It seems the recent rally in the sterling is taking a breather, with GBP/USD now deflating below the key support at 1.4200.

GBP/USD gains capped at 1.4250

Spot is retreating for the first time after five consecutive advances, running out of steam around post-Payrolls’ tops in the mid-1.4200s although still in good shape after the bounce off multi-year lows near 1.3820.

Nothing expected data-wise in the UK economy, while the Fed’s Labor Market Conditions Index and speeches by FOMC Brainard and Fed’s Fischer will take centre stage in the IS docket.

GBP/USD levels to consider

As of writing the pair is retreating 0.17% at 1.4198 and a breach of 1.4152 (38.2% Fibo of 1.4670-1.3833) would open the door to 1.4030 (23.6% Fibo of 1.4670-1.3833) and finally 1.3833 (multi-year low Feb.29). On the other hand, the next hurdle lines up at 1.4249 (high Mar.4) followed by 1.4398 (55-day sma) and then 1.4410 (high Feb.19).

It seems the recent rally in the sterling is taking a breather, with GBP/USD now deflating below the key support at 1.4200…

(Market News Provided by FXstreet)

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The offered tone surrounding the NZD picked-up pace in the early European trades, knocking-off NZD/USD to fresh session on 0.67 handle.

NZD/USD eyes hourly 50-SMA at 0.6753

Currently, the NZD/USD pair drops -0.54% near fresh session low of 0.6778, failing several attempts to extend beyond 0.6800. The Kiwi remains heavily offered as markets resort to profit-taking on their NZD longs after last week’s four consecutive sessions of gains to fresh eight-week highs.

The renewed selling pressure seen in the NZD/USD pair can be attributed to the pause in the oil rally, while subdued trading seen on the Asian equities also collaborated to the weakness in the bird.

Looking ahead, all eyes remain on the RBNZ meeting as the US docket remains fairly data-dry. Markets are expecting the RBNZ to slash rate further in a bid to stimulate growth and domestic demand.

NZD/USD Levels to consider

To the upside, the next resistance is located at 0.6800/04 (round number. Daily High), above which it could extend gains to 0.6823/46 (Mar 4 High/ Jan 4 High). To the downside immediate support might be located at 0.6756/53 (5-DMA/ 1h 50-SMA) and from there to 0.6691 (1h 100-SMA).

The offered tone surrounding the NZD picked-up pace in the early European trades, knocking-off NZD/USD to fresh session on 0.67 handle.

(Market News Provided by FXstreet)

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EUR/USD has surrendered part of last week’s gains to the 1.1070 area, retreating nearly a cent ahead of the European open on Monday.

“This week, the key event in Europe is the ECB meeting where our call of a 10bp rate cut, frontloading of QE and introduction of a two-tier deposit rate system are close to consensus. We expect EUR/USD to be under pressure ahead of the meeting as the theme of ECB-Fed divergence plays out following stronger US data and the reduction in EUR shorts”, suggested Arne Rasmussen, Chief Analyst at Danske Bank.

In addition, Karen Jones, Head of FICC Technical Analysis at Commerzbank, argued the pair “shot higher on Friday towards the 200 day moving average circa 1.1047. Between here and 1.1087 (September low) is quite a pivot point. Ideally this will again provoke failure and we continue to target 1.0560/1.0457 (the December 2015 and March 2015 lows)”.

EUR/USD has surrendered part of last week’s gains to the 1.1070 area, retreating nearly a cent ahead of the European open on Monday…

(Market News Provided by FXstreet)

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After Friday’s brief test of the vicinity of 1.3300 the figure, USD/CAD has rebounded to the 1.3350 area, where it is now looking to consolidate.

USD/CAD lower on oil, focus on Fedspeak

The greenback lost further ground last week in spite of the solid print from February’s Payrolls at 242K, surpassing both estimates and January’s reading, all bolstered by the re-emergence of the risk-on trade in response to a strong recovery in crude oil prices.

Ahead in the session, market participants will close follow the speeches by Brainard and Fischer following last Friday’s results and in light of the key FOMC meeting on March 16. On the data front, the Fed’s LMCI is only due later in the NA session.

USD/CAD significant levels

As of writing the pair is advancing 0.20% at 1.3349 facing the next resistance at 1.3629 (20-day sma) followed by 1.3677 (100-day sma) and then 1.3861 (high Feb.24). On the flip side, a breakdown of 1.3309 (low Mar.4) would open the door to 1.3302 (200-day sma) and finally 1.3034 (low Nov.3 2015).

After Friday’s brief test of the vicinity of 1.3300 the figure, USD/CAD has rebounded to the 1.3350 area, where it is now looking to consolidate…

(Market News Provided by FXstreet)

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Research Team at Goldman Sachs, suggests that the net effect of the recent market volatility on Europe’s growth outlook is likely to be relatively small in our assessment, with the boost to growth from lower oil prices offsetting the hit from weaker equity prices and a stronger Euro exchange rate.

Key Quotes

“However, the downside risks relative to our central (modal) growth forecasts have increased materially. Three risks, in particular, are worth highlighting: first, the slowdown in the global industrial cycle appears more pronounced than we had previously anticipated; second, the increase in the credit spreads of European banks threatens to de-rail the easing in domestic credit conditions that is underway; and, third, the political risks presented by the UK’s EU referendum on 23 June and by Europe’s ongoing refugee crisis continue to pose a threat to Europe’s economic outlook. We continue to monitor each of these risks closely.

While our (modal) growth forecasts have been broadly unchanged since our last quarterly forecast update, we have made significant downward revisions to our near-term inflation forecasts in reaction to the fall in oil prices and the rise in the Euro exchange rate.

Responding to the weakness in near-term inflation dynamics, we expect the ECB to announce a number of additional easing measures at its 10 March meeting, including a 10bp cut to the deposit rate, a €10bn per month increase in the rate of asset purchases and a six-month extension of the Asset Purchase Programme (APP) to September 2017. Outside the Euro area, the sharp fall in oil prices and the associated weakness of near-term inflation are also driving monetary policy prospects.

We expect the weakness of inflation and the increase in political risk across Europe to dominate market sentiment in the coming months.”

Research Team at Goldman Sachs, suggests that the net effect of the recent market volatility on Europe’s growth outlook is likely to be relatively small in our assessment, with the boost to growth from lower oil prices offsetting the hit from weaker equity prices and a stronger Euro exchange rate.

(Market News Provided by FXstreet)

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Research Team at TDS, lists down the key takeaways from the National Peoples’ Congress held over the weekend.

Key Quotes

1) Growth target was lowered from “about 7%” to 6.5-7% (maintain 2016-2020 growth target at 6.5%) and the new urban jobs target at 10mn was in line with expectations;

2) Fiscal easing – the government’s plan is to increase infrastructure and social spending, pushing the budget deficit to 3% of GDP (some were expecting more, closer to 4%);

3) Pursue SOE reform by addressing zombie firms through mergers, bankruptcies and debt deals;

4) keep monetary policy accommodative (use ’’full range of monetary policy tools’), the government targeting a 13% growth rate for M2 and Total Social Financing;

5) Tax and credit policies to be aimed at supporting ‘reasonable’ housing demand;

6) Keep yuan rate at a “reasonably balanced” level. Is that ~6.50?”

Research Team at TDS, lists down the key takeaways from the National Peoples’ Congress held over the weekend.

(Market News Provided by FXstreet)

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Research Team at Wells Fargo, suggests that the federal government in the United States has its own set of fiscal challenges over the coming years.

Key Quotes

“Even if nominal GDP growth rebounds to 4.1 percent, average borrowing costs remain at only 1.5 percent and the primary deficit stays at 1.8 percent of GDP (i.e., the “best case” scenario) the debt-to-GDP ratio of the U.S. government would only fall marginally between now and 2030.

Although the primary deficit may edge lower in the next few years, more fiscal adjustment in the United States likely will be needed to bring about a meaningful decline in the government debt-to-GDP ratio. If GDP growth disappoints in coming years, then even more fiscal consolidation will be required to stabilize, let alone reduce, the debt-to-GDP ratio.”

Research Team at Wells Fargo, suggests that the federal government in the United States has its own set of fiscal challenges over the coming years.

(Market News Provided by FXstreet)

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