<p>Last Friday the <a target=“_blank“ href=“https://www.forexlive.com/news/us-nonfarm-payroll-517k-vs-185k-estimate-unemployment-rate-34-vs-35-estimate-20230203/“ target=“_blank“ rel=“follow“>NFP
report</a> surprised everyone with a 517K gain vs. 185K expected. The number was
much higher than even the most optimistic forecasts. The unemployment rate fell
to 3.4%, the lowest in 53 years. This brought back fears of a possible
reacceleration in inflation as the labour market is still extremely tight and
wages may start to rise again. </p><p>The Fed is trying to get
inflation back to its 2% target and it’s hard to envision such a scenario with
a labour market this strong. Inflation may get to 3% or 4%, which would be a
failure for the Fed and if too much time passes by, people may start to change
their expectations around the 2% inflation, which would make the Fed’s job even
harder.</p><p>The <a target=“_blank“ href=“https://www.forexlive.com/news/ism-us-nonmanufacturing-pmi-index-552-versus-504-estimate-20230203/“ target=“_blank“ rel=“follow“>ISM
Services PMI</a> report also showed a reacceleration in economic
activity for the Services sector as the data made a big jump back into
expansionary territory. If the market had doubts on the Fed’s willing to hike
to 5.00-5.25% and stay there for longer, the last week should have cleared
those doubts.</p><p>Nasdaq Composite Technical Analysis</p><p>On the daily chart above, we can
see that the price after breaking out of the 10200-11500 range, rallied towards
the next <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>resistance</a> at 12274 where it got rejected
after the blockbuster NFP report. Given the new uncertainties on the monetary
policy side, we can expect a pullback before another push higher. </p><p>On the 4 hour chart above, we can
see that the blue upward <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-trendlines-20220406/“ target=“_blank“ rel=“follow“>trendline</a> is now the support for the
current uptrend. </p><p>If the price falls below the
trendline and the previous resistance now turned <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>support</a>, the bears will regain control
and target the lower band of the previous range at 10200. For the bulls a break
above the 12274 resistance is needed to target the next resistance at 13191.</p><p>Drilling down to the 1 hour chart
above, we can see the possible scenarios. From a risk management perspective,
the bulls should wait for the price to retrace back to the trendline where
there is also support from the previous swing high and a 61.8% <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-using-fibonacci-retracements-20220421/“ target=“_blank“ rel=“follow“>Fibonacci
retracement level</a>. </p><p>The risk would be well defined.
In case the price breaks down the trendline and the previous resistance turned
support at 11500, it would open up opportunities for the bears to target the
next support at 10200. </p>

This article was written by ForexLive at www.forexlive.com.

<p>After a busy week with a lot of economic events and the decisions of
central banks in focus, this one is likely to be a quiet one, as is usual
following the NFP print.</p><p>The BoE and ECB hiked the rates by 50bps and Fed by 25bps, while all of
them signalled that more hikes will follow. The market now expects another
50bps hike at the next ECB meeting in March, and a 25bps hike from the
BoE. </p><p>The NFP came in high above expectations and the unemployment rate fell to
3.4% — the lowest it’s been in 50 years. The market is now pricing in another
25bps rate hike for the next FOMC meeting in March, but the Fed is data
dependent and until then we’ll have two more CPI reports and another NFP print.
Even so, the bank is unlikely to change its hawkish tone.</p><p>Fed Chair Powell described the labour market as „extremely tight“
based on the recent data, which indicates that the Fed wants to see more
softening before considering any rate hike pause. However, UBS analysts warn
that the payroll growth in January might have been fuelled by temporary factors
like the mild winter weather and these are actually broader signs the labour
market is cooling off to some extent.</p><p>The focus Tuesday will be on the RBA cash rate and rate statement. Fed
Chair Powell is expected to speak in a moderated discussion at the Economic
Club of Washington DC and it will be interesting to see what he has to say
about the latest jobs report. BoC Governor Macklem is also scheduled to speak
on how monetary policy works at a conference hosted by the Chartered Financial
Analyst of Quebec. These talks shouldn’t create market volatility, but it’s
worth keeping an eye on them.</p><p>Thursday we’ll have the monetary policy report hearing in the U.K.,
followed by a busy Friday with the U.K. GDP m/m print, the employment change
and unemployment rate in Canada and the preliminary UoM consumer sentiment and
inflation expectations in the U.S.</p><p>A few Fed members are also scheduled to deliver their remarks this
week. </p><p>The RBA is likely to hike the rate by 25bps, but according to some
analysts, the market has this priced in already. The stubbornly high inflation
in Australia poses a big problem for the bank and suggests the hiking cycle
might not be over, but the market will watch for any change in language that
could indicate a pause. At the December meeting the RBA stressed that it is not
on a pre-set course.</p><p>In the U.S. the focus will be on the consumer sentiment and inflation
expectations data. The high gasoline prices will likely lead to an increase of
the 1-year inflation expectations median, but the 5-to-10-year expectations
will remain the same at 2.9%, according to Citi.</p><p>In Canada, even though the net employment change could see a strong median
rise by 25k, the unemployment rate could increase to 5.1% from 5.0% as a result
of stronger immigration and therefore higher participation in the labour
market, Citi analysts said.</p><p>In the U.K. GDP data will show whether the economy entered a technical
recession during the second half of last year, according to Wells Fargo.
Overall, the economic situation is expected to be negatively impacted in the
near future with consumer spending under pressure.</p><p>USD/CAD expectations</p><p>On the H1 chart the USD/CAD closed the week near the 1.3415 resistance. A
correction is expected until the 1.3350 level of support. If that level holds,
the next target could be 1.3515.</p><p>The BoC raised the rates to 4.5% and signalled that it will keep them at
this level. Other hikes could follow in the future as necessary to keep
inflation under control, but for now the pause in the hiking cycle was a dovish
surprise. The Governor also noted that rate cuts are not on the table at this
point when asked about recession risks.</p><p>USD/CAD has prospects for further appreciation in the near future.</p><p>U.S. Dollar Index (DXY) expectations</p><p>After stronger than expected jobs data the possibility of any rate cuts has
been pushed further away. On the H1 chart the DXY looks good for buying opportunities.
A correction is expected until the 101.80 level of support and if that level
holds, the next target could be 103.90.</p><p>On the downside the next levels of support are at 101.30 and 100.70. </p><p>This article
was written by Gina Constantin.</p>

This article was written by ForexLive at www.forexlive.com.

<p>Ignazio Visco is Governor of the Bank of Italy and thus a European Central Bank Governing Council member.</p><p>He spoke over the weekend in front of Italy’s Assiom-Forex financial markets association.:</p><ul><li>“The policy tightening can now continue with the due caution, carefully assessing the implications for the economy and inflation prospects of the measures that have already been adopted“ </li><li>said that unwarranted excess tightening would have „serious implications“ for economic activity and financial stability</li><li>said short-term inflation expectations have dropped sharply and longer-term ones remain under control</li></ul><p>Info via Reuters. </p><p>—</p><p>Huh, Visco’s jawboning tilting a little less hawkish after the 50bp rate last week:</p><ul class=“text-align-start vertical-align-baseline“><li class=“vertical-align-baseline“><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecb-sources-see-at-least-two-more-rate-hikes-20230202/“ rel=“follow“ target=“_self“ class=“article-link vertical-align-baseline“>ECB sources: See at least two more rate hikes</a></li><li class=“vertical-align-baseline“><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecbs-lagardewe-intend-to-raise-rates-by-50-bps-the-next-meeting-then-monitor-the-path-20230202/“ rel=“follow“ target=“_self“ class=“article-link vertical-align-baseline“>ECBs Lagarde:We intend to raise rates by 50 BPs @ the next meeting & then monitor the path</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecb-raises-key-rates-by-50-bps-in-february-monetary-policy-meeting-as-expected-20230202/“ rel=“follow“ target=“_self“ class=“article-link“>ECB raises key rates by 50 bps in February monetary policy meeting, as expected</a></li></ul>

This article was written by Eamonn Sheridan at www.forexlive.com.

<p>An interesting weekend item from Reuters about oil, but also about circumventing trade payments in the dominant USD – helping Russia to de-dollarise its economy.</p><ul><li>Indian refiners have begun paying for most of their Russian oil purchased via Dubai-based traders in United Arab Emirates dirhams instead of U.S. dollars</li><li>India’s top bank, the State Bank of India (SBI), is now clearing these dirham payments, the sources told Reuters</li></ul><p><a target=“_blank“ href=“https://www.reuters.com/business/energy/indian-refiners-pay-traders-dirhams-russian-oil-2023-02-03/“ target=“_blank“ rel=“nofollow“>Reuters</a> cite four sources (unnamed) for the information. More detail at that link. </p><p>—-</p><p>The background top this is that banks and financial institutions are cautious about clearing payments, not wanting to unintentionally violate the sanctions imposed against Russia after its invasion of Ukraine. The Russian oil price cap has been imposed by the Group of Seven nations and Australia.</p><p>Indian (and Chinese) purchases of Russian oil may not be in violation of sanctions, but, exercising an abundance of caution, Indian refiners and dealers are concerned they may not be able to continue to settle trades in dollars. Hence thus of UAE dirhams (code is AED).</p>

This article was written by Eamonn Sheridan at www.forexlive.com.

<ul><li><a target=“_blank“ href=“https://www.forexlive.com/technical-analysis/us-stocks-close-lower-but-still-higher-on-the-week-20230203/“>US stocks close lower but still higher on the week</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/wti-crude-oil-futures-settled-at-7339-20230203/“>WTI crude oil futures settled at $73.39</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/feds-daly-the-number-was-a-wow-number-the-december-fed-policy-is-a-good-indicator-20230203/“>Fed’s Daly: The number was a „wow“ number. The December Fed policy is a good indicator.</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/baker-hughes-total-rig-count-falls-12-to-759-20230203/“>Baker Hughes total rig count falls -12 to 759</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/european-indices-close-the-day-with-mixed-results-20230203/“>European indices close the day with mixed results</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/ism-us-nonmanufacturing-pmi-index-552-versus-504-estimate-20230203/“>ISM US nonmanufacturing PMI index 55.2 versus 50.4 estimate</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/spglobal-services-pmi-index-versus-a-468-versus-466-preliminary-20230203/“>S&P/Global services PMI index versus a 46.8 versus 46.6 preliminary</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/technical-analysis/the-strong-us-jobs-report-sent-the-us-dollar-sharply-higher-what-next-20230203/“>The strong US jobs report sent the US dollar sharply higher. What next?</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/us-nonfarm-payroll-517k-vs-185k-estimate-unemployment-rate-34-vs-35-estimate-20230203/“>US nonfarm payroll 517K vs 185K estimate. Unemployment rate 3.4% vs 3.5% estimate</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/bank-of-england-pill-i-expect-we-will-proceed-with-qt-over-the-coming-years-20230203/“>Bank of England Pill: I expect we will proceed with QT over the coming years</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/technical-analysis/the-gbp-is-the-strongest-and-the-cad-is-the-weakest-as-the-na-session-begins-20230203/“>The GBP is the strongest and the CAD is the weakest as the NA session begins</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/forexlive-european-fx-news-wrap-dollar-mixed-equities-lower-ahead-of-nfp-20230203/“>ForexLive European FX news wrap: Dollar mixed, equities lower ahead of NFP</a></li></ul><p>The US jobs report was – as Fed’s Daly put it – a „wow“ number. The Non Farm Payroll increased by a whopping 517K. The prior two months were revised higher by 71K. The combined total of 587K far outpaced the expectations of 185K. Wow is right. </p><p>The unemployment rate moved down to 3.4% (expected a rise to 3.6%), the lowest since 1969. The average hourly earnings increased by 0.3% and the YoY by 4.4% which were as expected. The work week increased to 34.7 hours from 34.3 hours expected. That is a big jump and indicative of solid employment. </p><p>The number was more the initial claims and the JOLTs data vs the anecdotal stories of layoffs.</p><p>It had some analysts saying, „it is so good, ignore it“, which I guess is another way of saying, „My model is right. The BLS is wrong“. However, the reality is, the jobs data continues to show month after month strength. </p><p>Looking at the industries: </p><p>Good producing jobs added 46K </p><ul class=“text-align-start vertical-align-baseline“><li class=“vertical-align-baseline“>manufacturing +19</li><li>construction +28K</li></ul><p>IN the service jobs, they added 397K </p><ul class=“text-align-start vertical-align-baseline“><li>professional and business services 82K</li><li class=“vertical-align-baseline“>private education and health services +105K</li><li class=“vertical-align-baseline“>trade transportation and utilities +63K</li><li class=“vertical-align-baseline“>transportation and warehousing +23K</li><li class=“vertical-align-baseline“>Leisure and hospitality rose 128K</li><li class=“vertical-align-baseline“>information -5K </li><li class=“vertical-align-baseline“>financial activity minus 6K</li></ul><p>Government even added a chunk with a gain of 78K</p><p>Later the ISM nonmanufacturing index came in much stronger than expected at 55.2 versus 50.4</p><ul><li>new orders index rose to 60.4 from 45.2 last month</li><li>employment back to the 15 level from 49.4 last month</li><li>prices dip to 67.8 from 68.1</li><li>backlog of orders rose to 52.9 from 51.5</li><li>new export orders search to 59.0 from 47.7</li></ul><p>Recession? What recession?</p><p>The US stocks initially took the news as more bearish as the Fed might need to hike more and keep the rates higher for a time period longer than the market’s expectations. However, when momentum slowed on the decline, the major indices moved back to the upside and erased all the declines for the day. That was also in the face of less than stellar earnings from Amazon, Alphabet and Apple after the close on Thursday. Intraday, </p><ul><li>The Dow was down as much as -240.09 points, and reverset to up 125.63 points</li><li>The S&P was down as much as -56.39 points, and reversed to up 2.61 points</li><li>The Nasdaq was down as much as -253.96 points, and reversed to up 30.49 points</li></ul><p>However, the climb was a tough one and buyers turned back to sellers. Word that Fed’s Daly would be speaking on FoxBusiness, may have been a catalyst to take some off the table. Recall, Daly was a bit more hawkish on the inflation prospects when she spoke on January 9th just before the blackout period. She was particularly insistent that the goods inflation was coming down, but service inflation ex housing was still elevated. </p><p>The stock buyers had the courage of 1000 matadors in the morning hours, but cowered a bit with the prospects of a Fed official coming out and saying „we are still data dependent“, inflation is still elevated, and „it was far to early“ to call a peak (which is what she reminded the market). </p><p>Next week, when more Fed officials speak, it will be hard to say things are slowing down. In reality, the employment situation seems like it is doing the opposite – despite the job cuts announced, and that will continue to be a scare to the Fed who only has one job – to see inflation comes down. </p><p>In the debt market. yields moved higher and stayed elevated for the day:</p><ul><li>two year yield 4.288% +19.9 basis points</li><li>five year yield 3.653% +17.1 basis points</li><li>10 year yield 3.520% +12.3 basis points</li><li>30 year yield 3.615% +6.1 basis points</li></ul><p>Gold tumbled in reaction to the higher dollar. It is closing down near -$46 or -2.44% at $1865.63 after moving to within $41 of $2000 yesterday (the high reached $1959.74). Silver tumbled 4.67% or down -$1.09. </p><p>Crude oil focused on the higher dollar and it too fell even though stronger growth might lead to more demand down the road. Crude oil closed the week down -7.89% </p><p>The USD was the strongest of the majors rising by over 2% vs the NZD (+2.29%), AUD (2.16%) and was up 1.97% vs the JPY. The only currency the USD rose by less than 1% today was the CAD with a gain of only 0.69%.</p><p>For the trading week, the USD rose vs all the major currencies:</p><ul><li>EUR, +0.67%</li><li>JPY, +1.09%</li><li>GBP, +2.7%</li><li>CHF, +0.55%</li><li>CAD, +0.70%</li><li>AUD, +2.61%</li><li>NZD, +2.54%</li></ul><p>It certainly was a Wow day (and a Wow week as well with 3 major central banks in play, and an earnings week highlighted by the likes of Meta, Apple, Alphabet, Amazon, Boeing, Merck, Honeywell, Starbucks). </p><p>Next week, the calendar of events will be a little less packed. Nevertheless, the anticipation of what Fed officials might say is intriguing and potentially market moving. ON Tuesday at 12 PM, Fed’s Powell will speak at the Economic Club of Washington. On Wednesday, NY Fed’s Williams will also speak (and I am sure others Fed officials will be asked to comment on policy post the jobs report). </p><p>The Bank of Australia is expected to hike rates by 25 basis points on Tuesday in Australia (Monday night at 10:30 PM ET).. Recall Australia CPI for Q4 came in at 1.9% vs 1.6% estimate when announced on January 24. Canada will release their employment report on Friday a month after reporting an oversized gain of 104K last month. The expectations are for 15K on Friday. The BOC raised rates by 25 bps on January 25th and said they were „conditionally pausing“ as they assess the economic data going forward. That will be a key data point for their rate hike sabbatical. </p><p>Taking a look at the calendar of earnings, the major releases are now over. Next week there are a few names but the impacts should be minimal:</p><p>Monday:</p><ul><li>Pinterest</li><li>Activision Blizzard</li></ul><p>Tuesday:</p><ul><li>Chipotle</li></ul><p>Wednesday</p><ul><li>Disney </li><li>CVS</li><li>Emerson</li><li>MGM</li></ul><p>Thursday</p><ul><li>Toyota</li><li>Pepsi</li><li>AstraZeneca</li><li>Phillip Morris</li><li>Unilever</li><li>PayPal</li><li>Motorola</li></ul>

This article was written by Greg Michalowski at www.forexlive.com.

<p>The major US stock indices are ending lower on the day led by the NASDAQ index with a decline of about -1.6%. However, that comes after some pretty strong gains including a 3.25% gain yesterday.</p><p>The final numbers are showing:</p><ul><li>Dow Industrial Average fell -127.93 points or -0.38% at 33926.00</li><li>S&P index fell -43.26 points -1.03% at 4136.49</li><li>NASDAQ index fell -193.85 points or -1.59% at 12006.96</li><li>Russell 2000 fell -15.68 points or -0.78% at 1985.53</li></ul><p>For the trading week, the S&P and NASDAQ closed higher, but the Dow Industrial Average had a small decline as traders rotated away from the relative safety of the down into the tech heavy NASDAQ:</p><ul><li>Dow Industrial Average fell -0.15%</li><li>S&P index rose 1.62%</li><li>NASDAQ index rose 3.31%</li></ul><p>Technically, for the NASDAQ index enclosed above its 200 day moving average at 11465.53 for the second consecutive week. Last week, the price closed above on Friday, but traded back below the moving average on Monday and Tuesday before rotating back to the upside. Stay above the 200 day moving average keeps the buyers in firm control. The NASDAQ index has been up for five consecutive weeks. The price is up 17.6% from the low during the week of December 27, 2022.</p>

This article was written by Greg Michalowski at www.forexlive.com.

<p>WTI crude oil futures settled at $73.39 today. That was down -$2.49 or -3.28%. </p><p>The high price reached $78.00 today. The low reached $73.13. The price traded to the lowest level going back to January 23. The low for the year reached $72.46 back on January 5th. The cycle low from December reached $70.08. </p><p>For the week, the price of crude oil tumbled by $8.06%. The close last week was up at $79.68.</p><p>Taking a broader look at the weekly chart, the price of crude oil has been moving up and down since November 21 week. Since that week, the price has seen resistance near the 50% of the move up from the November 2020 low near $82.07 (the high reached $82.64), and support near the 61.8% of the same move at $70.84 (the low dipped to $70.08). The 100 week MA at $83.36 is also a key level that the price has been able to stay below since breaking on the week of November 14, 2022. </p>

This article was written by Greg Michalowski at www.forexlive.com.

<p>The EURUSD has fell below the 100/200 hour MAs after the jobs report and also below a swing area that was a ceiling going back to mid- January between 1.0866 and 1.0874 (see lower „Red Box“ on the chart above). </p><p>The price decline continued toward the next target near 1.0799 and 1.0805. The subsequent corrective move higher stalled near the swing area again near 1.0866 to 1.0874 before restarting the downward move. These levels were outlined in my earlier video <a target=“_blank“ href=“https://www.forexlive.com/technical-analysis/the-strong-us-jobs-report-sent-the-us-dollar-sharply-higher-what-next-20230203/“ target=“_blank“ rel=“follow“>HERE</a>. </p><p>The price low has just reached the 1.0799 target. </p><p> What now?</p><p>Dip buyers will want to see this level hold. Risk is defined and limited against the area. If it holds, and the price can get back above the broken 38.2% a 1.08207, the buyers will look toward 1.08345 and above. </p><p>On the downside, on a break below 1.0799, I would expect more selling with the same midpoint of the 2023 trading range at 1.07558 along with the low of the lower „red box“ between 1.0760 and 1.0775 as a target area. A move below that level is another key target area to get to and through if sellers are to take back more control.</p><p>Meanwhile, stocks have continued the drip to the downside. </p><ul><li>Dow is down 165 points or -0.46%</li><li>S&P is down -45 points or -1.07%</li><li>NASDAQ index is down -194 points or -1.59%</li></ul>

This article was written by Greg Michalowski at www.forexlive.com.

<ul><li>A 25 bps or 50 bps rate hike in May is possible</li><li>If core inflation remains persistent, 3.50% terminal rate is the minimum</li><li>Thursday decision is a hawkish one so market reaction has been surprising</li></ul><p style=““ class=“text-align-justify“>Well, they are really coming out to make it clear to markets that March isn’t going to be the last rate hike in this tightening cycle. I think the issue for me is why couldn’t we just hear something like this from Lagarde yesterday? Geez.</p>

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

<p style=““ class=“text-align-justify“>In case you need a reminder on what happened in January:</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/us-dollar-sinks-on-hard-landing-fears-after-ism-services-survey-plunges-20230106/“ target=“_blank“ rel=“follow“>US dollar sinks on hard landing fears after ISM services survey plunges</a></li></ul><p style=““ class=“text-align-justify“>While the main focus is on the US non-farm payrolls first and foremost, it may not be the most important data release on the day. The ISM services report saw a stark miss in December (49.6 vs 55.0 estimated) and the reading is expected to come in at 50.4 today.</p><p style=““ class=“text-align-justify“>As much as broader markets may be paying attention to the US jobs report, another big miss could really set off fears of a hard landing and that could compound the pain in the equities space so far on the day.</p>

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