• Prior +2.8%
• Core CPI +3.1% vs +2.9% y/y expected
• Prior +3.3%

The standout here is that core annual inflation continues to remain stubbornly high. Even if it did fall from 3.3% in January to 3.1% in February, it reaffirms that the challenge for the ECB to get this to 2% might be much tougher in the months ahead. The euro has nudged up slightly on the data but this shouldn’t change the market’s view of a June rate cut – at least for now.

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

• Prior 47.0

The headline reading is a 10-month high but UK manufacturing activity continues to observe a downturn at least for now. Both output and new orders continue to decline while the Red Sea crisis is leading to supply disruptions. This reaffirms a more challenging environment, even with some improvements seen as of late. S&P Global notes that:

“UK manufacturers faced challenging circumstances
in February, as the ongoing impact of the Red Sea crisis
delayed raw material deliveries, inflated purchase prices
and impacted production capabilities. There were also
knock-on effects for demand, as new export orders were
hit by both supply disruptions and higher shipping costs.
Production volumes subsequently contracted for the
twelfth successive month while total new orders fell at the
sharpest rate since October.

“The impacts were felt particularly hard on the price and
supply fronts. Input cost inflation hit an 11-month high,
leading to a further increase in selling prices. Average
supplier lead times meanwhile lengthened to the greatest
extent since mid-2022. Several manufacturers noted that
they faced the difficult choice between accepting delays
from re-routed shipping or facing the prospect of paying
higher prices to source from closer to home. This comes at
a time of already heightened cost caution at manufacturers
in response to weak demand, as highlighted by further cuts
to employment, purchasing and inventories in February.

“Although the supply impact and effect of prices is
muted by standards seen at the height of the pandemic,
any upward pressure on inflation will be a concern to
policymakers and may add to calls that it is too early to be
confident on the timing of interest rate cuts.”

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

• 46 of 73 economists see first ECB rate cut in June
• 17 economists expect first rate cut in April
• 10 economists expect first rate cut to only come in 2H 2024
• Median call is for 100 bps worth of rate cuts this year, taking deposit rate to 3% by year-end

Despite a growing consensus for a June call, economists are still having some slight doubts on their conviction. Roughly 55% majority of respondents say that the more likely risk surrounding the timing of the first rate cut would be for it to come earlier than they expect.

That being said, at least there is some synchronicity to market pricing now with the June call rising to 63% from 45% in the January poll. As for market pricing, odds of an April rate cut have now been reduced to just ~26%. Meanwhile, the odds of a June move are at ~92%.

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

Yesterday,
the S&P 500 continued to retreat from the highs as the market is waiting
for the key catalysts in the next few days and weeks. Nothing has changed in
the bigger picture as the Fed is still considering rate cuts conditional on the
disinflationary trend being intact. The data has been good but what will matter
the most is the next CPI report as that will tell us if the progress on
inflation has indeed stalled, or worse, reversed. Before that we will get many
important reports including the NFP, but as long as they remain benign the
market will likely keep on rising.

S&P 500 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the S&P 500
is now near the key trendline where we
can also find the blue 8 moving average for confluence. This is
where we can expect the buyers to step in with a defined risk below the
trendline to position for a rally into new highs. The sellers, on the other
hand, will want to see the price breaking lower to position for a drop into the
4920 level.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we
have a strong support zone
around the 5050 level where we can find the confluence with the trendline, the 38.2%
Fibonacci
retracement level and the red 21 moving average. This
makes this level significant as a strong bounce will likely lead to new highs
while a break lower could trigger a quick selloff into the 4920 level.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the bullish setup around the 5050 level. What happens at this zone will
likely decide where the price will go in the next few days and weeks.

Upcoming Events

Today we will see the US PCE and the latest US
Jobless Claims figures, while tomorrow we conclude the week with the US ISM
Manufacturing PMI.

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

On the yen move, these are the earlier posts:

• BOJ’s Takata: Momentum is rising in spring wage talks. Yen jumps
• Yen climbs as Bank of Japan drops the clearest hint of a looming rate hike
• USD/JPY down after Takata remarks but near-term levels continue to hold for now

Besides that, there hasn’t been much activity among major currencies so far on the session. In fact, other dollar pairs are only seeing 0.1% change currently. And that speaks to the lack of appetite today and for the most part, this week.

Looking to the remainder of the day, we could get some injection of life when we get to US trading later.

The US PCE price index will be a key risk event to watch in terms of data releases. Then, we might also get some volatility surrounding month-end flows when we get to the London fix.

In the bigger picture though, the bond market will still have a say in things and it doesn’t look like there is much appetite to move just yet. But do at least keep a watchful eye on that just in case.

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

• Prior 50.46k; revised to 51.51k
• Net consumer credit £1.9 billion vs £1.6 billion expected
• Prior £1.2 billion; revised to £1.3 billion

On net, individuals repaid £1.1 billion of mortgage debt in January compared to £0.9 billion in December. Meanwhile, net consumer credit also rose on the month mostly driven by higher borrowing through credit cards, which rose from £0.3 billion in December to £0.9 billion in January.

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

Copper erased almost all
the gains from the surprising PBoC 5-yers LPR cut. Nothing has changed though, so
this could be a great opportunity for those who missed the rally to position
for new highs. Overall, the data has been good, and the central banks are still
looking to ease their monetary policies which should keep on supporting the
commodity. As long as global growth remains resilient, we can expect the bias
to remain bullish.

Copper Technical Analysis –
Daily Timeframe

On the daily chart, we can see that Copper pulled
back into the red 21 moving average. The
price bounced here as the buyers started to pile in to position for another
rally into new highs. We can see that we are basically in the middle of a big
range between the 3.72 support and the
3.95 resistance, so we need to zoom in to see some more details.

Copper Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price
yesterday broke above the downward trendline and
extended the rally into the most recent higher high at 3.86 where we can also
find the 38.2% Fibonacci retracement level
for confluence. This is
where we can expect the sellers to step in with a defined risk above the level
to position for a drop into new lows. The buyers, on the other hand, will want
to see the price breaking higher to invalidate the bearish setup and increase
the bullish bets into the 4.00 handle.

Copper Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
latest leg lower diverged with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, it led to a pullback into the 3.86 resistance. A break
above the resistance should confirm the reversal and give the buyers even more
conviction for a rally into new highs. The sellers, on the other hand, will
want to see the price breaking below the minor upward trendline to invalidate
the bullish bias and increase the bearish bets into new lows.

Upcoming Events

Today we will see the US PCE and the latest US
Jobless Claims figures, while tomorrow we conclude the week with the Chinese
PMIs and the US ISM Manufacturing PMI. Weak data is likely to weigh on Copper
in the short term while strong figures should give it a boost.

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

• Prior -10.6%
• Market index 171.5 vs 181.6 prior
• Purchase index 127.6 vs 133.6 prior
• Refinance index 395.9 vs 427.0 prior
• 30-year mortgage rate 7.04% vs 7.06% prior

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

• Pleased with recent shift in expectations
• Headline disinflation is going quicker than expected but core prices still remain uncertain
• Prefers June rate cut, then „smooth and steady cycle of policy easing“

The odds of an April rate cut are now just at ~37%, with a June rate cut fully priced in. Meanwhile, the total rate cuts priced in for the year is 91 bps. That is quite a drastic shift compared to where we were just two months ago as seen here.

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

Bitcoin has been rising steadily in February amid a
positive risk sentiment as the central banks ended their tightening cycles and
are now looking for the right moment to start easing their policies. Recession
fears have also dissipated with resilient economic data and even some
reacceleration lately. Moreover, the market is also looking forward to the
halving event set for April.

Bitcoin Technical Analysis
– Daily Timeframe

On the daily chart, we can see that Bitcoin continues
to surge to new highs amid a positive risk sentiment and lots of FOMO. The
price is now a bit overstretched as depicted by the distance from the blue 8 moving average. In such
instances, we can generally see a pullback into the moving average or some
consolidation before the next move.

Bitcoin Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that from a risk
management perspective, the buyers will have a much better risk to reward setup
around the previous resistance at 52858
where we can also find the confluence with the
trendline and the
daily 21 moving average. The sellers, on the other hand, will want to see the
price breaking below the trendline to invalidate the bullish setup and position
for a drop into the next major trendline around the 45000 level.

Bitcoin Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
price bounced on the red 21 moving average today and we can also notice a divergence with
the MACD. This
is generally a sign of weakening momentum often followed by pullbacks or
reversals. The sellers will want to see the price breaking below the black
trendline to pile in and target a drop into the 52858 support. The buyers, on
the other hand, will likely lean on the trendline with a defined risk below it
to target new highs.

Upcoming Events

Tomorrow we will see the US PCE and the latest US
Jobless Claims figures. On Friday, we conclude the week with the US ISM
Manufacturing PMI.

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