Markets Turn “Risk Off” Ahead of NFPs, OPEC Awaits Green Light from Russia

Risk Appetite Deteriorates as Virus Fears Return

The dollar traded lower against most of the other G10 currencies on Thursday and during the Asian morning Friday. It gained only against NOK, AUD and CAD in that order, while it underperformed the most versus JPY, CHF and EUR.

OPEC Agrees to 1.5mn bpd Cuts, Awaits non-OPEC Members’ Decision

The Canadian dollar could also stay under selling interest, but we would like to stay away from it for now, until OPEC and its allies arrive to a final and official decision over whether they will cut production further, and if so, by how much. Yesterday, OPEC members agreed for output to be cut by an extra 1.5mn bpd, until the end of 2020, with non-OPEC producers contributing the one third. Nevertheless, Russia and Kazakhstan said that they have not agreed yet to the proposal, something that raised worries with regards to a final accord. Both Brent and WTI slid 1.92% and 1.18% respectively on those concerns.

NFPs Unlikely to Change USD’s Course

As for today, apart from headlines and developments surrounding the coronavirus and the OPEC+ meeting, investors may also pay attention to the US employment data for February. Nonfarm payrolls are expected to have increased 175k, less than January’s 225k, while the unemployment rate is now forecast to have held steady at +3.6%, just a tick above its 50-year low of 3.5%. Average hourly earnings are expected to have accelerated to +0.3% mom from +0.2%, something that, barring any deviations to the prior monthly prints, will drive the yoy rate up to 3.2% yoy from 3.1%.

AUD/JPY — Technical Outlook

AUD/JPY tumbled yesterday, falling below the 70.45 barrier, something suggesting that the corrective rebound started on Monday may be over. The rate is now trading below a tentative short-term downside resistance line drawn from the high of February 21 stand thus, we would consider the near-term outlook to be negative.

EUR/USD — Technical Outlook

EUR/USD skyrocketed yesterday, breaking above the long-term downside resistance line drawn from the peak of January 10 th, 2019. The move also confirmed a forthcoming higher high, with the rate challenging the 1.1240 zone, defined as a resistance by the high of December 31 st. Bearing in mind that EUR/USD resumed its latest rally and managed to overcome the aforementioned long-term downside line, we will consider the outlook to be positive and we would expect some further advances.

As for the Rest of Today’s Events

Apart from the US employment report, we get jobs data from Canada as well. The unemployment rate is expected to have ticked back up to 5.6% from 5.5%, while the net change in employment is anticipated to show that the economy gained less jobs than it did in January. Specifically, it is expected to show an increase of 10k jobs, less than the prior print of 34.5k. Following the double cut by the BoC on Wednesday, a soft employment report is likely to keep the door for more easing wide open.



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