The market is preparing for some big data updates on the state of the US economy this week with the delayed Non-Farm Payrolls numbers out on Wednesday and the CPI figures being released on Friday after being bumped along the calendar a couple of days by the employment data. The Federal Reserve Bank kept rates on hold as expected in January and the market is only pricing in an 18% chance that they will cut at the next meeting in March.
For those odds to increase the market – and indeed the FOMC – would have to see either a sharp decrease in the jobs market, or inflation come down significantly, or a combination of the two. This week could see some movement and the initial focus will be on Wednesday’s jobs numbers. The headline Non-Farm Employment Change is expected to show a 70k increase in jobs in January with the Unemployment Rate remaining steady at 4.4% and the Average Hourly Earning increasing by 0.3%. Anything +/-30k on the Non-Farms or a +/- 0.2% on the Unemployment Rate should see those rate cut expectations change and the dollar move significantly.
Cable is setting up nicely for moves on the back of the data this week with little on the calendar from the sterling side of the equation. Having peaked just under 1.3900 late in January, it is now sitting close to mid-range and therefore could test either side if the data comes in off expectation. A stronger result should see it fall to test the 200-day moving average around 1.3430 while a weaker number could see those recent highs come into play again.
Resistance 2: 1.4248 – 2021 High
Resistance 1: 1.3867 – 2026 High and Trendline Resistance
Support 1: 1.3430 – 200-Day Moving Average
Support 2: 1.3275 – Trendline Support
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