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China's Trade Balance for January and February, in Yuan terms, came in at CNY675.86 billion versus CNY369.73 billion expected and CNY516.81 billion la

China's Trade Balance for January and February, in Yuan terms, came in at CNY675.86 billion versus CNY369.73 billion expected and CNY516.81 billion last.

The exports in the first two months of 2021 surged by a whopping 50.1% vs.11.2% expectations and 10.9% last.

Imports arrived at 14.5% vs.-2% market forecasts and -0.2% prior.

In USD terms,

China reported a widening trade surplus, as imports and exports both bettered the consensus forecasts.

Trade Balance came in at +103.25B versus +60B expected and +78.17B previous.

Exports (YoY): +60.6% vs. +38.9% exp. and +18.1% last.

Imports (YoY): +22.2% vs. +15% exp. and +6.5% last.

Additional takeaways

“Chinese authorities combine trade data for the first two months to compensate for fluctuations due to the Lunar New Year holiday, which falls at different times each year in January or February.”

“Forecasters say the Chinese export surge should decelerate as demand for masks and other medical supplies eases and overseas competitors return to global markets.”

“Trade officials have warned that the global situation still is "grave and complex."

  • AUD/USD Weekly Forecast: Aussie bulls won’t give up easily
China Exports (YoY) CNY came in at 50.1%, above expectations (11.2%) in February
China Trade Balance CNY came in at 675.86B, above expectations (369.73B) in February
China Trade Balance USD came in at $103.25B, above forecasts ($60B) in February
China Exports (YoY) above expectations (38.9%) in February: Actual (60.6%)
China Imports (YoY) above forecasts (15%) in February: Actual (22.2%)
China Foreign Exchange Reserves (MoM) came in at $3.205T, above forecasts ($3.2T) in February
It was a strong finish to the week for US equity markets, which surged higher after a tough three days. The S&P 500 finished the day 2.0% higher to cl
  • It was a solid finish to the week, with stocks recovering as strong US jobs data brightened the economic outlook.
  • The S&P 500 managed to recover from 3730 lows back towards 3850 and closed in the green for the week.

It was a strong finish to the week for US equity markets, which surged higher after a tough three days. The S&P 500 finished the day 2.0% higher to close near 3850, a more than 3.0% rally from intra-day lows around the 3730 mark. The Nasdaq 100 finished the session up 1.6% to close in the 12600s, bouncing roughly 3.7% from intra-day lows around 12200. The Dow ended the session up 1.85%, close the 31500 mark. The CBOE volatility index dropped nearly 4 points, taking it back into the 24.00s.

In terms of the sectoral performance; the S&P 500 energy sector again faired the best amid further crude oil market upside (WTI surged $2.50 to end the week at multi-year highs above $66.00), closing the session 3.1% higher. Meanwhile, the Consumer Discretionary sector was the underperformer, gaining just 0.7% on the day and dragged to the bottom of the sectoral performance board by continued underperformance in Tesla shares, which cratered another 3.8% on Friday.

Friday’s recovery meant that the S&P 500 managed to close the weak in the green, up 0.8%. The Dow ended the week 1.8% higher, while the Nasdaq 100 still ended the week 1.9% lower, though is at least now just 8.8% down from recent highs, meaning that it is no longer classed as being in “correction” territory.

Stock Market Reaction to US Jobs Report

In the first few hours following the release of a much stronger than anticipated US Labour Market survey, stocks were choppy and indecisive. Some desks had argued that a strong jobs report would exacerbate fears about the US economy overheating and the Fed being forced to step in to curb inflation by raising rates or tapering their asset purchase programme sooner than currently priced by markets. There were also fears that a much stronger than expected report would trigger a further surge in US bond yields, itself a negative for equity markets (and particularly negative for high price-to-earnings ratio stocks, like Big Tech).

The fact that US bond yields did not surge in wake of the data (well, they did but the move higher was only very fleeting, and yields are back to broadly flat on the day) seemed to set the stage for equities to stage a bit of a recovery. Indeed, Friday’s jobs data strengthens the idea that the US is on course for a very strong economic recovery.

Meanwhile, it is worth remembering that while stocks have been under pressure in recent weeks amid fears about higher long-term interest rates, inflation and a Fed that has not come across as dovish as the market had hopes, the US economic outlook has unequivocally brightened; 1) as Covid-19 infection rates in the country have dropped the easing of Covid-19 restrictions has accelerated, 2) the vaccine rollout has accelerated and 3) Congress remains on course to pass US President Joe Biden’s $1.9T stimulus bill into law by mid-March and hopes for a follow-up multi-trillion-dollar infrastructure-focused spending bill are high. All of these positives bode very well for earnings growth.

US Labour Market Data Review

The US economy added 379K jobs in February, well above expectations for the economy to have added 182K. But the labour market performed better than the headline NFP number suggests; the private service sector 513K jobs as the easing of economic restrictions allowed hospitality, retail and leisure sector-related jobs to return. Meanwhile, the manufacturing sector added 21K jobs, but construction saw 61K in job losses as a result of bad weather. Moreover, local and state government employment dropped by 69K, a trend most desks expect not to continue, particularly with further fiscal stimulus incoming.

Had February not seen freak weather conditions in much of the country and had government jobs not surprisingly fallen, markets might easily have been looking at a +500K job gain. Assuming that conditions in the US economy continue to improve in March; i.e. lockdown restrictions continue to ease as the prevalence of Covid-19 drops and the vaccine rollout continues, further large gains should be expected to continue. These employment gains might accelerate from April as the economic tailwind from US President Joe Biden’s $1.9T stimulus bills kicks in (assuming it gets passed into law by mid-March and stimulus cheques are sent out within a few weeks).

The US unemployment rate dropped to 6.2% unexpectedly (consensus forecasts were for the unemployment rate to remain unchanged at 6.3%), as the gain in employment outpaced the rate at which workers returned to the workforce. The participation rate remained unchanged at 61.4% (but actually was down about 50K). Total employment levels are still about 9.5M below their pre-Covid-19 levels in the US. Even if the rate of job gains does pick up to about half a million new jobs per month (which would probably be an over-optimistic forecast), that implies it is still going to take into 2023 before the US economy reaches full employment.

That means the Fed will (inflation permitting) continue to sit on its hands with regards to interest rates. Indeed, the Fed may even be targeting an unemployment rate of below pre-Covid-19 levels given recent rhetoric on how it seeks to create “inclusive” full-employment; that likely means that, say, if White unemployment is at 2.5% but minority unemployment remains at say 6% (implying a national unemployment rate of say 3.5%), this would still not constitute full employment for the Fed. In other words, they are taking a more dovish interpretation of their full-employment mandate than they ever have before.

United States CFTC Gold NC Net Positions: $189.6K vs previous $215.7K
United States CFTC Oil NC Net Positions increased to 519K from previous 511.8K
United States CFTC S&P 500 NC Net Positions: $23.2K vs $-31.3K
Australia CFTC AUD NC Net Positions dipped from previous $-1.6Kto $-6K
European Monetary Union CFTC EUR NC Net Positions dipped from previous ?138.4Kto ?126K
Japan CFTC JPY NC Net Positions fell from previous 28.6K to 19.3K
United Kingdom CFTC GBP NC Net Positions: 36.1K vs 31K
EUR/USD has been going sideways over the past few hours in the low 1.1900s. After coming under strong selling pressure in wake of remarks by the Chair
  • EUR/USD is ending the week in the low 1.1900s, down more than 1.3% on the week.
  • That means the pair is set for its worst week since October 2020.
  • Further increases to the euros interest rate disadvantage ensured the single currency struggled against its peers.

EUR/USD has been going sideways over the past few hours in the low 1.1900s. After coming under strong selling pressure in wake of remarks by the Chairman of the Federal Reserve Jerome Powell on Thursday and losing its grip on the 1.2000 handle, the pair saw fresh selling during Friday’s Asia Pacific session, during which time its lost its grip on the 1.1950 handle. A strong US NFP report then sent EUR/USD very briefly under the 1.1900 handle, though this level was well defended.

On the day, EUR/USD trades about 0.4% or about 50 pips lower. That means the pair is set to close the week with losses of about 1.3%, its worst week since the final week of October 2020. That places the euro third from bottom in this week’s G10 FX performance table, with only JPY (down 1.7% versus USD) and CHF (down 2.3% versus USD) performing worse.

Why has the euro underperformed this week?

Yield differentials are the first thing to note this week. Whilst core European government bond yields have been broadly unchanged on the week (the German 10-year bond yield is roughly where they started the week around -0.30%, as is the French 10-year around -0.05%), bond yields in other G10 countries have rallied. For example, 10-year yields in the US are up about 15bps (from 1.40% to around 1.55%), 10-year yields in Canada are up about 10bps (from around 1.35% to 1.50%) and 10-year yields in Australia are up about 15bps (from under 1.70% to just under 1.80%). As its interest rate disadvantage was further widened against these currencies, the euro has understandably underperformed them.

One key reason as to why European government bond yields haven’t rallied much this week (and why the euro has suffered as a result) is likely the fact that the ECB has come across as much more eager to act in order to prevent yields from rising than the Fed; not all ECB members are on board with the idea of accelerating the pace of bank’s weekly asset purchases, but officials have left it very clear that they are “closely monitoring” movements in long-term interest rates. By contrast, the Fed have adopted a less aggressive stance; officials, including Powell, have noted that last week’s bond market moves caught their eye but there does not seem to be the same eagerness to do anything about it.

Elsewhere, in contrast with the US, UK and many other countries, the pandemic situation in Europe is not improving. In fact, according to the WHO, Covid-19 infections actually accelerated in the EU last week. Italy is tightening restrictions, France is still under curfew (which looks likely to be extended) and the threat of a return to full lockdown in Germany looms large, with current restrictions having recently been extended again.

European officials are worried about the spread of Covid-19 variants; the UK was ravaged by the “UK” variant over the winter which was as much as twice as transmissible and 30% more deadly. It seems as though the UK strain is becoming the dominant one in the EU. Meanwhile, the bloc’s vaccine rollout continues to lag that of major global peers.

 

United States Consumer Credit Change below expectations ($12B) in January: Actual ($-1.31B)
USD/JPY has backed off from earlier session highs of above the 108.60 mark in recent trade and, as the end of the trading week draws closer, seems con
  • USD/JPY is off highs but remains comfortably above the 108.00 level.
  • The pair is set for its best week since May 2020, having largely traded as a function of US government bond yields.

USD/JPY has backed off from earlier session highs of above the 108.60 mark in recent trade and, as the end of the trading week draws closer, seems content to range around the 108.25 region. Though off highs, USD/JPY seems to be attracting a lot of buying interest ahead of the 108.00 level, which is keeping things supported for now.

On the day, the pair is up 0.3% or just over 30 pips. That means that USD/JPY is on course for its largest weekly gain since May 2020 (of 1.7% or about 180 pips). That means JPY sits at the bottom of this week’s G10 FX performance table, with only CHF (down 2.4% on the week) doing worse.

Driving the day

USD/JPY appears to have traded as a function of US government bond yields, or as a function of US/Japanese rate differentials which tend to move in line with US bond yields given the fact that Japanese government bond yields hardly move given the BoJ’s Yield Curve Control policy (where it target’s 10-year JGB yields at 0.0%). The US 10-year yield spiked as high as 1.625% on Friday, its highest level since early February 2020 (i.e. before the pandemic went global and triggered a financial market panic), in wake of a much stronger than anticipated US Labour Market Report. However, the move did not last long, with yields quickly dropping back to pre-data levels in the mid-1.50s%.

Looking ahead, US/Japan rate differentials look set to remain a key driver of the USD/JPY currency cross. The outlook for US bond yields is pretty bullish; Friday’s jobs data has boosted expectations for a strong post-Covid-19 rebound that were already sky-high given the rapid vaccine rollout, recent easing of Covid-19 restrictions and expectations for further fiscal stimulus. Thus, the outlook for USD/JPY also looks pretty good.

As long as nothing scuppers the US’ path to recovery, which it looks like it won’t  - vaccine-resistant Covid-19 variants have been a concern recently but according to the latest results from AstraZeneca, their vaccine appears to be effective against the Brazilian variant – and as long as the Fed don’t suddenly surprise markets with more QE or dovish adjustments to their existing programme, there is no reason to think that US bond yields can’t continue higher. Indeed, the main driver of higher yields this week (and the main driver of USD/JPY strength) was Fed Chair Jerome Powell’s failure to signal Fed readiness/eagerness to combat rising yields.

There is always the possibility, however, that the only reason why Powell failed to talk about what the Fed could do to stop yields rising or when they might act is that the FOMC has not yet had the chance to come to agreement on this issue. The FOMC meeting in two weeks’ time would offer such an opportunity. A dovish surprise could see bond yields hit and USD/JPY drop. But that is two weeks away and a lot can happen in that time.

 

United States Baker Hughes US Oil Rig Count: 403 vs 309
Front-month futures contracts for the American benchmark for sweet light crude, West Texas Intermediary (or WTI), continue to surge on the final tradi
  • WTI has topped $66.00 for the first time since April 2019.
  • The commodity continues to benefit in the afterglow of Thursday’s bullish OPEC+ outcome.
  • But the demand outlook also continues to strengthen, adding further upward pressure to prices.

Front-month futures contracts for the American benchmark for sweet light crude, West Texas Intermediary (or WTI), continue to surge on the final trading day of the week. WTI has now eclipsed the $66.00 level for the first time since April 2019 and, after printing fresh 2021 highs at $66.20, came within only 38 cents of the 2019 high at $66.58.

Technically, speaking a break above the 2019 high could open the door to further protracted upside towards the 2018 highs at $76.88. A break beyond this level would open the door to a move back towards $100, though let’s not get too ahead of ourselves.

On the day, WTI is trading just under 3% or $1.80 higher. That means it has rallied more than 11.0% from this week’s low (set on Wednesday). On the year, that means WTI trades more than 36% higher, making it one of the best performing major asset classes.

Driving the day

Crude oil markets continue to benefit in the afterglow of Thursday’s announcement from OPEC+ that the group would be holding output largely steady. Russia and Kazakhstan were granted a small 150K barrel per day output hike allowance, but the rest of the cartel will roll over in April their output cuts that have been in effect for the last few months. Moreover, the Saudi Arabians opted to continue with their 1M barrel per day in additional, voluntary output cuts. Markets had been expected OPEC+ to decide to bring back online as much as 1M barrels per day in supply, so this was a very bullish outcome.

Demand outlook brightening

Though OPEC+ has been the major focus of crude oil markets over the past three days, it is worth also noting that the demand outlook for crude oil over the coming months continues to strengthen.

Friday’s US Labour Market report showed a much stronger than expected rebound in employment in the country in February as Covid-19 restrictions were eased, boding well for US employment prospects (and the US economy more broadly) in the coming months. Assuming that US economy will continue to rebound strongly over the coming months seems reasonable as economic reopening and the country’s vaccine rollout has accelerated in the first few days of March; the Biden administration is hoping to vaccinate all adults by May, implying a strong likelihood that restrictions will be all but gone by Summer (the same assumption can be made for the UK). Meanwhile, another large dose of fiscal stimulus from the US government (which markets expect Congress will pass into law by mid-March) is set to send things into overdrive.

Prospects for an economic recovery, though maybe not as bright as is the case in the US, look good for most of the rest of the world also. As the Northern hemisphere enters Summer, virus levels ought to naturally drop and economic restrictions with them (as was the case in 2020), implying by default stronger demand for crude oil. Fears about the international spread of concerning Covid-19 variants is likely to mean that international travel restrictions remain a lot tougher than domestic restrictions (which will weigh on jet fuel demand), but the data so far shows that Covid-19 vaccine still work against, for example, the Brazilian P.1. variant.

 

"The 10-year US Treasury bond yield is just returning to the level consistent with the 6 months before the pandemic, it's still quite a low level of y

"The 10-year US Treasury bond yield is just returning to the level consistent with the 6 months before the pandemic, it's still quite a low level of yields," St. Louis Fed President James Bullard said on Friday, as reported by Reuters.

Additional takeaways

"Something panicky would catch my attention but we're not at that point."

"We still need a lot of repair in the labor market."

"We can't really talk about specific levels of yields without the data context around it, so it's hard to draw a line in the sand at a particular level."

Market reaction

The greenback continues to outperform its rivals after these remarks and the US Dollar Index was last seen gaining 0.4% on the day at 92.00.

"I hope we can make a lot of progress this year on jobs, it will depend on vaccines and the coronavirus," Minneapolis Federal Reserve President Neel K

"I hope we can make a lot of progress this year on jobs, it will depend on vaccines and the coronavirus,"  Minneapolis Federal Reserve President Neel Kashkari said on Friday, as reported by Reuters.

Additional takeaways

"Would be great to get back to full employment by 2023."

"We need to get back to where we were before the pandemic and need to go beyond that."

"When labor market gets tight enough that wage growth picks up, get 2% inflation, that's full employment."

"Not concerned about inflation."

"Not concerned about the Fed's ability or willingness to deal with high inflation; we need to get there."

"10-year real yield is basically flat from where it was last summer."

"An uptick in real yields would give me concern, could warrant a policy response but not seeing that."

"Recent movements in Treasury market suggest that Fed's framework is delivering what we wanted."

"Not concerned about the wartime COVID spending we need to do right now."

Market reaction

The US Dollar Index largely ignored this report and was last seen gaining 0.37% on a daily basis at 91.97.

 

Following Thursday's sharp decline, the NZD/USD pair extended its slide on Friday and touched its lowest level since mid-January at 0.7101. Although t
  • NZD/USD remains on track to close third straight day lower.
  • US Dollar Index clings to gains around 92.00.
  • Nonfarm Payrolls in the US increased by 379,000 in February.

Following Thursday's sharp decline, the NZD/USD pair extended its slide on Friday and touched its lowest level since mid-January at 0.7101. Although the pair was able to pull away from its lows, it remains deep in the negative territory in the late American session and was last seen losing 0.68% on the day at 0.7140. On a weekly basis, the pair is down nearly 100 pips.

USD capitalizes on strong US labour market data

The USD continued to gather strength ahead of the weekend after the data published by the US Bureau of Labor Statistics showed that Nonfarm Payrolls in February increased by 379,000. This reading surpassed the market expectation of 182,000 by a wide margin. Additionally, the report revealed that the Unemployment Rate edged lower to 6.2% from 6.3%. 

Commenting on the US jobs report, "king dollar may feel more comfortable on its throne. The Fed seems content with its current policy, and unlikely to budge – at least not until its next meeting on March 17," said FXStreet analyst Yohay Elam. "All in all, the wait for the NFP has caused a pause in dollar gains, and now the greenback has a new green light for gains."

 NFP Quick Analysis: Another greenlight for greenback gains after Powell.

With the initial reaction, the 10-year US Treasury bond yield surged to its highest level in more than a year 1.622% and provided a boost to the greenback. The US Dollar Index (DXY) climbed to its highest level since late November at 91.20 before going into a consolidation phase. At the moment, the DXY is up 0.4% at 92.00.

Technical levels to watch for

 

After a brief trip above the 1.2700 level in the run-up to the latest US Labour Market Report, USD/CAD is back below the big figure and has recently b
  • USD/CAD is back below the 1.2700 level despite strong US jobs data.
  • The loonie is deriving support from crude oil prices and strong Canadian data.

After a brief trip above the 1.2700 level in the run-up to the latest US Labour Market Report, USD/CAD is back below the big figure and has recently bounced after printing session lows under 1.2650. The pair currently trades around the 1.2675 mark, up a modest 0.1% or about 10 pips on the day.

Outperforming loonie

Aside from the US dollar, CAD is the next best performing G10 FX currency on the day, owing in no small part to crude oil markets, which are having a blinder on the final trading day of the week; WTI (+2.8% or +$1.75) just hit its highest levels since April 2019 and even managed to cross briefly above the $66.00 level. Petro-linked currencies such as the loonie are of course seeing upside in tandem.

But the loonie is likely also getting a boost from strong data. Canada posted a surprise trade surplus in January of CAD 1.41B. Expectations were for the economy to be in a trade deficit of CAD 1.4B. The surprise surplus owed itself to an 8.1% MoM surge in exports.

Some of this surge was due to temporary factors; Statcan noted that a Canadian airline retired and sold some of its fleet, adding 2% to exports on the month and gold exports to US retail customers also reportedly saw a surge. But the country’s commodity exports remain on a strong footing; the 5.9% increase in energy exports was mainly as a result of higher prices but volumes also rose 1.7% on the month and returned to their pre-pandemic levels.

Moreover, Ivey Business School’s PMI survey for February showed that Canadian economic activity expanded at its fastest pace since last August, with the seasonally adjusted headline PMI rising to 60.0. That marked a strong jump from a reading of 48.4 in January and the first time the index had been above the 50 level in three months. The jump reflected a loosening of strict lockdown measures being implemented in Quebec and Ontario last month as the prevalence of the Covid-19 virus dropped.

Importantly for the loonie, the Ivey PMI employment subindex rose to 54.0 in February from 41.5 in January, implying that employment rose in the month just gone. Strong Ivey PMI data ought to bolster expectations for a strong Canadian Labour Market Report, which is set to be released by StatsCan next Friday.

 

The real gross domestic product (GDP) in the United States is expected to grow by 8.3%, down from 10% on March 1, in the first quarter of 2021, the Fe

The real gross domestic product (GDP) in the United States is expected to grow by 8.3%, down from 10% on March 1, in the first quarter of 2021, the Federal Reserve Bank of Atlanta's latest GDPNow report showed on Friday.

"After Monday's GDPNow update and subsequent releases from the US Census Bureau, the US Bureau of Economic Analysis and the Institute for Supply Management, the nowcasts of first-quarter real personal consumption expenditures and first-quarter real gross private domestic investment growth decreased from 8.8% and 18.7%, respectively, to 7.5% and 15.8%, respectively," the Atlanta Fed explained. "The nowcast of the contribution of the change in real net exports to first-quarter real GDP growth decreased from -0.86% to -1.10%."

Market reaction

The greenback continues to outperform its rivals after this report and the US Dollar Index was last seen gaining 0.4% on the day at 92.00.

The US economy is expected to grow by 8.6% in the first quarter of 2021 and 4% in the second quarter, the Federal Reserve Bank of New York's latest No

The US economy is expected to grow by 8.6% in the first quarter of 2021 and 4% in the second quarter, the Federal Reserve Bank of New York's latest Nowcasting Report showed on Friday. 

"News from this week’s data releases decreased the nowcast for 2021:Q1 by 0.1 percentage point and increased the nowcast for 2021:Q2 by 0.1 percentage point," the publication explained. "Negative surprises from international trade data accounted for most of the decrease in 2021:Q1, while positive surprises from ISM manufacturing survey data accounted for most of the increase in 2021:Q2."

Market reaction

The US Dollar Index largely ignored this report and was last seen gaining 0.4% on the day at 92.00.

The non-farm payrolls report showed a better-than-expected number for February. Hiring was widespread across industries and the unemployment rate tick

The non-farm payrolls report showed a better-than-expected number for February. Hiring was widespread across industries and the unemployment rate ticked down for the right reasons, explains analysts at Wells Fargo. They consider that Although there is still a long way to go in terms of a full recovery, things appear to be once-again moving in the right direction.

Key Quotes: 

“Today's employment report confirmed what recent spending and production data had already told us: the worst of the winter slowdown is behind us, and the recovery is gaining pace. Job growth in February nicely beat expectations, increasing by 379K, with last month's disappointing gain revised up by 117K.”

“Despite the encouraging gains in today's report, we are still very much in the recovery phase of the cycle. Payrolls are 9.5 million lower over the past year, or down 6.2% which is on par with the low point of the Great Recession. While GDP looks poised to regain its pre-COVID peak in the second half of this year, we estimate that the number of jobs in the economy won’t recover until 2023.”

“We expect that as COVID is brought under control and the economy more fully re-opens this summer, participation among women (and men) will rebound strongly, but some individuals won’t easily find their way back to the labor force, which will keep the Fed biased toward staying accommodative for longer even as inflation risks mount.”

The USD/MXN broke above 21.00 and rose further. It peaked at 21.41 before pulling back to the 21.25 area. The rally reinforced the bullish outlook. Cu
  • Mexican peso under pressure amid risk aversion across financial markets.
  • USD/MXN breaks 21.00 area, reaffirms bullish outlook.

The USD/MXN broke above 21.00 and rose further. It peaked at 21.41 before pulling back to the 21.25 area. The rally reinforced the bullish outlook. Currently, it is hovering around a technical area, and a close above 21.30 would suggest the momentum remains firm, even despite overbought readings.

The move off highs suggests the possibility of some consolidation before another move. With sharp moves in Wall Street, the week might not be over. Also, the US dollar's profit-taking correction is not looking favorable to go on at the moment.

Above 21.35, the USD/MXN could head toward the next target that is seen at 21.50. The area 21.45/50 is a relevant resistance that could limit more gain, favouring some correction. If the move higher continues, there is not much protection toward 22.00; an interim resistance is seen around 21.75.

On the flip side, a correction might find support at 21.10 and then 21.00. A relevant level continues to be 20.60: a decline below would alleviate the bearish pressure.

USD/MXN daily chart 

usdmxn

 

Russia Consumer Price Index (MoM) came in at 0.8%, above forecasts (0.6%) in February
Gold has been on the back foot after Federal Reserve Chair Jerome Powell seemed reluctant to intervene and lower bond yields. Higher returns on US deb

Gold has been on the back foot after Federal Reserve Chair Jerome Powell seemed reluctant to intervene and lower bond yields. Higher returns on US debt make the yieldless precious metal less attractive to investors. However, markets seem to have stabilized after US Nonfarm Payrolls rose by 379,000. 

In the meantime, here is how XAU/USD is positioned on the charts.

The Technical Confluences Detector is showing that gold faces some resistance at around $1,700. Apart from being a round number, that level is also the convergence of the Bollinger Band one-day Lower, the Simple Moving Average 100-15m, the previous 4h-high, and the BB 1h-Upper. 

Critical resistance awaits at $1,718, which is a cluster of lines including the Pivot Point one-day Resistance 1, the previous monthly low, and the SMA 100-1h. 

Support awaits at $1,691, which is the confluence of the previous daily low, the PP one-week S1, and the previous 4h-low. 

Further down, the downside target is $1,673, which is the meeting point of the PP one-month S1 and the PP one-day S2.  

XAU/USD resistance and support levels

Confluence Detector

The Confluence Detector finds exciting opportunities using Technical Confluences. The TC is a tool to locate and point out those price levels where there is a congestion of indicators, moving averages, Fibonacci levels, Pivot Points, etc. Knowing where these congestion points are located is very useful for the trader, and can be used as a basis for different strategies.

Learn more about Technical Confluence

 

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