• USD/JPY up nearly 2% on huge US jobs nL1N34I2TY and ISM beats nN9N32B01A

• Prices past the recent downtrend line, 30-DMA and daily Kijun hurdles

• And nearing Jan. 18's BoJ meeting day spike high at 131.58 on EBS

• Nearly 25bp of Fed hikes priced back in by 2024 after data shockers

• Markets still on the watch for a BoJ move to let JGB yields rise more

• But hawkish shift in Fed expectations is a more important factor for now

• First close above the kijun at 131 since 148.26 Nov. 2 close is possible

• Above the 131.58 spike high are the 55-DMA and cloud base at 133.47/89

• Rising 55-WMA and falling 10-WMA are converging near 132 nL1N34J1FD

For more click on FXBUZ

• EUR/USD rallied to 1.0940 on EBS in early NY but then turned lower

• Upbeat jobs nL1N34I2TY, ISM non-mfg PMI nN9N32B01A lifted US rates

• UST 2-yr yield US2YT=TWEB gains buoyed US$; USD/CNH neared 6.8000

• Stocks ESv1 and commodities XAU= fell as risk-off took control

• EUR/USD fell below the 21-DMA, hit 1.0808 & sat just above late in the day

• Techs warn longs; RSIs falling, monthly inverted hammer candle formed

• Downside risks grow as payrolls highlight shifting Fed view nL1N34J1E6

• For more click on FXBUZ

Credit Agricole CIB Research discusses its expectations for next week's RBA policy meeting.

"The focus for the AUD in the coming week will be the RBA meeting outcome and its revised forecasts in its SoMP. We expect the RBA to raise its cash rate by 25bp to 3.35%, which would not have much impact on the AUD as the market is about 75% priced for such a hike. Softening household consumption and employment growth leave the market a little hesitant to fully price in a 25bp rate hike," CACIB notes. 

"This data also leaves investors on the lookout for any signs from the RBA next week of a pause in its tightening cycle. With the market still pricing in an RBA terminal rate of between 3.60%," CACIB adds. 

The dollar index vaulted higher on Friday, chalking up gains of 0.9% after U.S. employment nL1N34I2TY and ISM services nN9N32B01A came in so much stronger than forecasts that investors rushed to price in nearly 17bp of additional Fed hikes, while 2-year Treasury-bund yield spreads rose 10bp.

The 517k rise in payrolls was more than double the 185k forecast, and December and November were revised significantly higher.
The average workweek increased to 34.7 hours from 34.2, its highest since last March.

Average hourly earnings increased 0.3% month-on-month, though December was revised to 0.4% from 0.3%, bringing the year-on-year rate to 4.4% versus 4.3% forecast and 4.6% last.

The jobless rate dropped instead of rising, but that was largely due to annual population controls bolstering households data.

ISM non-manufacturing's biggest dollar bullish surprises were business activity and new orders surging to 60.4 from 53.5 and 45.2, respectively.
The employment index bounced to the breakeven 50 level from 49.4, with the index out of synch with very robust 471k increase in services jobs in the payrolls report.

The dollar index cleared its downtrend line from November before bumping into the underside of the broader pandemic uptrend line it broke below in January.

EUR/USD fell 0.8% despite above-forecast euro zone PPI nL8N34J2ER and ECB policymakers saying the central bank is set to raise rates again in May, not just March nL1N34J0FR.

USD/JPY surged 1.8% higher to its strongest since the 131.58 Jan.
18 spike high after that day's BoJ meeting wrong-footed traders by not increasing its 10-year JGB yield cap.
Prices may close above key hurdles, fostering further gains near-term nL1N34J1FD.

Because JGB yields remain highly restrained by the BoJ, the surge in Treasury yields had an outsized impact on USD/JPY versus the EUR/USD, as the 1% EUR/JPY rise highlights.

Sterling fell 1.2% on more morose UK data and weakening BoE rate hike guidance.

There's little on the U.S. release calendar until CPI on Feb.
14.

For more click on FXBUZ

Danske Research maintains a bearish bias on EUR/USD and looks to sell the pair on rallies over the coming weeks.

"While the initial market reaction in FX markets to the ECB announcement was fairly limited, the EUR initiated a broader-based decline during the press conference. EUR/USD is now firmly below the 1.10 mark and EUR/Scandies are also trading considerably lower. In recent weeks, EUR/USD has defied the shift and sudden underperformance of Eurozone equities, which we otherwise deem to have been an important driver behind the EUR/USD rally since September (Eurozone equities overperforming during this period)," Danske notes.

"Our tactical conviction on EUR/USD is not high but we maintain a clear sell-on-rallies bias for the cross as we still think medium-term drivers indicate that EUR/USD is overvalued (and not undervalued," Danske adds. 

GBP/USD slumped in early NorAm to a 3-week low on Friday after U.S.
payrolls data beat forecasts by a prodigious 332,000, sending sterling below key Fibo support at 1.2145, which may portend further weakness.

Surging U.S. Treasury yields emboldened the dollar, which kicked cable down to 1.2065 in short order from 1.2240 before the release, with resurgent Fed rate expectations in the belly of the U.S. Eurodollar strip pressuring sterling further.

However, the sterling-positive rate advantage once priced in for 2024 -- a key source of the pound's recent strength -- has evaporated, with futures 0#ED:0#SON3: now tipping in the dollar's favor across the strip.

With risks that British inflation may lead to a deeper recession, UK rate futures in 2026 and 2027 are pricing below U.S. rates.

The BoE's less-hawkish rate stance -- including two votes to hold steady when the bank hiked by 50bp on Thursday and dropping forceful inflation-fighting language from its statement -- GBP/USD bears are likely to target the 200-DMA at 1.1957 and the Jan.
6 2023 low at 1.1842.

For more click on FXBUZ

Bank of America Global Research maintains a structural bearish bias on GBP over the coming months. 

"GBP price action following the BoE meeting this week indicate that markets see the BoE at or close to the terminal rate, which fits our priors. However, the UK rate outlook has played little role in GBP pricing for some time. The BoE decision tells us more about the contours of the UK economy, which continues to be hamstrung by structural difficulties. Indeed, admission that the long run impacts of Brexit had fed through much faster than anticipated is clear evidence that the BoE is aware that monetary policy will not be the solution," BofA notes. 

"A quicker turnaround in rates (from hikes to cuts) than other central banks and a level of acceptance that the UK is in a unique situation compared to its peers is therefore likely. We maintain a bearish view on GBP," BofA adds. 

CIBC Research discusses its reaction to today's US NFP report for the month of January.

"The US labor market started the new year with a bang, as 517K jobs were created, well above the consensus expectation of 188K. A 71K upward revision to the prior two-month job tally added to the upside, and hiring was somewhat widespread across industries in January, with leisure and hospitality leading the way. The unemployment rate fell to 3.4% (vs. consensus for a tick increase to 3.6%), and the BLS noted that the introduction of new population controls to this month's data did not impact the overall unemployment rate. Average wages rose by a moderate 0.3% m/m, as expected, and a more modest 0.2% for production workers," CIBC notes. 

"Overall, this is clearly a tight labor market that proves that the Fed has more work to do in order to cool activity," CIBC adds. 

• The 10-DMA helped cap overnight gains, 0.7080 hit but AUD/USD then fell

• Pair traded down to 0.7045 as investors sought some safer assets

• Equities ESv1, iron-ore DCIOc2 fell while US$, yen gained

• USD/CNH rallied toward 6.7550, AUD/JPY dipped below 90.60 in early NY

• Bearish tech signs emerge; monthly gravestone doji forms, 10-DMA caps

• US Jan. Employment report, ISM non-mfg PMI data risks loom in NY

• For more click on FXBUZ

• Cable tests 1.2264 (Jan 24 low) after pushing recovery envelope from 1.2185

• Rise to 1.2264 spurred by UK Jan services PMI upward revision to 48.7

• 1.2185 was two-and-a-half week low on dovish steer from BoE's Pill

• Resistance levels beyond 1.2264 include 1.2275 (Wednesday's low) and 1.23

• U.S. Jan jobs report due 1330 GMT; NFP f/c 185k, jobless rate f/c 3.6%

• AHE f/c 4.3% YY nL1N34I2CA. U.S. ISM services index due 1500 GMT; 50.4 f/c

FX options have been correctly predicting the recent price action in EUR/USD, so what next for the currency pair according to its forward-looking derivative?

EUR calls/USD puts were a favoured option trade in early January and many of those with strikes around 1.07-1.08 and short-dated expiries were pared for profit after the post-Fed bounce to 1.1034.
However, the popular EUR calls with attached knock-out triggers at 1.1100-1.1200 and above are still in play.
This might suggest holders of EUR calls think they have seen the near-term peak for EUR/USD and that any further gains will remain hard-fought.

There's been a slight reduction in EUR put/USD call strike premium since the central bank meetings which may alleviate some of the fears about deeper spot declines, especially when combined with the big drop in implied volatility as risk premiums were pared.
One through 3-month expiry implied volatility is at longer-term lows, and while that remains the case EUR/USD traders should expect lower actual volatility.

For more click on FXBUZ

• EUR/USD broke above the 1.0939 Fibo, but is in danger of ending week below

• 1.0939 Fibo: 50% retracement of the 1.2349 to 0.9528 (2021 to 2022) EBS drop

• A weekly close above 1.0939 Fibo is needed to keep the bias on the upside

• Note fourteen-week momentum is positive, reinforcing the overall bull market

• We remain long at 1.0955 in anticipation for gains in coming sessions

• EUR/USD Trader TGM2334. Previous update nL1N34I0LY

• EUR/USD drops 1.1034-1.0882 EBS in wake of Fed/ECB meetings

• Benchmark option vol sinks towards 7.5

• Big decline in vols is a strong signal trend near its end

• Traders betting heavily on a rise may be inclined to take profit

• Target for minimum tech correction of the uptrend is 1.0459

• EUR/USD implied volatility hit hard after central bank risk premiums pared

• Benchmark 1-month from 8.7 to 7.6 - now sits on December and 1-year lows

• 3-month from 8.3 to 7.8 - new lows since May. Sales flags 2 major signals

• 1. Low implied vol is consistent with low actual volatility and range trade

• 2. Long term lows more likely to cover premiums and offer cheap FX hedges

• Positioning before cen-bank meetings showed heavy upside resistance

  
  

  
  

For more click on FXBUZ

• A significant range break driven by a key day reversal

• A higher high, lower low and close clear below previous close

• Bear targets now include a key 50% Fibo at 1.2145, off 1.1842-1.2447

• The daily cloud top is at 1.2140 just below: 1.2088, Jan. 12 low in the mix

• Move abv 1.2288 might trigger a squeeze but level might also attract offers

• We lean bearish but will monitor any corrective rebound for an entry point

  For more click on FXBUZ

• -0.3% as risk sours in Asia - E-mini S&P -0.6%, Nasdaq futures -1.6%

• Regional stocks are mixed - market nervous ahead of often volatile U.S. jobs

• Poll - RBA to hike 25bp on Tuesday and rates to peak at 3.6% in Q1 for 2023

• As we learnt from 2022, there will likely be major economic surprises ahead

• AUD trades at the base of a 0.7080-0.7047 range with solid flow on D3

• Charts; momentum studies flat line, 21 day Bollinger bands contract

• 10 & 21 daily, weekly MAs climb - positive setup while 0.7003 21 DMA holds

• Asian 0.7080 high and 0.7003 21 DMA are initial support and resistance

For more click on FXBUZ

• -0.15% in a busy 1.2203-1.2229 range with U.S. and Asian stocks lower

• UK motor insurance costs jumped 8% in fourth quarter of 2022- ABI

• Market and BoE optimistic that inflation is coming under control

• Even if inflation peaks, it will be a long hard road to growth

• Techs; 5, 10 & 21 day moving averages conflict, 21 day Bolli bands contract

• Momentum studies head lower - dip leaves negative daily studies

• 1.2144, 50% of the 2023 rise is initial significant support

• 1.2229 Asian high then 1.2287 21 DMA, 1.2294 5 DMA first resistance

For more click on FXBUZ

• -0.15% after falling 0.85% on USD strength as European yields slid

• Central banks believe inflation is coming under control - do the RBA?

• Recent data showed CPI above expectations, but retail sales slumped

• Mixed signals for the RBA - RBAWATCH prices 25pt Feb 7 hike at 88.65%

• Another 25 pt hike expected in April, but not fully priced until May

• RBA too dovish as inflation built, they need to be confident to end hikes

• Charts; momentum studies flat line, 21 day Bollinger bands contract

• 10 & 21 daily and weekly moving averages climb - net positive setup

  For more click on FXBUZ

• Touch softer after closing down 1.2% in response to the BoE dovish hike

• Gilt yields slumped, 10yr -30bp to 3.006%, investors wary on longer term

• Expecting a tight range in Asia ahead of often volatile U.S. payrolls

• Techs; a bearish outside day and close below 1.2288 21 DMA ends topside bias

• 5, 10 & 21 day moving averages conflict, 21 day Bolli bands contract

• Momentum studies head lower - dip leaves negative daily studies

• 1.2216, 38.2% of the 2023 rise is initial close support

• 1.2288 21 DMA then 1.2295 5 DMA are first resistance

  For more click on FXBUZ

• AUD/USD in a subdued start after declining 0.8% Thursday on profit-taking

• Undermined by softer commodities; copper, gold, iron ore prices decline

• Weighed down by position squaring ahead of Friday U.S. jobs report for Jan

• Unemployment rate expected to tick up to 3.6% and 185,000 rise in jobs

• Focus turns to RBA rate decision Tuesday; Fed-RBA rate expectations diverge

• After a joint rate surge, central banks start to see the end in sight

• Support 0.7050-55, 0.7025-30, resistance 0.7110-15, 0.7140-45, 0.7160-65

• For more click on FXBUZ

TD Research expects tomorrow's NFP print at 220k vs 185k for consensus.

"Job creation likely remained solid, with payrolls gains staying above the 200k mark in Jan.

We look for the unemployment rate to stay put at 3.5%," TD notes. 

• USD/JPY fell to 128.08 with Tsy-JGB yields spreads down after Fed meeting

• Also some spill-over weakness from plunging bund, gilts yields post-BoE, ECB

• US data mostly better than f/c stemmed USD/JPY's slide nL1N34I1O3

• Yen broadly stronger because JGB yields were up slightly vs drops elsewhere

• BoJ's JGB yield cap is expected to eventually be raised, underpins yields

• Prices being drawn toward Jan's 127.215 trend lows on EBS by Fed hike doubts

• By those lows are 50% of the 2020-22 advance and May's key low at 126.56/37

• Fri's NFP and ISM services are the last key report until CPI on Feb. 14

• The primary down TL will be at 130.53 on Fri, should US data greatly impress

For more click on FXBUZ

The dollar index rallied on Thursday, rebounding from the previous session's Fed-inspired losses nL1N2UT1TV after BoE nBEL2DEJ43 and ECB nL1N34I0E9 meetings sent gilts and bund yields sharply lower, while upbeat U.S. data also provided a lift nL1N34I16Q before Friday's jobs and ISM reports.

Markets increasingly suspect the Fed, BoE and the ECB will hike rates less than their guidance suggests, leaving investors more data dependent to confirming those divergences.

Peaks in Fed, BoE and ECB rates are currently priced in around midyear at roughly 4.9%, 4.25% and 3.3%, respectively.

But markets project the Fed will cut rates roughly 50bp by year-end versus only about 25bp by the BoE and 10bp by the ECB.

EUR/USD fell 0.69% and sterling dove 1% as 2-year bund-Treasury yield spreads plunged 15bp to -1.59% and 2-year gilts-Treasury spreads tumbled 24.7bp to -0.93%.

USD/JPY fell 0.3%, standing out in the crowd of dollar gains due to JGB yields actually rising marginally amid the BoJ's increasingly contested yield curve control and its 0.5% cap on 10-year yields.
That caused 10-year Treasury-JGB yields spreads to fall roughly 5bp to new trend lows and 2-yr spreads down 3.5bp and within 5bp of recent trend lows.

Friday's January non-farm payrolls are forecast at 185k versus 223k last.
The jobless rate is expected at 3.6% from December's nearly 50-year low at 3.5%.
Average hourly earning are forecast again up 0.3%, allowing the year-on-year increase to slip to 4.3% from 4.6%.

Also important will be the ISM non-manufacturing index, forecast at 50.4 from 49.4, along with any further moderation in the still heated prices paid index, last at 67.6, and the new orders index that plunged in December to 45.2 and its lowest since June 2020.

For more click on FXBUZ

• GBP$ ending NY near session low, -1.07% at 1.2241; NorAm range 1.2397-1.2232

• Pair hit post-BoE +50bp, stmt removed pledge to hike forcefully; seen dovish

• IRPR on Eikon sees 60% odds for +25 on Mar 23, +32 bp by Jun 22 MPC meeting

• Less forceful BoE leaves sterling in the lurch nL1N34I1J7

• Dovish leans by Fed, BoE, ECB boosts USD as global yields slide

• Close sub-21-DMA 1.2274 puts 30-DMA 1.2205, daily cloud top 1.2145 in focus

• 1.2145 also 50% Fib of 1.1842-1.2448, cls below shifts momentum to GBP bears

• Res at 1.2289 falling 10-HMA, 1.2361 10-DMA, 1.2401 Thursday high

• Worth noting GBP failed 9/12 recent attempts abv 1.24, bulls capitulating

• EUR/GBP +0.4% to 0.8916, Thurs range 0.8916-0.8879; ECB seen more hawkish than BoE