 at 0.504.
US initial jobless claims rose to 211k, above expectations
US initial jobless claims rose 21k to 211k in the week ending March 4, above expectation of 195k. Four-week moving average of initial claims rose 4k to 197k.
Continuing claims rose 69k to 1718k in the week ending February 25. Four-week moving average of continuing claims rose 10k to 1680k.
ECB Villeroy: Inflation will halve by year end
ECB Governing Council member Francois Villeroy de Galhau said “what is very important is the inflation expectations”.
“The peak will come this semester, and then inflation will halve by the end of the year,” he added.
The Bank of France head also expect France’s inflation to peak in first half of the year.
AUD/JPY and NZD/JPY break support ahead of Kuroda’s last BoJ meeting
Yen is seeing a broad recovery today as investors anticipate Haruhiko Kuroda’s last BoJ monetary policy meeting tomorrow. As with four of his predecessors, Kuroda is unlikely to make any changes to policy during this last meeting, with his comments expected to echo what has been said numerous times before. Specifically, he is likely to reiterate that the current ultra-loose monetary policy is still appropriate until there is sustained inflation above the 2% target led by wage growth.
Meanwhile, the government’s nominees for the next BoJ Governor and Deputy Governors have been approved by the lower house of parliament today. The upper house will vote on the nominees tomorrow. Kazuo Ueda will officially replace Kuroda on April 8, and chair his first monetary policy meeting on April 27-28. The two deputy governor nominees, Shinichi Ueda and Ryozo Himino, will take office from March 20.
Yen is making progress today by breaking through near term resistance levels against commodity currencies. AUD/JPY’s break of 90.21 support argues that corrective rise from 87.00 has completed at 93.02. Sustained trading below channel support (now at 89.91) will affirm this bearish case and target 87.00/88.10 support zone.
NZD/JPY’s break of 83.59 support also argue that corrective pattern from 81.02 has completed at 85.20. Sustained trading below trend line support (now at 83.44) will bring deeper fall to 82.31 support first, and then 81.02 low.
USD/JPY Mid-Day Outlook
Daily Pivots: (S1) 136.59; (P) 137.25; (R1) 138.02; More…
Intraday bias in USD/JPY remains neutral for consolidation below 137.90 temporary top. Further rally is expected as long as 135.35 support holds. Break of 137.90 will resume the rally from 127.20 to next fibonacci level at 142.48. However, break of 135.35 will bring deeper pull back to 55 day EMA (now at 134.30) instead.
In the bigger picture, the break of 38.2% retracement of 151.93 to 127.20 at 136.64 suggests that whole down trend from 151.93 has completed at 127.20 already. Tentatively, rise from 127.20 is seen as the second leg the medium term pattern from 151.93. Further rally is expected to 61.8% retracement at 142.48. This will now remain the favored case as long as 55 day EMA (now at 134.10) holds.
Economic Indicators Update
| GMT | Ccy | Events | Actual | Forecast | Previous | Revised |
|---|---|---|---|---|---|---|
| 23:50 | JPY | GDP Q/Q Q4 F | 0.00% | 0.20% | 0.20% | |
| 23:50 | JPY | GDP Deflator Y/Y Q4 F | 1.20% | 1.10% | 1.10% | |
| 23:50 | JPY | Money Supply M2+CD Y/Y Feb | 2.60% | 2.80% | 2.70% | |
| 00:01 | GBP | RICS Housing Price Balance Feb | -48% | -50% | -47% | -46% |
| 01:30 | CNY | CPI Y/Y Feb | 1.00% | 1.90% | 2.10% | |
| 01:30 | CNY | PPI Y/Y Feb | -1.40% | -1.20% | -0.80% | |
| 06:00 | JPY | Machine Tool Orders Y/Y Feb P | -10.70% | -9.70% | ||
| 12:30 | USD | Challenger Job Cuts Y/Y Feb | 410.10% | 440.00% | ||
| 13:30 | USD | Initial Jobless Claims (Mar 3) | 211K | 195K | 190K | |
| 15:30 | USD | Natural Gas Storage | -76B | -81B |