Forex Signals Brief March 6: BOC and JOLTS Jobs Ahead of Powell

Yesterday the bond market signaled challenges for traders as Treasury rates began to decline. This trend was followed by stock markets and yen crosses which plunged lower, while Gold kept surging higher, although the foreign exchange (FX) market’s price action was relatively subdued.

Dollar selling intensified after disappointing ISM data revealed lower employment and prices paid, indicating a potential slowdown in the US economy. Gold reached an all-time high of $2140 earlier in the session before retracing slightly, but still ended the day higher. USD/JPY faced pressure from dollar selling and risk aversion, resulting in a 50-pip drop, although it briefly exceeded this figure as stops were triggered below 150.00.

Following the ISM data, the euro and cable both climbed to highs of 1.0876 and 1.2734 respectively, but retreated by around 30 pips afterward as risk sentiment deteriorated. Despite the cautious mood and limited enthusiasm about Chinese stimulus announcements, commodity currencies held their ground. Beijing mentioned year-long stimulus for consumers, but market participants awaited further details.

The day started with the Q4 GDP of 2023 from Australia, which showed a 0.2% expansion as expected. The first reading for the third quarter also showed a 0.2% growth, but Q3 GDP was revised higher today to 0.3%, which balanced out the miss in the Q4 GDP.

In the US session, the Bank of Canada (BoC)  is anticipated to maintain interest rates at 5.00%, with the market projecting the first rate cut to occur in June. Given the recent economic data and the central bank’s shift away from a tightening bias, it’s expected that the BoC will maintain its current stance and refrain from making any changes at this meeting. Consequently, the event is likely to be uneventful.

The upcoming US Job Openings report is expected to show a decrease to 8.895 million from the previous reading of 9.026 million in January. Although this data is slightly dated, it remains significant as it provides insight into the US labor market. Market participants will pay close attention to metrics such as hiring and quit rates, which have recently fallen below pre-pandemic trends.

The day will end with Federal Reserve Chair Jerome Powell testifying before the US Congress, during which market participants will closely monitor any indications or hints regarding the trajectory of monetary policy. The release of the prepared text before the testimony will be scrutinized for any clues or bias. Additionally, the subsequent Q&A session following Powell’s opening remarks will be a focal point for investors.

Yesterday the immense volatility in Gold and cryptocurrencies continued, although in forex the price action was not too exaggerated. We opened many trading signals in commodities, forex and forex, but only had three signals closed, two in profit and one in loss.

The demand for gold has remained robust in recent days, driven by uncertainty surrounding central bank policies. Gold buyers have been particularly active, leading to a significant surge in the price of gold. Yesterday, the price of gold surpassed $2,100, marking a substantial increase of more than $100. Today, buyers have continued to drive the price higher, breaking the previous all-time high of around $2,134. Currently, the new all-time high stands at $2,141.80, reflecting the strong demand and bullish sentiment surrounding gold.

USD/JPY has remained relatively stable, hovering around the 150 mark and fluctuating slightly above and below it. Following the release of the US ISM services data for February, which indicated stabilization in the sector’s activity, the USD/JPY pair dipped below the 150 level once again. However, it is anticipated to continue trading within the range it has been maintaining since February.

Yesterday Fed funds futures increased, implying further rate cuts, which pushed Bitcoin to a new record of around $69,000. However, profit-taking among Bitcoin bulls led to a retreat just below $60,000, before recovering to $64,000 towards the end of the day. We decided to open a buy BTC signal after Bitcoin found support at moving averages as shown on the chart below.

BTC/USD – 60 minute chart

Ethereum has also retreated lower yesterday after finding strong demand in recent weeks, as it was heading toward $4,000. The price dived lower yesterday, but the decline stopped just above the 100 SMA (green) on the H4 chart and the ETH price increased above the 50 SMA (yellow) which has been acting as support. Our buy Ethereum signal from February is also looking good.

ETH/USD – 240 minute chart