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Top Events: BOE, ECB, & RBA Rate Decisions; Canada Jobs Report; US NFP


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Hand moves wooden cubes and changes the letters from January to February.

02/01 Tuesday | 03:30 GMT | AUD Reserve Bank of Australia Rate Decision
The Reserve Bank of Australia will take note of the fact that inflation pressures and expectations remain elevated, and a rebounding labor market is expected to help keep growth tilted higher for the foreseeable future. Similarly, they will likely zero out their QE program. The current Australian unemployment rate of 4.6% is quickly approaching the RBA’s 2022 year-end forecast of 4.2%. These factors point to an aggressive RBA this year – but no rate hikes are imminent.


According to Australia overnight index swaps (OIS), the first 25-bps rate hike is anticipated for July (54% chance). A second rate hike is expected in September (61% chance) and a third rate hike anticipated in December (64% chance). Any commentary that drags forward rate hike odds will prove beneficial for the Australian Dollar, as the RBA closes the policy gap with more hawkish central banks like the Federal Reserve.

02/03 Thursday | 12:00 GMT | GBP Bank of England Rate Decision
With UK inflation rates at their highest level in a decade and accumulating evidence that the labor market is steadily improving, both Bank of England policymakers and rates markets believe that more policy tightening is ahead. Rates markets are discounting February 2022 as the most likely period for when rates will rise next, with an 98% chance of a 25-bps rate hike; this is an increase from 66% at the start of January. Moreover, rates markets have discounted a fourth rate hike in 2022, up from three at the start of 2022. A BOE rate hike this week aligns neatly with the release of the Monetary Policy Committee’s next iteration of the Quarterly Inflation Report (QIR). The British Pound should remain well-supported around an increasingly hawkish BOE.

02/03 Thursday | 12:45 GMT | EUR European Central Bank Rate Decision & Press Conference
ECB policymakers have been beating the same drum for the past several months: no rate hikes are coming in 2022. The final policy meeting of 2021 noted that the Governing Council believed that “monetary accommodation is still needed for inflation to stabilise at the 2% inflation target over the medium term.” ECB President Christine Lagarde has called the current rise in inflation as a “hump.” Inflation data this week is showing that price pressures are not pulling back as quickly as anticipated, however. Rates markets are pricing in an 89% chance of the first 10-bps rate hike to arrive in July 2022. Nevertheless, Euro rallies may be providing a selling opportunity as ECB rate hike odds fall back, in line with policymakers’ commentary.

02/04 Friday | 13:30 GMT | CAD Employment Change & Unemployment Rate (Jan)
A surge in COVID-19 omicron variant infections coupled with increasing protests about mandatory vaccinations may have hindered the Canadian labor market at the start of 2022. According to a Bloomberg News survey, the Canadian economy lost -117.5K jobs in January after adding +54.7K jobs in December. The Canadian unemployment rate is expected to jump considerably, from 5.9% to 6.2%. But with risk appetite starting to stabilize and oil prices continuing to press higher, any weakness seen in the Canadian Dollar around a weak January labor report may prove to be a ‘buy the dip’ opportunity.

02/04 Friday | 13:30 GMT | USD Nonfarm Payrolls & Unemployment Rate (Jan)
Like in Canada, the spread of the COVID-19 omicron variant appears to have weighed on the US labor market. Notably, US jobless claims have ticked higher every week through January, and alongside declining PMI readings, a weaker US jobs reading is expected. According to a Bloomberg News survey, forecasters are looking for jobs growth of +153K while the unemployment rate (U3) is anticipated to hold at an impressive 3.9%. Meanwhile, the US labor force participation rate is due to stay on hold at a still-meager 61.9%. Wage growth is expected to remain robust, at +5.2% y/y in January from +4.7% y/y in December.

Atlanta Fed Jobs Growth Calculator (January 2022)
Chart of Atlanta jobs growth calculator from 1980 to 2020

Chart of Atlanta jobs growth calculator from 1980 to 2020

The US economy continues to inch closer towards achieving ‘full employment’ as experienced pre-pandemic. According to the Atlanta Fed Jobs Growth Calculator, the US economy needs +424K jobs growth per month over the next 12-months in order to return to the pre-pandemic US labor market of a 3.5% unemployment rate (U3) with a 63.4% labor force participation rate. Tastytrade

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    • The ECB is expected to raise rates again at its meeting this week, but will it be enough to bolster the euro? Source: Bloomberg   Forex Indices European Central Bank Euro EUR/USD United States dollar  Chris Beauchamp | Chief Market Analyst, London | Publication date: Tuesday 31 January 2023  What will the ECB do? The European Central Bank (ECB) is expected to raise rates by 50bps at its meeting. What is the background? Like most major central banks, the ECB has been pushed into raising rates in order to combat high levels of inflation. While energy prices have come down, price increases remain above the ECB’s 2% target, and as a result, the bank still views it as necessary to push ahead. No ECB member has dissented from this view of late, leaving markets with little indication that a dovish caucus is forming. Indeed, inflation remains high, but economic data remains resilient. Expectations for a recession, which were widespread as 2022 ended and 2023 began, have been pushed further out, towards the second half of this year and even into 2024, helped by a slump in energy costs that has allayed the worst fears of economists and investors. What is the market impact? If the ECB can send a suitably hawkish message along with the expected 50bps rate hike, then the euro may receive some support against the US dollar. However, euro bulls must be aware that the pair has come a long way since the October lows, and while it only puts a modest dent in the 2022 downtrend, it does mean that the bar for further EUR/USD gains is rather high. This is coupled with negative divergence on the daily MACD indicator, which suggests weakening bullish momentum in the short-term and a general unwillingness to push the rally much further in the near-term. If the ECB is not viewed as being sufficiently hawkish, then EUR/USD may continue to weaken from its eight-month highs, but a move below $1.05 would be the minimum needed to indicate that the sellers have reasserted control. Source: ProRealTime Meanwhile in indices, a weaker euro could give the Dax some fresh impetus, but this would need to be fairly strong to counter worries about a weakening eurozone economy that might ensue. And if the ECB is much more hawkish and provides EUR/USD with a reason to recover then the risk to eurozone stocks is skewed to the downside. Some might argue that, given the huge rally in the Dax this month, some weakness is needed to take the froth out of the index, which may well be pricing in too optimistic a scenario. A drop back towards the 50-day SMA might bring the June and November 2022 highs into view as potential support. This would still leave the uptrend intact. Bulls would welcome further gains in order to cancel out the MACD’s negative divergence that looms large at present. Further upside targets 15,605 and then 15,725. Source: ProRealTime
    • Charting the Markets: 31 January FTSE, DAX and Nasdaq consolidate after latest leg higher. EUR/USD and GBP/USD fall back while USD/JPY rallies, ahead of central bank decisions. And Brent, gold and aluminium prices drop ahead of central bank meetings. Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Tuesday 31 January 2023           This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.
    • EUR/USD and GBP/USD fall back while USD/JPY rallies, as investors await central bank decisions The dollar has recovered to an extent this week, but the uptrends in EUR/USD and GBP/USD, along with the downtrend in USD/JPY, remain intact for now.  Chris Beauchamp | Chief Market Analyst, London | Publication date: Tuesday 31 January 2023  EUR/USD continues to drop back from recent high A modest pullback continues here with EUR/USD, eating into gains made since the beginning of the year. As markets brace themselves for a double hit of a Federal Reserve (Fed) and European Central Bank (ECB) meeting within a 24-hour period, EUR/USD has fallen back somewhat from the eight-month highs it reached last week. This is the first real weakness since the first week of January, and would leave the uptrend intact unless we see a move back below $1.04. If the price recovers above $1.05 then the bullish view is arguably intact and a bounce back towards $1.09 and higher may well develop. Source: ProRealTime GBP/USD stalls at December high Weakness here with GBP/USD has seen the price falter at a similar level to early December, with a possible negative divergence in the daily moving average convergence/divergence (MACD) sending a cautionary signal for bulls. Just as EUR/USD traders have to deal with the Fed and ECB decisions within the same 24-hour period, cable traders must cope with the Bank of England (BoE) decision following hard on the heels of the Fed’s. Much thus depends on that period for the next move in GBP/USD, though it will still arguably take much steeper losses to reverse the broadly bullish outlook. For that to happen we would need to see a drop below the 50-day simple moving average (SMA), followed up by a fall below the 200-day SMA. Having failed to establish a higher high, and with the MACD negative divergence a risk, the uptrend could come under pressure. A reversal above $1.24 would put the buyers back in charge. Source: ProRealTime USD/JPY edges up The greenback in USD/JPY has seen a modest recovery off its January lows, as the Bank of Japan (BoJ) dials down any hint of hawkish rhetoric. Nonetheless, the downtrend is still firmly placed. A move back above the 50-day SMA to suggest perhaps some further short-term strength, but the mid-December high around ¥134.00 would act as a barrier. Sellers will be looking for a fresh reversal that puts a move back to the January lows in play, and then sees a move below the May 2022 low around ¥126.50. Source: ProRealTime
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