Daily Market Outlook, March 3, 2023

Markets look To Close Out The Week On A Firmer Footing Driven By Fed ‘Pause’ Hope

Asian equities followed Wall Street’s positive lead and were mostly higher following on from the positive close stateside, driven by yet another round of optimism regarding the potential for a Fed pause, this time Fed member Bostic was the catalyst for the improvement in risk sentiment. Overnight it appears that signs of a strong growth rebound in China following the lifting of Covid restrictions may be adding to risk appetite. China’s February Caixin services PMI ticked up to 55.0 from 52.9. PMIs in Japan and Australia were also revised up from their preliminary flash releases.

This morning’s UK and Eurozone services PMI survey releases for February are final readings, the preliminary flash estimates signalled the first expansion (above 50 level) in UK services activity since August, rising to 53.3 from 48.7, while Eurozone services rose to 53.0, up from 50.8. Both reports indicated that price pressures linked to wage inflation remain elevated. 

US investors will be eyeing the February ISM services survey release later today. The January increase to 55.2 surprised to the upside, however, the uptick was widely attributed to milder weather leading to increase in activity, the prices index remained buoyant despite retreating from elevated levels over the past 12 months, market watchers anticipate that today’s headline ISM should continue to remain anchored in expansionary territory, nudging up to 55.5 for February. Investors will have one eye on the newswires this afternoon as a bevy of Fed officials are set to make comments with voters Logan and Bowman set to speak along with further remarks from non voters Bostic and Barkin also on deck later, markets will be keen to decipher any further indications from Fed officials around the possibility of a Fed ‘pause’.

FX Options Expiration New York Cut

  • EUR/USD: 1.0600 (EU2.11B), 1.0500 (EU1.76B), 1.0700 (EU1.45B)

  • USD/JPY: 123.00 ($1.01B), 135.00 ($795.5M), 128.00 ($793M)

  • USD/CNY: 6.9000 ($1.32B), 7.0000 ($800M), 6.8750 ($622.5M)

  • GBP/USD: 1.2065 (GBP644.8M), 1.2000 (GBP542.7M), 1.2520 (GBP468.9M)

  • AUD/USD: 0.6800 (AUD950.8M), 0.7000 (AUD576.2M), 0.6500 (AUD447.9M)

  • USD/CAD: 1.3600 ($744.6M), 1.3400 ($669.8M), 1.3550 ($405.5M)

  • USD/MXN: 19.95 ($300.8M)

  • USD/BRL: 5.0700 ($312M)

  • NZD/USD: 0.6100 (NZD1B), 0.6150 (NZD465M), 0.6785 (NZD324.3M)

Overnight News of Note

  • USD Eases Toward First Weekly Loss Since Jan As Traders Weigh Fed Path

  • China Feb Services Activity Jumps Sharply As Demand Recovers- Caixin PMI

  • China's Yuan More Flexible, Helps Stabilise Economy: C.Bank Governor

  • China's Housing Bubble Has Been Curbed: Deputy C.Bank Governor

  • Consumer Inflation In Japan's Capital City Off 42-Year Peak

  • Japan's Feb Service-Sector Activity Grows At Fastest Rate In 8 Months

  • BoJ Watchers See Higher Chance Of June Shift After Ueda Hearings

  • RBA To Lift Rates To 3.60% On March 7, Finish At 3.85% In Q2 - RTRS Poll

  • Fed's Waller: If Data Stays Hot, Policy Rate Should Go Above 5.1%-5.4%

  • Fed’s Bostic Open To Seeking Higher Rate Peak If Data Stay Hot

  • Deluge Of Inflation Data Pushes US Borrowing Costs To 2007 Levels

  • ECB’s Wunsch Sees 4% Rates Possible If Inflation Stays Strong

  • Dollar's Renewed Strength Temporary, Weakness Ahead - RTRS Poll

  • Bitcoin Slides With Wider Crypto Markets Amid Silvergate Fallout

  • Japan’s Key Bond Yield Rises Above 0.5% BoJ Ceiling Once More

  • China Swap Traders Flip To Bet On Higher Rates On Growth Rebound

  • Oil Racks Up Weekly Gain As Investors Warm To China’s Recovery

  • Asian Stocks Set To Snap Four-Week Loss On Dovish Fed Comments

  • China Retail Investing Remained Lackluster Amid Reopening Rally

  • iPhone Maker Plans $700 Million India Plant In Shift From China

(Sourced from Bloomberg, Reuters and other reliable financial news outlets)

Technical & Trade Views

SP500 Bias: Intraday Bullish Above Bearish Below 4000

  • Primary support is 3885

  • Primary objective is 4384

  • Below 3880 opens 3835

  • 20 Day VWAP bearish, 5 Day VWAP bullish

EURUSD Bias: Intraday Bullish Above Bearish below 1.0680

  • Primary resistance is 1.0805

  • Primary objective is 1.0430

  • Above 1.0860 opens 1.09

  • 20 Day VWAP bearish, 5 Day VWAP bullish

GBPUSD Bias: Intraday Bullish Above Bearish below 1.2080

  • Primary resistance  is 1.2265

  • Primary objective 1.1785

  • Above 1.2265 opens 1.2337

  • 20 Day VWAP bearish, 5 Day VWAP bullish

USDJPY Bias: Intraday Bullish above Bearish Below 135.50

  • Primary support  is 133.50

  • Primary objective is 137.26

  • Below 133.40 opens 132.80

  • 20 Day VWAP bullish, 5 Day VWAP bullish

AUDUSD Bias: Intraday Bullish Above Bearish below .6790

  • Primary resistance is .7030

  • Primary objective is .6635

  • Above .7050 opens .7150

  • 20 Day VWAP bearish, 5 Day VWAP bearish

BTCUSD Intraday Bias: Bullish Above Bearish below 23800

  • Primary support 2100

  • Primary objective is 26700

  • Below 20300 opens 19500

  • 20 Day VWAP bullish, 5 Day VWAP bearish