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China Data Mutes Asian Market Gains As Investors Eye Powell Testimony

Asian markets opened on the front foot following a relatively flat close on Wall Street as markets digested Friday’s gains, US investors were reluctant to extend risk exposure ahead of a heavy backend data slate this week. In Asia China data once again put a lid on risk appetite, as Chinese trade data confirmed further contraction on dollar-denominated imports and exports, leading to a mixed performance on the Hang Seng and Shanghai Comp. The standout performer in the Asian region was the Australian ASX200 as the Reserve Bank of Australia hiked rates again but the move was accompanied by a less hawkish statement which buoyed investor sentiment, as once again markets sense that a pause may be closer than expectations post the previous raise and statement.

Today’s investor focus will be firmly on comments from US Federal Reserve Chair Powell’s semi-annual testimony on monetary policy to Congress. Today’s appearance before the Senate Banking Committee is the first of two days of the Fed Chair headlining central bank speakers, as he will also be on deck before the House Financial Services Committee Wednesday. Markets are poised for commentary that sticks to the script of nascent progress in the current inflation battle, however, much remains to be done to win the war. Markets are currently pricing a 25bp rate rise at the next FOMC policy announcement on March 22nd. The tail risk for investors today is that if the US central bank intends to hike by more, then today’s testimony provides the platform for Powell to alert market participants to this possibility before the Fed goes into its pre-meeting blackout period. While this remains a possibility the more probable path for Powell's performance will be Powell stating that for the time being recent data has done little to materially allay inflation concerns. The market read likely being that the US interest rates path for the year ahead likely has a higher terminal rate than most were pricing at the turn of the year, confirmation of this view will likely be cemented by an update to the dot plots at the March meeting, with the majority of Fed speakers of late coalescing around the ‘higher for longer’ mantra.
 

FX Options Expiration New York Cut

• EUR/USD: 1.1000 (EU1.39B), 1.0900 (EU1.01B), 1.0685 (EU735M)
• USD/JPY: 136.50 ($568.5M), 136.10 ($434.6M), 136.00 ($413.8M)
• USD/CNY: 6.9500 ($1.42B), 7.2000 ($950M), 6.7500 ($514M)
• GBP/USD: 1.1800 (£800.4M), 1.1975 (£750.6M)
• USD/CAD: 1.3600 ($952.1M), 1.3615 ($420.4M)
• USD/MXN: 18.75 ($581.4M), 18.50 ($454.1M), 19.40 ($317.5M)
• USD/BRL: 5.2045 ($317.5M)
   

Overnight News of Note

• US Futures Flat As Wall Street Awaits Powell’s Comments
• Bank Of America CEO Warns Of US Technical Recession In Q3
• China Warns US Risks Catastrophe IF Tries To ‘Contain’ Beijing
• China’s Exports Extend Declines, Adding Pressure To Economy
• Japan's January Real Wages Drop At Fastest Pace Since 2014
• RBA Raises Key Rate, Says Further Tightening Data Dependent
• Australia’s Trade Surpluses Enter Sixth Year On Strong Iron Ore
• Valentine's Day Spending Boosts British Retail Sales In February
• UK Grid Issue Energy Supply Warning For Tuesday In Cold Snap
• Oil Extends Gain For Sixth Session Ahead Of Powell’s Testimony
• Meta Set To Plan Thousands More Layoffs As Soon As This Week
• Dollar Subdued Ahead Of Fed Chair Powell’s Testimony
• Gold Steady As Traders Wait For Fed Chair To Take Centre Stage

(Sourced from Bloomberg, Reuters and other reliable financial news outlets)
 

Technical & Trade Views

SP500 Bias: Intraday Bullish Above Bearish Below 4030

• Primary support is 3885
• Primary objective is 4384
• Below 3880 opens 3835
• 20 Day VWAP bearish, 5 Day VWAP bullish

(Click on image to enlarge)

EURUSD Bias: Intraday Bullish Above Bearish below 1.07

• Primary resistance is 1.0805
• Primary objective is 1.0430
• Above 1.0805 opens 1.0925
• 20 Day VWAP bearish, 5 Day VWAP bullish

(Click on image to enlarge)

GBPUSD Bias: Intraday Bullish Above Bearish below 1.2080

• Primary resistance  is 1.2265
• Primary objective 1.1785
• Above 1.2265 opens 1.2337
• 20 Day VWAP bearish, 5 Day VWAP bullish

(Click on image to enlarge)

USDJPY Bias: Intraday Bullish above Bearish Below 135.50

• Primary support  is 133.50
• Primary objective is 137.26
• Below 133.40 opens 132.80
• 20 Day VWAP bullish, 5 Day VWAP bearish

(Click on image to enlarge)

AUDUSD Bias: Intraday Bullish Above Bearish below .6790

• Primary resistance is .7030
• Primary objective is .6635
• Above .7050 opens .7150
• 20 Day VWAP bearish, 5 Day VWAP bearish

(Click on image to enlarge)

BTCUSD Intraday Bias: Bullish Above Bearish below 23800

• Primary support 2100
• Primary objective is 26700
• Below 20300 opens 19500
• 20 Day VWAP bullish, 5 Day VWAP bearish

(Click on image to enlarge)

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