US Session Recap
The European Central Bank (ECB) has indicated its intention to keep raising interest rates in response to persistent inflation in the Eurozone, which is primarily driven by wage pressures. This decision comes despite concerns over potential turmoil in the banking sector. The Swiss National Bank’s (SNB) injection of 54 billion Swiss Francs into Credit Suisse and its support for First Republic Bank suggest that a widespread banking crisis might be avoided.
In terms of economic data, the US unemployment claims figure came in at 192K, which is lower than the forecasted 205K and the previous 212K. This suggests a robust job market and the potential for economic growth. These positive labor market conditions could influence market sentiment and impact currency valuations.
Impact on Asian Session
US Dollar (DXY)
Key News Events
Prelim UoM Consumer Sentiment
DXY Outlook for today
If the Preliminary UoM Consumer Sentiment Index release comes in higher than expected at 67.0, compared to the previous figure of 66.9, it may have a positive impact on the USD. A higher consumer sentiment reading typically indicates increased consumer confidence, which can lead to higher spending and economic growth. Conversely, a lower-than-expected reading could negatively impact the USD.
Since the Preliminary release comes earlier than the Revised version, it tends to have a more significant impact on the market. Keep in mind that market participants will also be watching for any updates on monetary policy decisions from the Federal Reserve.
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
Australian Dollar (AUD)
Key News Events
No major news events.
AUD Outlook today
In the absence of significant news, the AUD’s value may continue to be supported by the recent positive labor data. The strong job gains of 64.6K, surpassing the forecast of 49.7K and the previous figure of -10.9K, along with a 3.5% Unemployment Rate, better than the forecasted 3.6% and the previous 3.7%, are likely to boost sentiment towards the Australian dollar.
Central Bank Notes:
- Cash rate raised by 25 basis points to 3.60%
- Board prioritizes returning inflation to target, with a likely need for further monetary policy tightening
- Board to closely monitor the global economy, household spending trends, inflation, and labor market outlook when assessing interest rate increases
- Next meeting on 4 April 2023
Keep in mind that the AUD may also be influenced by global economic developments and other external factors, so it’s essential to stay updated on any relevant news or events that could affect the currency’s performance.
Next 24 Hours Bias
Weak Bullish
The Kiwi Dollar (NZD):
Key News Events
No major news events.
NZD Outlook today
The NZD’s direction may indeed be influenced by the previously released GDP data, which showed a contraction of 0.6% q/q, worse than the forecasted -0.2% and significantly lower than the previous 1.7%. This weaker economic performance could negatively impact the NZD as it suggests a slowdown in the New Zealand economy.
Central Bank Notes:
- Monetary Policy Committee increased the OCR from 4.25% to 4.75%
- Higher interest rates are needed to reduce inflation and support employment sustainably
- Severe storms in North Island will increase inflation and disrupt production
- Next meeting is on 5 April 2023
It’s essential to keep an eye on other economic indicators and global events that may affect the NZD’s performance, as well as any changes in the central bank’s policy stance that could influence the currency’s direction.
Next 24 Hours Bias
Weak Bearish
The Japanese Yen (JPY):
Key News Events
No major news events.
JPY Outlook today
The expected increase in Japan’s Tertiary Industry Activity m/m by 0.5% (previous -0.4%) could have a positive impact on the JPY, as the tertiary sector contributes to a significant portion of the country’s GDP (approximately 70%). This uptick may signal overall economic expansion and improved economic performance.
Central Bank Notes:
- The bank will continue with QQE (Quantitative and Qualitative Monetary Easing) with Yield Curve Control to achieve the price stability target of 2%
- Japan’s economy is expected to recover gradually
- The bank will not hesitate to take additional easing measures if necessary
- Next meeting is on 27 April 2023
Keep in mind that other economic factors and global events may also influence the JPY, so it’s essential to monitor these developments to gain a comprehensive understanding of the currency’s performance.
Next 24 hours bias
Weak Bullish
The Euro (EUR):
Key News Events
No major news events.
EUR Outlook today
The Eurozone’s Final CPI y/y is expected to decrease from 8.6% to 8.5%, while the Final Core CPI y/y is expected to remain the same at 5.6%. If the data comes in lower than expected, the recent hawkishness seen in the ECB may be mildly tempered. However, it’s essential to consider other factors and economic data releases that could also impact the Euro and the ECB’s decisions.
Central Bank Notes:
- ECB raised interest rates by 50 basis points to ensure the 2% inflation target is met
- Inflation is projected to average 5.3% in 2023, with growth at 1%, and underlying price pressures remain strong
- The bank will continue to monitor market tensions closely and will be data-dependent in its policy rate decisions
- Next meeting on 4 May 2023
It’s crucial to monitor further economic developments and global events to gain a comprehensive understanding of the Euro’s performance and the ECB’s policy stance.
Next 24 hours bias
Weak Bullish
The Swiss Franc (CHF):
Key News Events
No major news events.
CHF Outlook today
The Swiss economic growth forecast for 2023 is notably below average at 1.1%, with an expected increase to 1.5% in 2024. This slowdown will likely impact the Swiss labor market with a delay, resulting in an unemployment rate projection of 2.3% in 2024. Slower economic growth and higher unemployment may affect the Swiss Franc’s performance and influence the Swiss National Bank’s (SNB) policy decisions.
Central Bank Notes:
- Current policy rate is at 1.00%
- Next meeting on 23 March 2023
It is essential to monitor further economic developments, data releases, and global events to gain a comprehensive understanding of the Swiss Franc’s performance and the SNB’s policy stance.
Next 24 hours bias
Bearish
The Pound (GBP):
Key News Events
No major news events.
GBP Outlook today
Higher UK Consumer Inflation Expectations, if above the previous 4.8%, may encourage the Bank of England (BoE) to tighten monetary policy, which could strengthen the GBP. On the other hand, a lower figure might weaken the GBP as it would support the BoE’s intentions to pause rate hikes sooner than anticipated, due to easing inflationary pressures.
Central Bank Notes:
- MPC voted to increase Bank Rate by 0.5 percentage points to 4%
- Near-term data developments are crucial in assessing how quickly external and domestic inflationary pressures will abate
- MPC’s updated projections show CPI inflation falling back sharply from its current level
- Next meeting on 23 March 2023
It’s important to keep an eye on relevant economic data and global events to understand the GBP’s performance and the BoE’s policy decisions.
Next 24 hours bias
Mixed
The Canadian Dollar (CAD):
Key News Events
No major news events.
CAD Outlook today
The lower-than-expected figures from second-tier data releases, such as Foreign Securities Purchases, IPPI m/m, and RMPI m/m, could potentially weaken the CAD due to their implications on the overall health of the Canadian economy.
Central Bank Notes:
- Bank of Canada maintains its target for the overnight rate at 4.5%
- Inflation eased in January, but price increases for food and shelter remain high
- BOC is prepared to increase the policy rate further to return inflation to the 2% target
- Next meeting on 12 April 2023
Market participants should monitor upcoming data releases and any statements from the Bank of Canada to gauge the potential impact on CAD’s value and the central bank’s policy decisions.
Next 24 hours bias
Weak Bearish
