February’s US employment data could shake the markets as traders await the February NFP report amid rising geopolitical tensions and inflation concerns. A resilient labour market could support the USD and reinforce expectations that the Fed may keep interest rates higher for longer.
February’s US employment data eyed
We note the release of the US employment data for February with the NFP figure front and centre. It should be note that the release has as its backdrop the war in Iran and worries for inflationary pressures in the US economy. Should we see the actual rates and figure implying a more than expected resilient US employment market, that could be perceived as a free hand for the Fed to keep rates unchanged for longer. Please note that currently USD bulls still seem to have the upper hand powered by safe haven inflows for the greenback.
Xlence Research Team opinion
Despite the justified fundamental worries for the possible consequences of the US-Iran war may have on the US economy, dampening the effect the release may have, we still consider the picture of a possibly tighter US employment market as a factor that could provide some support for the USD n the FX market. On the flip side should the US employment market ease more than expected we may see the USD losing ground.
Oil bulls lead the charge
The greenback retreated against its counterparts yesterday as market worries tended to ease. Market worries eased yesterday, after New York Times issued a report stating that Iran had reached out in an effort to find a diplomatic solution. The report was denied by Iran, nevertheless for some time the markets started to hope that the could be an end to the war rather earlier than later. The improvement of the market sentiment eased the safe haven demand in the FX market for the USD allowing for the US currency to weaken. Today we intend to keep a close eye on the release of the US weekly initial jobless claims figure and January’s Challenger Layoff figure, given that the market attention may allready be shifting towards the release of February’s US employment report with its NFP figure, in the early American session tomorrow.
Xlence Research Team opinion
Should we see the oil market’s worries for its supply side intensifying further we may see oil prices getting additional support and on the contrary should market worries ease or the moil market sentiment start normalising somewhat, we may see oil prices retreating.
Widening uncertainty tends to weigh on US equities
US equities indexes such as the Dow Jones, Nasdaq and S&P 500 ended their day in the reds yesterday, as uncertainty in the markets regarding the path of the US economy widened, especially given the war in Iran and its possible side-effects in the US economy. Market worries tend to concentrate on the possibility of inflationary pressures should oil prices remain at high levels for a prolonged period which in turn could allow the Fed to keep rates unchanged for longer. It should be noted that according to Fed Funds Futures, the market now seems to be expecting only one rate cut in 2026, while in the past two rate cuts were expected.
Xlence Research Team opinion
For US equities we still see the bears as being in the driver’s seat, given the fundamental worries mentioned above. For US equities to recover some of their losses an improvement of the market sentiment may be required, while also a looser than expected US employment market with possibly a lower than expected NFP figure today could also allow some confidence to return among market participants.
Bitcoin’s upward movement set into doubt
The price of crypto king Bitcoin corrected lower yesterday and during today’s Asian and European sessions disappointing somewhat Bitcoin’s bulls. The correction lower of the crypto’s price raised some eyebrows regarding the continuance of the crypto’s upward movement. We still view the market sentiment as possibly the main catalyst behind Bitcoin’s direction, given its riskier nature.
Xlence Research Team opinion
Currently any direction is possible for Bitcoin especially over the weekend as the rest of the markets is to be closed while the cryptocurrency market remains open. Should we see the market’s cautiousness intensifying we may see Bitcoin’s losing more ground and vice versa.
Disclaimer: This information is not considered investment advice or an investment recommendation, but instead a marketing communication.
