Forex Top Team

Seeking clues about the timing of US rate cuts through events like the US ADP Employment Report and Powell’s Testimony

Today features several notable events related to the United States. In terms of economic statistics, employment-related indicators like the ADP Employment Report for February and the JOLTS Job Openings for January are likely to draw attention. Other data releases include the MBA Mortgage Applications Index (02/24 – 03/01) and Wholesale Inventories (Final) for January. Market consensus anticipates an increase in the ADP Employment figure by around 150,000 jobs from the previous 107,000. On the other hand, expectations for JOLTS Job Openings are around 8.85 million, a decrease from the previous 9.026 million. Depending on the outcomes, US bond yields and the dollar’s value may exhibit sensitive reactions.

In terms of speaking events, Federal Reserve Chair Powell is scheduled to testify before the House Financial Services Committee. Market participants anticipate gaining insights into the current perception of inflation, economic trends, and hints about future monetary policy actions. Particularly, indications regarding inflation perception and the timing of rate cuts or expectations for prolonged high interest rates could trigger significant market responses. Given the fervor in the US stock market, caution is warranted against extreme reactions. Additionally, other events such as meetings attended by Daly, President of the Federal Reserve Bank of San Francisco, and Kashkari, President of the Federal Reserve Bank of Minneapolis, as well as the release of the Federal Reserve’s Beige Book, are scheduled.

Other factors to consider include European time releases such as Germany’s Trade Balance for January and Eurozone Retail Sales for January. Furthermore, the UK’s Chancellor of the Exchequer will deliver the Spring Budget. While reports yesterday hinted at a possible “2-point reduction in national insurance contributions,” if this aligns with policies aimed at boosting the popularity of the SNAC government, it could lead to selling of UK bonds (resulting in rising interest rates) from a fiscal discipline perspective.

During New York trading hours, there are also several events related to Canada. The main focus will be on the Bank of Canada’s Interest Rate Decision announcement and Governor Macklem’s press conference. Other releases include Labor Productivity for Q4 2023 and the Ivey Purchasing Managers Index for February. The market consensus currently leans towards expectations of unchanged policy rates. Given Canada’s significant exposure to US economic trends, there may also be awareness regarding the Fed’s policy actions.

Today, attention is on the Bank of Canada’s Interest Rate Decision and the US JOLTS Job Openings. If there’s a selling bias for both USD and CAD, it might be worth considering riding that momentum.

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