Weekly Market Forecast for February 2nd-6th
Global Economic Data Releases: This week features key economic indicators including manufacturing PMI for the Eurozone, U.K., and U.S., along with employment reports from New Zealand and Canada, and monetary policy announcements from the RBA, BoE, and ECB.
U.S. Labor Market Outlook: The U.S. is expected to see a slight increase in non-farm payrolls and average hourly earnings, with the unemployment rate projected to remain steady at 4.4%. However, labor-demand indicators suggest potential downside risks.
Australia's Monetary Policy: The RBA is anticipated to raise interest rates by 25 bps to combat persistent inflation, while adopting a cautious approach moving forward. The updated economic outlook will reflect stronger inflation and stable consumer demand.
U.K. and Eurozone Economic Conditions: The BoE is likely to maintain its policy rate amid improving economic activity, while the ECB is expected to keep its deposit rate unchanged, reflecting ongoing economic resilience despite mixed forward-looking indicators.
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Barclays observes increasing risk premium impacting the US dollar
US Dollar Outlook: Barclays warns that the US dollar is facing increasing downside risks due to a rising risk premium, despite the US economy's strong performance compared to global peers.
Currency Comparisons: The Japanese yen is expected to have more potential for appreciation than the euro, which is already trading at high levels, limiting its upside potential.
Asian Currencies: Several Asian currencies may benefit from ongoing dollar depreciation as global investors diversify their portfolios away from the US, potentially increasing inflows into emerging market assets in Asia.
Monetary Policy Impact: The Federal Reserve's interest rate decisions are crucial for the dollar's direction, with current market expectations reflecting two rate cuts this year, which could significantly influence investor sentiment and positioning.
GBPUSD Approaches 2025 Peaks as Attention Shifts to US Data and BoE Decision
USD Outlook: The US Dollar is rebounding due to strong economic data, with upcoming reports like the US ADP and ISM Services PMI potentially influencing interest rate expectations and further supporting the greenback.
GBP Performance: The British Pound received a boost from better-than-expected UK Flash PMIs, while the Bank of England is expected to maintain the current Bank Rate with a focus on data-driven guidance.
GBPUSD Technical Analysis: The GBPUSD pair has seen a false breakout above 1.3790, with sellers targeting the major trendline around 1.3500, while buyers are expected to support the trendline for potential rallies.
Upcoming Economic Events: Key economic data releases include the US ADP and ISM Services PMI today, the BoE rate decision and US Jobless Claims tomorrow, and the University of Michigan Consumer Sentiment data on Friday.
USD/JPY Pushes Japan's Patience to the Brink This Week
USD/JPY Movement: The USD/JPY currency pair has risen over 100 pips to 156.70, recovering from a drop following speculated 'rate checks' by Japanese authorities, who previously intervened to prevent the pair from exceeding 159.00.
Market Sentiment: The Japanese yen continues to face selling pressure, with a shift towards a more bullish near-term bias for USD/JPY as it breaks above key moving averages, indicating a potential for further upward movement.
Intervention Speculation: There is ongoing speculation about when Japan will intervene in the currency market, especially after previous 'rate checks' have led to actual interventions, with officials possibly waiting for the snap election on February 8 to gauge market reactions.
Impact of Trading Levels: As traders push USD/JPY above the 155.00 mark, it may prompt Japanese officials to consider intervention, reflecting their growing impatience with the currency's performance.
USDJPY Set to Approach Intervention Level as US Economic Data Improves
USD Performance: The US Dollar rebounded due to the nomination of Kevin Warsh as the next Fed chair, with improving labor market data and strong ISM Manufacturing PMI suggesting potential for further gains if upcoming data remains positive.
JPY Outlook: The Bank of Japan maintained interest rates and slightly upgraded growth and inflation forecasts, with expectations for a potential rate hike in April depending on economic data, while the Japanese Yen faces pressure from a strengthening US Dollar.
USD/JPY Technical Analysis: The USD/JPY pair has broken above the 154.50 resistance, with potential to reach 159.00 if support holds; however, a rising wedge pattern on the 1-hour chart indicates possible loss of momentum and a correction.
Upcoming Economic Data: Key upcoming economic indicators include the US ADP, ISM Services PMI, Jobless Claims, and University of Michigan Consumer Sentiment, alongside Japan's lower house election expected to favor the LDP party.
Indian Rupee Strengthens Against Dollar Following Trump's Trade Deal and Tariff Reductions
USD Performance: The US Dollar rebounded due to the nomination of Kevin Warsh as the next Fed chair, with improving labor market data and strong manufacturing PMI suggesting potential for further appreciation if upcoming data remains positive.
INR Developments: The Indian Rupee is on a bearish trend against the US Dollar, but recent tariff reductions announced by President Trump have provided a boost, while the RBI is expected to maintain steady interest rates amid rising inflation.
Technical Analysis - USDINR: The USDINR pair is approaching the bottom trendline on the daily chart, with potential for buyers to step in, while a break below could lead to further bearish movement towards the 89.00 level.
Upcoming Economic Data: Key economic indicators to watch include the US ADP, ISM Services PMI, Jobless Claims, and the RBI rate decision, which could significantly impact market sentiment and currency movements.
Australian Dollar Soars as RBA Surpasses Market Hawkish Expectations
US Dollar Performance: The US Dollar rebounded due to the nomination of Kevin Warsh as the next Fed chair, despite a lack of strong fundamentals supporting its previous selloff. Improved US labor market data and a positive ISM Manufacturing PMI suggest potential strength for the dollar in February.
Upcoming Economic Data: Key economic reports, including the NFP, US ADP, and ISM Services PMI, are anticipated to influence the dollar's performance, with market expectations for easing potentially being adjusted based on the data outcomes.
Australian Dollar Reaction: The Australian Dollar strengthened after the RBA raised the Cash Rate by 25 bps and indicated two additional rate hikes by year-end, surpassing market expectations.
AUD/USD Technical Analysis: The AUD/USD pair has shown a bounce from the 0.69 support level, with potential targets at 0.7150 for buyers, while sellers may look for a break below major support levels in upcoming trading sessions.
Barclays observes increasing risk premium impacting the US dollar
US Dollar Outlook: Barclays warns that the US dollar is facing increasing downside risks due to a rising risk premium, despite the US economy's strong performance compared to global peers.
Currency Comparisons: The Japanese yen is expected to have more potential for appreciation than the euro, which is already trading at high levels, limiting its upside potential.
Asian Currencies: Several Asian currencies may benefit from ongoing dollar depreciation as global investors diversify their portfolios away from the US, potentially increasing inflows into emerging market assets in Asia.
Monetary Policy Impact: The Federal Reserve's interest rate decisions are crucial for the dollar's direction, with current market expectations reflecting two rate cuts this year, which could significantly influence investor sentiment and positioning.
GBPUSD Approaches 2025 Peaks as Attention Shifts to US Data and BoE Decision
USD Outlook: The US Dollar is rebounding due to strong economic data, with upcoming reports like the US ADP and ISM Services PMI potentially influencing interest rate expectations and further supporting the greenback.
GBP Performance: The British Pound received a boost from better-than-expected UK Flash PMIs, while the Bank of England is expected to maintain the current Bank Rate with a focus on data-driven guidance.
GBPUSD Technical Analysis: The GBPUSD pair has seen a false breakout above 1.3790, with sellers targeting the major trendline around 1.3500, while buyers are expected to support the trendline for potential rallies.
Upcoming Economic Events: Key economic data releases include the US ADP and ISM Services PMI today, the BoE rate decision and US Jobless Claims tomorrow, and the University of Michigan Consumer Sentiment data on Friday.
USD/JPY Pushes Japan's Patience to the Brink This Week
USD/JPY Movement: The USD/JPY currency pair has risen over 100 pips to 156.70, recovering from a drop following speculated 'rate checks' by Japanese authorities, who previously intervened to prevent the pair from exceeding 159.00.
Market Sentiment: The Japanese yen continues to face selling pressure, with a shift towards a more bullish near-term bias for USD/JPY as it breaks above key moving averages, indicating a potential for further upward movement.
Intervention Speculation: There is ongoing speculation about when Japan will intervene in the currency market, especially after previous 'rate checks' have led to actual interventions, with officials possibly waiting for the snap election on February 8 to gauge market reactions.
Impact of Trading Levels: As traders push USD/JPY above the 155.00 mark, it may prompt Japanese officials to consider intervention, reflecting their growing impatience with the currency's performance.
USDJPY Set to Approach Intervention Level as US Economic Data Improves
USD Performance: The US Dollar rebounded due to the nomination of Kevin Warsh as the next Fed chair, with improving labor market data and strong ISM Manufacturing PMI suggesting potential for further gains if upcoming data remains positive.
JPY Outlook: The Bank of Japan maintained interest rates and slightly upgraded growth and inflation forecasts, with expectations for a potential rate hike in April depending on economic data, while the Japanese Yen faces pressure from a strengthening US Dollar.
USD/JPY Technical Analysis: The USD/JPY pair has broken above the 154.50 resistance, with potential to reach 159.00 if support holds; however, a rising wedge pattern on the 1-hour chart indicates possible loss of momentum and a correction.
Upcoming Economic Data: Key upcoming economic indicators include the US ADP, ISM Services PMI, Jobless Claims, and University of Michigan Consumer Sentiment, alongside Japan's lower house election expected to favor the LDP party.
Indian Rupee Strengthens Against Dollar Following Trump's Trade Deal and Tariff Reductions
USD Performance: The US Dollar rebounded due to the nomination of Kevin Warsh as the next Fed chair, with improving labor market data and strong manufacturing PMI suggesting potential for further appreciation if upcoming data remains positive.
INR Developments: The Indian Rupee is on a bearish trend against the US Dollar, but recent tariff reductions announced by President Trump have provided a boost, while the RBI is expected to maintain steady interest rates amid rising inflation.
Technical Analysis - USDINR: The USDINR pair is approaching the bottom trendline on the daily chart, with potential for buyers to step in, while a break below could lead to further bearish movement towards the 89.00 level.
Upcoming Economic Data: Key economic indicators to watch include the US ADP, ISM Services PMI, Jobless Claims, and the RBI rate decision, which could significantly impact market sentiment and currency movements.
Australian Dollar Soars as RBA Surpasses Market Hawkish Expectations
US Dollar Performance: The US Dollar rebounded due to the nomination of Kevin Warsh as the next Fed chair, despite a lack of strong fundamentals supporting its previous selloff. Improved US labor market data and a positive ISM Manufacturing PMI suggest potential strength for the dollar in February.
Upcoming Economic Data: Key economic reports, including the NFP, US ADP, and ISM Services PMI, are anticipated to influence the dollar's performance, with market expectations for easing potentially being adjusted based on the data outcomes.
Australian Dollar Reaction: The Australian Dollar strengthened after the RBA raised the Cash Rate by 25 bps and indicated two additional rate hikes by year-end, surpassing market expectations.
AUD/USD Technical Analysis: The AUD/USD pair has shown a bounce from the 0.69 support level, with potential targets at 0.7150 for buyers, while sellers may look for a break below major support levels in upcoming trading sessions.
