Fed Minutes Gave A Slight Boost To Investor Morale

FED MINUTES HELP MARKETS RECOVER A BIT

In the U.S., after a negative start of the trading day yesterday, the top three indices managed to recover some of their losses and end the session somewhat flat. The boost came after the Fed released the minutes from its last gathering where they have noted that rates could be increased already in March, but not with the same aggressiveness, as it was anticipated earlier. This helped boost investor morale giving them an opportunity to take advantage of the situation, when the rates are still lower. As we understand, higher interest rates are not seen as a positive for the equities, due to higher borrowing costs.

DJIA — TECHNICAL OUTLOOK

DJIA is now seen trading above a newly-established short-term tentative upside support line drawn from the low of January 24th. That said, the index seems to be struggling with a resistance area between the 35055 and 35142 hurdles, marked by the highs of February 15th and 16th respectively. In order to aim for slightly higher levels, we prefer to wait for a strong break above that resistance area first.

AUSTRALIA’S EMPLOYMENT NUMBERS COME OUT ON THE MODEST SIDE

During the Asian morning we have received the Australian jobs numbers for the month of January. The participation rate improved by a tenth of a percent from the previous one, showing up at 66.2%. Although the employment change number came out at 12.9k, which is better than the initial forecast of -15.0k, the previous reading was at 64.8k. Unemployment rate remained at the same level, at 4.2%. Overall, the report was not bad, which may keep RBA away from raising rates for a while.

AUD/CHF — TECHNICAL OUTLOOK

Currently, AUD/CHF is trading between two short-term trendlines, an upside one taken from the low of January 28th and a downside one taken from the high of February 10th. In order to consider the next short-term directional move, a break of through one of those lines is needed.

US DATA IN FOCUS

Later on, the U.S. will release a few sets of data for market participants to digest today. January’s building permits will be released and the current expectation is for a decline from 1.885mln to 1.760mln. If so, this would be the first month that the figure would be below forecast, after three straight months of gains.

AS FOR THE REST OF TODAY’S EVENTS

Another piece of economic data from the U.S. that will be delivered today will be the Philadelphia Fed Manufacturing index for February. The current expectation is for the reading to show up at 20.0. If so, this would be lower from the previous 23.2. Since March of last year, the figure is on a steady decline. In order to beat the March 2021 number, we would need to see the actual figure coming out above 51.8. However, for now, it seems unlikely, as current higher inflation reduces the variety and quantity of goods that a household can purchase, forcing the consumer to choose one good over another. This means that production levels in certain sectors might slow down a bit.

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