Dollar slides after big ADP miss

“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” ~ Peter Lynch

 

 

 

HEADLINES

 

 

 

• U.S. dollar falls on weak private jobs data; euro up as inflation perks up
• Sterling rises further ahead of expected BoE rate hike
• Gold gains as U.S. dollar, yields dip after ADP jobs data
• Oil edges higher after OPEC+ keeps to steady supply bump, U.S. stockpiles draw
• Stocks extend gains on strong U.S. earnings, weak economic reports
• GBP/USD needs a clear sign from the BoE to go above its neutral rate to test 1.38 – Scotiabank

 

 

 

FOREX

 

 

 

U.S. dollar falls on weak private jobs data; euro up as inflation perks up

 

 

The dollar declined to a more than a one-week low on Wednesday after data showed a drop in U.S. private sector employment in January due to the increase in COVID-19 infections.

However, the data is unlikely to prevent the Federal Reserve from hiking interest rates at the March 15-16 policy meeting. But the report has eased expectations of a large interest rate increase of half a percentage point.

 

 

Sterling rises further ahead of expected BoE rate hike

 

 

The British pound climbed on Wednesday for a fourth session in a row, reaching a 1-1/2-week high against the dollar, as investors firmly held to their expectations that the Bank of England will raise interest rates on Thursday.

Investors have now fully priced a 25-basis-point rise in the BoE's main interest rate to 0.50% on Feb. 3 and economists polled by Reuters also expect that outcome from the meeting.

 

 

 

COMMODITIES

 

 

 

Gold gains as U.S. dollar, yields dip after ADP jobs data

 

 

Gold rose on Wednesday as the U.S. dollar and Treasury yields declined after a downbeat jobs report, underpinning demand for the safe-haven metal amid simmering tensions between Russia and the West over Ukraine. An employment report from ADP showed U.S. private payrolls unexpectedly fell in January, pressuring the dollar and Treasury yields.

 

 

Oil edges higher after OPEC+ keeps to steady supply bump, U.S. stockpiles draw

 

 

Oil prices edged up on Wednesday after OPEC+ stuck to planned moderate output increases despite pressure from top consumers to raise output more quickly. Global benchmark Brent has remained within striking distance of $90 for several days now, buoyed by ongoing concerns about tight supply across major world producers and steadily increasing demand.

 

 

 

STOCKS

 

 

 

Stocks extend gains on strong U.S. earnings, weak economic reports

 

 

Global stocks staged a recovery on Wednesday as strong earnings from U.S. technology companies and OPEC+ plans for moderate oil output helped to counter jitters over weak economic reports.

Investors also shrugged off the pace of central banks' interest rate hikes. The STOXX index of 600 European companies rose 0.45%, up for a third straight session, to recoup nearly half its losses during January's global rout in shares.

 

 

 

ANALYSIS

 

 

 

GBP/USD needs a clear sign from the BoE to go above its neutral rate to test 1.38 – Scotiabank

 

 

“Market pricing for the BoE has held steady at a 95-100% chance of a hike tomorrow and a total of five 25bps hikes by end-2023. We think it’s more likely that the bank delivers only 100bps in rate increases this year, which should eventually act as a headwind for the GBP as markets reprice expectations.”

“We see the 1.36 mark as a near-term ceiling for the GBP.”

“It would take a clear sign from the BoE that it is willing to go above its neutral rate for the pound to test 1.38.”

 

 

 

CHART

 

 

 

Euro / US dollar – Daily Candlesticks

Source: GKFX Prime Metatrader 4

EUR/USD has rallied off the lows and is now bumping into a broken rising trendline and the 50 DMA with a long term downtrend line just above. - Prepared by Trading Writers*

 

 

 

CALENDAR

 

 

 

*Times in GMT

 

 

Source: FX Street Economic Calendar

 

SOURCE:

https://www.fxstreet.com/economic-calendar
https://www.reuters.com/markets/europe/global-markets-wrapup-1-pix-2022-02-02/
https://www.reuters.com/markets/us/euro-strengthens-improved-risk-sentiment-hits-dollar-2022-02-02/
https://www.reuters.com/markets/europe/gold-steady-ukraine-tensions-counter-fed-rate-hike-bets-2022-02-02/
https://www.reuters.com/markets/europe/sterling-perched-1-12-week-highs-before-central-bank-vote-2022-02-02/