.jpg)
The market opened Monday under a cloud of risk aversion with the ongoing Ukraine and Russia tensions and uncertainty depressing the market. Investors shifted their focus to safe haven assets, such as gold and the Japanese yen; the latter also benefitting from carry trade opportunists and strengthening to a three day high as a result. The risk aversion later began to ease overnight on Monday into Tuesday morning’s trade with safe haven assets weakening as investors turned their attention to the week’s data announcements, especially Friday’s Non-Farm Payrolls (NFP) jobs data from the US. The forecast is for a positive change of 159,000 jobs, compared to last month’s 175,000, and if the figure is much lower than the forecast it could spur Federal Reserve Chairwoman Janet Yellen to reconsider her stimulus tapering program. Yellen has consistently stated that the tapering program will continue unchanged, but as the NFP jobs data is considered the most accurate reflection of the health of the US economy, if the data is disappointing Yellen will be forced to reassess the Fed’s strategy.
Investors are also in for an exciting week with four central bank interest rate announcements – from the Reserve Bank of Australia (RBA), the Bank of Canada (BoC), the Bank of England (BoE), and the European Central Bank (ECB). The RBA kicked off proceedings on Tuesday by announcing no change to the record low interest rate level of 2.5%, with RBA Governor Stevens explaining that they believe they have delivered enough stimulus from the previous interest rate cuts to allow growth to strengthen slowly over time. The AUD barely reacted to this news, with AUD/USD trading consistently around 0.8941 in the wake of the announcement. AUD/USD pivot point is 0.8920, with resistance levels at 0.8949, 0.8975 and 0.9004; and support levels at 0.8894, 0.8865 and 0.8839.
Interest rate announcements from the BoC on Wednesday and BoE on Thursday are expected to remain unchanged, however the optimism around the UK’s recovery was slightly dampened by Tuesday’s UK Construction PMI data that revealed construction activity expanded at a slower rate in February than was forecast. The February reading was just 62.6, down from January’s reading of 64.6 and even lower than the forecasted 63.0. Volatility is expected for GBP/USD around Thursday’s interest rate announcement and during the press conference delivered by BoE Governor Carney. The GBP/USD pivot point is 1.6690, with resistance levels at 1.6726, 1.6787, 1.6823; and supports at 1.6629, 1.6593 and 1.6532.
There has been substantial talk in the market of the ECB cutting interest rates even lower this month than the current record 0.25% level, but the latest Eurozone inflation figures announced last Friday provided a much-needed boost in optimism for the single currency. The Eurozone CPI remained unchanged at 0.8%, above the 0.7% forecast, which was a bullish signal for the euro and saw EUR/USD rally and break above the key 1.3800 level. ECB President Draghi will no doubt be cheered with this news and the pressure for him to take further action to support the Eurozone recovery may be somewhat reduced or at least delayed for now. EUR/USD is now trading around 1.3756, with the pivot point at 1.3752, resistance levels at 1.3778, 1.3819 and 1.3845 and supports at 1.3711, 1.3685 and 1.3644.
After starting the week on a high on the back of risk aversion and interest in the carry trade, the yen has subsequently declined with USD/JPY now trading around 101.77. Bank of Japan Governor Kuroda spoke out in Parliament on Tuesday saying there was momentum boosting the yen carry trade, and ongoing uncertainty around Ukraine is likely to spur further investments in the carry trade in the near future. The USD/JPY pivot point is 101.39, with resistance levels at 101.58, 101.75 and 101.94 and supports at 101.22, 101.03 and 100.87.
What to Watch this Week: The main focus this week is Friday’s US jobs data announcement where analysts expect to see volatility in USD pairs. Additionally, some volatility is expected on Wednesday during the BoE and ECB interest rate announcements, particularly for GBP/USD, and also EUR/USD and EUR/GBP.
For more information please visit www.ForexTime.com
Disclaimer: This material should not be construed as containing, investment advice or an investment recommendation or, an offer of or solicitation for any transactions in financial instruments. This material has not been prepared in accordance to legal and regulatory requirements in relation to independent research and is not subject to any prohibition on dealing ahead of its dissemination. Any information relating to past performance of an investment is not a guarantee of or prediction of future performance. The material is for general information only and does not take into account your personal investment objectives or financial situation. ForexTime Ltd makes no representation and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied by an employee of ForexTime Ltd, a third party or otherwise. All expressions of opinion are subject to change without notice. Any opinions made may be personal to the author and may not reflect the opinions of ForexTime Ltd. This communication must not be reproduced or further distributed without prior permission.
Risk Warning: There is a high level of risk involved with trading leveraged products such as forex and CFDs. You should not risk more than you can afford to lose, it is possible that you may lose more than your initial investment. You should not trade unless you fully understand the true extent of your exposure to the risk of loss. When trading, you must always take into consideration your level of experience. If the risks involved seem unclear to you, please seek independent financial advice.
FXTM
ForexTime Ltd (FXTM) is a forex broker founded by Andrey Dashin in December 2012. FXTM provides access to the global currency market and offers trading in forex, precious metals, Share CFDs, ETF CFDs and CFDs on Commodity Futures. Trading is available via MT4 and MT5 platforms with spreads starting from just 0.5 on the Standard MT4 trading platform and from 0 on the ECN.MT4 and ECN.MT5 trading platforms. Bespoke trading support and services are provided based on each client’s needs and ambitions – from novices, to experienced traders and institutional investors. The company is registered as a Cyprus Investment Firm under registration number HE310361 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 185/12.
