Forex Today: Markets recovered their optimism, but will it last?

Valeria Bednarik FXStreet

What you need to take care of on Thursday, March 3:

Financial markets shrugged off fears, at least temporarily by the end of Wednesday. Demand for the greenback receded, although it ended the day mixed across the board. It was quite a busy day, with inflation-related concerns temporarily returning to the table.

The EU released the preliminary estimate of its February CPI, which jumped to a record 5.8% YoY. Speculative interest forward bets for an ECB rate hike before year-end, despite policymakers noting that Eastern European developments are sending uncertainty to fresh, unknown levels.

US Federal Reserve chief Jerome Powell testified on the Semi-Annual Monetary Policy Report before the House Financial Services Committee. Powell hinted at a 25 bps rate hike in March, which helped Wall Street rebound, as market participants were betting on a 50 bps rate hike. He also referred to the new levels of uncertainty created by war but repeated that the central bank would do whatever is necessary to maintain price stability, including reducing the balance sheet.

The EUR/USD pair recovered from a multi-month low of 1.1058 and trades around 1.1130 heading into the Asian opening. GBP/USD finished the day with gains around 1.3380 after falling to 1.3270.

The Bank of Canada lifted interest rates by 25bps to 0.50% as expected on Wednesday, adding that it expects it would need to further increase interest rates. The central bank announced it would continue with the reinvestment phase of its balance sheet, maintaining its overall holdings of Canadian government bonds at roughly the same level.

The CAD appreciated against the greenback, with the pair currently trading at around 1.2650. AUD/USD surged to 0.7300, helped by upbeat Australian Q4 GDP figures.

Crude oil prices soared amid the Eastern Europe war. The OPEC+ agreed to raise oil output by 400k BPD in April, but the announcement fell short of cooling prices. The barrel of West Texas Intermediate is currently at around $110.80.

Spot gold retreated from its recent highs but holds on to weekly gains. It is currently changing hands at $1,925 a troy ounce.

Russian attacks on Ukraine persists, although the second round of talks will resume early on Thursday. A ceasefire would be discussed then. Such headline further supported the market’s optimism, despite escalating global tensions.

Bitcoin hits major resistance before BTC begins a 20% price spike

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

AUD/USD meets support around 0.6900

AUD/USD remains well on the defensive, bouncing off three-month lows near the 0.6900 level ahead of the opening bell in Asia on Friday. The pair has accelerated its weekly downtrend in response to the marked advance in the Greenback and the widespread selling pressure on the risk-linked assets.

USD/JPY sits at weekly top above 158.00 as bullish USD counters intervention risks

USD/JPY is sitting at the top end of its weekly range above 158.00 in the Asian session on Thursday. Despite the softer US PCE data, oil-driven inflation risks keep US bond yields elevated near multi-year highs. Moreover, the US-Iran standoff benefits the safe-haven US Dollar and supports the pair. Broad US Dollar strength counters hawkish BoJ expectations and Japanese intervention risks.

Gold alternates gains with losses below $4,200

Gold trades without a clear direction on Thursday, always below the key $4,200 mark per troy ounce. The yellow metal’s vacillating price action comes amid the marked advance in the US Dollar coupled with steady effervescence in the Middle East conflict.

Near Protocol slides below $5.00 after Near Intents $4M exploit

Near Protocol (NEAR) uptrend has been cut short, as the price slides below $5.00 on Thursday. The correction comes after an exploit on the network’s Near Intents services, which affected deposits and withdrawals across 11 crypto networks. NEAR is currently trading at $4.88, below the daily high of $5.54, while falling momentum indicators suggest that sellers are gaining the upper hand.

Markets are pricing a Fed pause. The jobs data says the hike is still coming

The market has rapidly changed its mind about the Fed. Only a week ago, investors saw an October interest-rate hike as the most likely outcome. However, softer inflation and cautious comments from policymakers have since turned a pause into the dominant scenario.

Markets are pricing a Fed pause. The jobs data says the hike is still coming

The market has rapidly changed its mind about the Federal Reserve (Fed). Only a week ago, investors saw an October interest-rate hike as the most likely outcome. However, softer inflation and cautious comments from policymakers have since turned a pause into the dominant scenario. Yet beneath that dramatic repricing, the US economy is sending a considerably less dovish message.