Wednesday calendar stacked with first tier risk

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The November 2022 monthly close back above 1.2000 strengthens this prospect. Any setbacks should now be well supported ahead of 1.2000. Next key resistance comes in at 1.2849.

• R2 1.2800 – Figure – Medium
• R1 1.2710 – 20 February high – Medium
• S1 1.2621 – 28 February low – Medium
• S2 1.2518 – 5 February/2024 low – Strong

GBPUSD – fundamental overview

The Pound managed to perform relatively well on Tuesday despite a small downward revision to UK PMI. It seems the combination of broad based Dollar selling and anticipation into today's UK Budget release were behind the support for the currency. Key standouts on Wednesday’s calendar come from German trade, German construction PMIs, UK construction PMIs, the UK Budget, Eurozone retail sales, US ADP employment, the Bank of Canada policy decision, Canada Ivey PMIs, US JOLTs job openings, Fed Chair Powell testimony, and the Fed Beige Book late in the day.

USDJPY – technical overview

The market remains confined to a strong uptrend, with sights set on a retest and break of the multi-year high from 2022 at 151.95. A push through this level will open the next major upside extension towards 155.00. Key support comes in at 145.90, with only a weekly close below to delay the constructive outlook.

• R2 151.00 – Figure – Medium
• R1 150.89 – 13 February/2024 high – Medium
• S1 149.21 – 29 February low – Strong
• S2 147.62– 7 February low – Strong

USDJPY – fundamental overview

Tuesday's release of hotter Tokyo CPI data has sparked the conversation around the BOJ ending negative interest rate policy. Japan's largest bank head of global market business at MUFJ Financial Group said "I think it is necessary to end the negative interest rate in March not April." Key standouts on Wednesday’s calendar come from German trade, German construction PMIs, UK construction PMIs, Eurozone retail sales, US ADP employment, the Bank of Canada policy decision, Canada Ivey PMIs, US JOLTs job openings, Fed Chair Powell testimony, and the Fed Beige Book late in the day.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6200 would give reason for rethink. Back above 0.6900 will take the big picture pressure off the downside and strengthen case for a bottom.

• R1 0.6625– 30 January high – Strong
• R2 0.6595 – 22 February high – Medium
• S1 0.6442– 13 February/2024 low – Strong
• S2 0.6400 – Figure – Medium

AUDUSD – fundamental overview

Aussie GDP came in as expected, but saw an upward revision to the previous print, which has helped to prop the Australian Dollar on Wednesday. But the fact that the reading was well below the decade average could see the RBA completely abandoning its rate hike bias. Aussie construction PMIs came in lower than previous, while manufacturing PMIs improved from previous. Key standouts on Wednesday’s calendar come from German trade, German construction PMIs, UK construction PMIs, Eurozone retail sales, US ADP employment, the Bank of Canada policy decision, Canada Ivey PMIs, US JOLTs job openings, Fed Chair Powell testimony, and the Fed Beige Book late in the day.

USDCAD – technical overview

Above 1.3000 signals an end to a period of longer-term bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4000 area. Setbacks should be very well supported down into the 1.3000 area.

• R2 1.3627 – 30 November high – Strong
• R1 1.3607 – 28 February/2024 high – Medium
• S1 1.3441 – 22 February  low – Medium
• S2 1.3358 – 31 January low – Strong

USDCAD – fundamental overview

A drop in the price of oil has been weighing on the Canadian Dollar in recent sessions, though setbacks had been somewhat mitigated by a round of better than expected Canada PMI numbers. Key standouts on Wednesday’s calendar come from German trade, German construction PMIs, UK construction PMIs, Eurozone retail sales, US ADP employment, the Bank of Canada policy decision, Canada Ivey PMIs, US JOLTs job openings, Fed Chair Powell testimony, and the Fed Beige Book late in the day.

NZDUSD – technical overview

Overall pressure remains on the downside with the market continuing to stall out on runs up into the 0.6500 area. At the same time, there are some signs of the market wanting to put in a longer-term base. Ultimately, a break back above 0.6500 would be required to take the medium-term pressure off the downside and encourage this prospect. A monthly close below 0.5800 will intensify bearish price action.

• R2 0.6223 – 4 December high– Strong
• R1 0.6218 – 22 February high – Medium
• S1 0.6050 – 13 February low– Medium
• S2 0.6000 – 5 February/2024 low – Strong

NZDUSD – fundamental overview

RBNZ Chief Economist Paul Conway said in a webinar earlier that the central bank may be able to cut rates earlier if the Fed eases first. The rationale is that a Fed cut will initially drive the Kiwi higher against its US counterpart as well as its other trading partners which will eventually lead to lower inflation and thus allow the central bank to cut rates. Key standouts on Wednesday’s calendar come from German trade, German construction PMIs, UK construction PMIs, Eurozone retail sales, US ADP employment, the Bank of Canada policy decision, Canada Ivey PMIs, US JOLTs job openings, Fed Chair Powell testimony, and the Fed Beige Book late in the day.

US SPX 500 – technical overview

Longer-term technical studies continue to look quite extended after pushing to fresh record highs, begging for a deeper correction ahead. Look for rallies to be well capped in favor of lower tops and lower lows. A monthly close above 5100 will be required to delay the outlook. Next key support comes in at 4842.

• R2 5200 – Figure – Strong
• R1 5150 – 4 March/Record – Medium
• S1 4920– 13 February low – Strong
• S2 4842 – 31 January low – Medium

US SPX 500 – fundamental overview

Though we have seen an adjustment of investor expectations towards the amount of rate cuts in 2024, the market still believes policy will end up erring more towards the investor friendly, accommodative side of things. This bet has kept stocks well bid and pushing record highs. Still, it's important to highlight the fact that the Fed has yet to declare a victory over inflation and could disappoint investors with less accommodative policy than desired going forward. If this happens, stocks could be in for a nasty bearish reversal.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs. Setbacks should now be well supported above 1900 on a monthly close basis ahead of the next major upside extension towards 2500.

• R2 2175 – 4 December/Record high– Strong
• R1 2142 – 5 March high – Medium
• S1 1984 – 14 February/2024 low– Medium
• S2 1973 – 13 December low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about inflation risk and a less stable and upbeat global growth outlook. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an end.