Sterling rockets higher today, boosted by stronger than expected job market data. Claimant count unexpected dropped -32.3k in February versus expected rise of 8.2k. Claimant count rate also dropped from 5.0% to 4.9%. Unemployment was unchanged at 7.8% versus consensus of 7.9%. The BOE minutes unveiled that MPC members voted unanimously on March 4 to keep the policy rate unchanged at 0.5% and to maintain the asset purchase program at 200B pound. While growth outlook remained mixed, policymakers raised concerns over the overshooting inflation. More in BOE voted 9-0 to Stay Status Quo, Sterling Rallied as Jobless Claims Reduced Unexpectedly
Dollar and yen are generally lower as risk appetite improved. Data released from US saw PPI dropped more than expected by -0.6 mom in February while core PPI was up 0.1% mom. Commodity currencies are performing best against dollar and yen along with Sterling. However, Euro and Swiss are lagging behind as pressured by selling in Sterling crosses. Crude oil extends this week's strong rebound and is set to take on 83 level. Also, gold's rally today suggests that recent pull back from 1145.8 is already finished. We'd expect commodities to strengthen further in general.
Dollar index dropped further to as low as 79.52 today and is now pressing mentioned key cluster support level at 79.56 cluster support (38.2% retracement of 76.60 to 81.34 at 79.52). We'd still expect strong support from 79.52/56 to conclude the correction from 81.34. Above 80.41 minor resistance will flip intraday bias back to the upside for retesting 81.34 high first. However, note that sustained trading below 79.52/56 will invalidate our view and indicate that whole medium term rise from 74.19 has completed and we would probably see dollar index drop further to 76.60/78.45 support zone instead.
Under the pressure from the government and dismal inflation outlook, the Bank of Japan announced to double the size of the fixed-rate funds-supplying operation against pooled collateral (the fixed-rate operation) to 20 trillion yen. The duration is maintained at 3 months. At the same time, policymakers left the uncollateralized overnight call rate to at around 0.1%. More in BOJ Doubled Funding Operations. Dissenting Votes Increased Uncertainty on Future Easing
GBP/USD Mid-Day Outlook
Daily Pivots: (S1) 1.5059; (P) 1.5159; (R1) 1.5342; More
GBP/USD's rebound extends further to as high as 1.5386 so far today and further rise could still be seen. However, we'd still expect upside to be limited by 38.2% retracement of 1.6456 to 1.4783 at 1.5422 and bring fall resumption. Below 1.5208 minor support will turn intraday bias neutral first. Further break of 1.4977 will argue that correction from 1.4783 is completed and recent down trend is possibly resuming for a new low below 1.4783. However, note that sustained break of 1.5422 will dampen our view and would bring stronger rise towards next cluster resistance at 1.5814 instead.
In the bigger picture, there is no change in our bearish view. That is, medium term rebound from 1.3503, which is treated as a correction to down trend from 2.1161, has completed at 1.7043 already. Fall from there is tentatively treated as resumption of the down trend from 2.1161 and should target a new low below 1.3503. On the upside, break of 1.5814 resistance is needed to invalidate this view. Otherwise, outlook will remain bearish.