Incoming data to strongly impact rate decisions

BY Janne Muta

|March 9, 2023

The NFP release and the earnings tomorrow are going to be even more important than usual. According to Fed Chair Powell the coming economic data will strongly influence the rate decision at the next Fed meeting (March 21-22). Therefore, the markets will give the data more emphasis than normal. If there’s a strong deviation from the expected number the price swings could be substantial. If the ADP report is anything to go by the NFP number could indeed be pretty good.

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According to the ADP, the private sector added 242K new jobs in February. The number was above forecasts but it wasn’t the only positive number yesterday. The JOLTS report on job openings was also confirmed at a higher-than-expected level despite the recent increase in layoffs in the technology sector.

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DJ tries to recover after trading to 32 630

DJ hit the 32 630 yesterday before buying started at 32 610. The market is now is trying to recover but needs to create a decisive break above 32 930 before we have a trend reversal in the 2h chart. A failure to rally decisively above the level would indicate weakness and increase the likelihood that yesterday’s low is retested. Above 32 874, the market probably rallies first to 33 060 and then to 32 300 on extension if the market remains bullish.

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Relative strength in NAS

Nasdaq has showed relative strength over the last two days. This provides some hope for the DJ bulls too. Positive sentiment in Nasdaq often spills over to the Dow stocks. A decisive break above 12 240 would probably take the market to 13 360 or so. If, however, the 12 093 level failed to provide support to the market a move to 12 020 would be likely.

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DAX trends higher but is near the daily range high

Dax trends higher in the 1h chart but is close to the recent highs which is a risk factor. The 1h uptrend is in force above 15 606. If Dax fails to attract buyers at the 15 606 level we’ll probably see the market trading down to 15 575 and then to 15 520 on extension. A decisive rally above yesterday’s high (15 671) would signal strength and probably take the market to new highs for the year.

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Gold recovery rally failed yesterday

After hitting the 1823 level yesterday, Gold rally faded and the market spent the day in a sideways range. This loss of downside momentum reflects the loss of upside momentum in the USD index and provides some hope for the gold bulls. But, there would need to be more evidence to back up these early indications. A decisive rally above yesterday’s high would help. However, as long as the market trades below the level it remains bearish and more likely to drift lower. The nearest support levels are at 1809 and 1804.

The Next Main Risk Events

  • USD Unemployment Claims
  • JPY Monetary Policy Statement
  • JPY BOJ Press Conference
  • GBP GDP m/m
  • CAD Employment Change
  • CAD Unemployment Rate
  • USD Average Hourly Earnings m/m
  • USD Non-Farm Employment Change
  • USD Unemployment Rate

For more information and details see the TIOmarkets economic calendar.

Trade Safe!

Janne Muta
Chief Market Analyst

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Janne Muta

Janne Muta holds an M.Sc in finance and has over 20 years experience in analysing and trading the financial markets.

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