That’s a slight improvement to the monthly order book balance compared to January, but still below the long-run average of -13. The standout detail from the report though is that the expectations for average selling price inflation rose to +17 in February. That is up from +9 in January and is the strongest reading since July 2023. If it keeps up, that will be an issue for the BOE in trying to push the narrative of rate cuts in the months ahead.

This article was written by Justin Low at www.forexlive.com.

That will see Germany revise their official 2024 GDP growth forecast to a measly 0.2%, which would represent a big downgrade from the previous forecast of 1.3%. Oof.

This article was written by Justin Low at www.forexlive.com.

Once again, it’s been a rather dull session so far in European morning trade. Major currencies are not doing a whole lot, having little to work with in general this week. The dollar is steady on the day, trading near flat levels against the euro, yen, pound and loonie currently. Of note, USD/JPY continues to do a tango in and around the 150.00 mark this week:

The lack of developments in the bond market isn’t helping with that regard as well. 10-year Treasury yields are down 1.5 bps to 4.26% now but remains pinned in between 4.20% and its 100-day moving average of 4.33% in the bigger picture.

For trading today, the focus turns towards the FOMC meeting minutes release next. That might help to offer something for traders to act upon and to get out of this rut.

Besides that, keep a watchful eye on stocks as there are some jitters persisting since yesterday. Nvidia earnings is in the spotlight and that will come after the market close today. US futures are down again though, with S&P 500 futures lower by 0.2% and Nasdaq futures down by 0.4% currently.

This article was written by Justin Low at www.forexlive.com.

GBP

• The BoE left interest rates unchanged as expected at the last meeting
  removing the tightening bias but reaffirming that they will keep rates high for
  sufficiently long to return to the 2% target.
• The employment report beat expectations across the board
  with a positive revision to the December’s negative payroll figure.
• The UK CPI missed expectations across the board but with
  Services inflation remaining sticky, which continues to support the BoE’s
  patient stance.
• The latest UK PMIs showed the Manufacturing sector improving but
  remaining in contraction while the Services sector continues to expand.
• The latest UK Retail Sales beat expectations across the board
  by a big margin.
• The market expects the first rate
  cut in June.

JPY

• The BoJ kept its monetary policy unchanged as expected with interest rates at
  -0.10% and the 10 year JGB yield target at 0% with 1% as a reference cap.
• The Japanese CPI eased further across all measures
  which makes it even harder to expect a rate hike from the BoJ anytime soon.
• The latest Unemployment Rate ticked lower hovering around cycle
  lows.
• The Japanese PMIs improved for both the Manufacturing
  and Services measures although the former remains in contractionary territory.
• The Japanese wage data missed expectations again recently
  although there was a pick up from the prior reading.
• The Tokyo CPI, which is seen as a leading
  indicator for National CPI, fell much more than expected recently.
• The market expects the BoJ to hike
  rates in Q2.

GBPJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPJPY broke
through the cycle high and started to consolidate. The buyers should keep on
leaning on the 188.67 level to position for new highs while the sellers will
want to see a breakdown to start targeting new lows.

GBPJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the 188.67
level is now a key support zone where
we can also find the confluence with the
trendline and the
red 21 moving average. This is
where we can expect the buyers to step in with a defined risk below the
trendline to position for new highs. The sellers, on the other hand, will want
to see the price breaking lower to invalidate the bullish setup and position
for a drop into the 185.21 level.

GBPJPY
Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
price action has been pretty choppy recently but overall the pair kept on
printing higher lows as the buyers remained in control. The sellers should wait
for a break below the key support to regain control and have more conviction
for new lows.

Upcoming Events

Today we have the FOMC Meeting Minutes on the agenda
while tomorrow we get the latest UK and US PMIs, and the US Jobless Claims
figures.

This article was written by FL Contributors at www.forexlive.com.

The year
has just begun, and US companies are planning a $155 billion share buyback. In
total, forecasts for 2024 put this figure at $885 billion, 10% more than in
2023 but still 4% below the 2022 record.

For
investors, this intel should be a big deal. Since 2011, share buybacks have
been a major factor, accounting for 40% of total US stock market returns,
especially in the S&P 500 index.

Indeed,
other factors such as dividend growth, EPS, and P/E multiples also matter, but
Pavilion Global Markets‘ data suggests they carry less weight.

In
theory, buybacks make sense when companies have more liquidity than they pay
out in dividends or have profitable investments on the horizon and their shares
are undervalued.

At the
moment, large companies tend to focus more on returning capital than growing
it.

Take big
oil as an example.

Despite
earning a whopping $357 billion in the seven years following the Paris
Agreement, they chose to invest billions in share buybacks and dividends
instead of fully engaging in the transition to renewables.

Specifically,
the five major oil giants spent more than their profits on shareholders: $428
billion in 2016-2022, of which $316.7 billion went on dividends and the rest on
share buybacks.

The jury
is still out on whether this move makes sense for the greater good.

Big Tech
isn’t exactly in a better spot. The combined cash stash of companies like
Apple, Microsoft, Alphabet, Alibaba, Amazon, and Meta tops $500 billion. The
burning question: where’s all that moolah headed?

If it
goes into share buybacks, it’s a win for shareholders, but only in the short
run. Investing in promising projects or breaking into new business frontiers
would better serve long-term gains.

The fact
that companies are cutting back on investment
raises alarm bells about their future growth potential, including expansion and
competitiveness. It is, therefore, essential to be cautious about these stocks.

And
let’s not forget that while buybacks can increase EPS by reducing the number of
shares, this does not necessarily mean that the company’s fundamentals are
improving.

Relying
too much on buybacks can look like a financial maneuver rather than actual
value creation.

The
sweet spot? A balanced approach where a company distributes its free cash flow
not only in buybacks but also in growth investments, cutting debt, paying
dividends and maintaining a healthy cash cushion.

As for
how to detect a possible change in market sentiment towards a specific stock or
the index itself, it is crucial to follow the support and resistance indicators.

This article was written by FL Contributors at www.forexlive.com.