All trading involves risk. Ensure you understand those risks before trading.
Open account
☰
All trading involves risk. Ensure you understand those risks before trading.
Open account
✖

European Open: Currencies tread water ahead of Jerome Powell speech

Article By: ,  Market Analyst
February 7, 2023 4:53 PM

Asian Indices:

  • Australia's ASX 200 index fell by -34.9 points (-0.46%) and currently trades at 7,504.10
  • Japan's Nikkei 225 index has fallen by -9.28 points (-0.03%) and currently trades at 27,684.37
  • Hong Kong's Hang Seng index has risen by 140.98 points (0.66%) and currently trades at 21,363.14
  • China's A50 Index has risen by 6.86 points (0.05%) and currently trades at 13,549.52

 

UK and Europe:

  • UK's FTSE 100 futures are currently up 6 points (0.08%), the cash market is currently estimated to open at 7,842.71
  • Euro STOXX 50 futures are currently up 6 points (0.14%), the cash market is currently estimated to open at 4,211.45
  • Germany's DAX futures are currently up 11 points (0.07%), the cash market is currently estimated to open at 15,356.91

 

US Futures:

  • DJI futures are currently up 12 points (0.04%)
  • S&P 500 futures are currently up 22.5 points (0.18%)
  • Nasdaq 100 futures are currently up 5 points (0.12%)

 

 

 

Earnings:

UK earnings: BMO – Carlsberg, BP

* BMO = Before market open, DMH = During market hours, AMC = After market close, TNS = Time not specified

 

Jerome Powell’s speech will be a main focus at 17:40 GMT, given the strong employment report on Friday and hawkish comments from Bostic. The Fed have a strong tendency to try and (re)shape market expectations following their meetings, when they feel their message has been misconstrued.

Given money markets initially lowered the Fed’s anticipated terminal rate to 5% and begin pricing in two cuts this year, there’s a decent chance Powell will strike a hawkish tone today.

Yesterday, the Fed’s Bostic told Bloomberg that he thinks the Fed may need to raise rates higher than the Fed anticipated and keep them higher for longer. This could suggest he anticipates rates to be 5.5% or greater and aims to remove expectations of rate cuts this year.

  • BOE’s Ramsden Pill speak at 09:00 and 10:15 respectively at the Royal Economic Society for Women, the Cunliffe speaks about digital currencies at 15:00
  • The BOC’s Govenor Macklem speaks on “how monetary policy works” at 17:45
  • The RBA hiked rates by 25bp to a 10-year high of 3.35% (and indicated more hikes are to follow)
  • The US dollar was the weakest major currency overnight, but the low levels of volatility show support for the dollar ahead of Jerome Powell’s speech

 

USD/JPY 4-hour chart

USD/JPY has pulled back slightly from its 20-day high having met resistance at the 50-day EMA. With Jerome Powell’s speech in full focus, it can be the difference between USD/JPY rallying or falling from current levels. Ultimately, traders will want to hear a hawkish message that supports the post-NFP rally, otherwise its vulnerable to some profit taking. For now, pullbacks towards gap support 200-bar EMA could tempt bears to return to the table, whilst a break below 131 suggests the trend has reversed on this timeframe.

 

Economic events up next (Times in GMT)

 

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.

© City Index 2024