Market Drivers – US Session 09/03/2023

During the American session, US yields decreased even more. US 2-year yields decreased to 4.95% and 10-year yields to 3.92%. The US Dollar suffered from the falling rates. The DXY dropped to 105.20 for the second day in a row. The retreat of the Greenback is still a correction from Tuesday’s rally, which was boosted by Federal Reserve Chair Powell’s hawkish remarks.

Economic Data

In anticipation of Friday’s Nonfarm Payrolls report, US markets fell substantially on Thursday. Initial Jobless Claims unexpectedly increased to its highest level in ten weeks, posting eliminating some speculations on the possibility of a 50-basis point Fed rate increase. The US Department of Labor (DOL) reported 211,000 initial unemployment claims in the week ending March 4, according to weekly statistics released on Thursday. This print follows the previous week’s print of 190,000 and was lower than the market forecast of 195,000.


The US employment report will be released on Friday, with traders seemingly on the sidelines ahead of payrolls. The numbers could be critical for Fed rate expectations as the odds of a 50 basis points rate hike jumped during the current week.

Key Developments

EUR/USD rose for the second day but was unable to retake 1.0600. Voices against the guidance of “significant rate hikes ahead” emerged at the European Central Bank (ECB), with Bank of Italy Governor Ignazio Vizco criticizing his colleagues. GBP/USD had the best day of the week so far, peaking at 1.1937, the highest in two days. EUR/GBP pulled back below 0.8900.

The Bank of Japan will announce its monetary policy decision (no change expected) at Governor Kuroda’s last policy meeting. His term expires on April 8, after a ten-year tenure. Japan’s Lower House of Parliament approved Kazuo Ueda to become the next governor and two deputy governors (Ryozo Himino and Shinichi Uchida). The Upper House will vote on the nominees Friday. USD/JPY lost more than a hundred pips on Thursday, going all the way back to 136.00.

While awaiting important data, the US dollar recorded mixed performance. Late on Thursday, as Wall Street crashed, commodity and developing market currencies took a hit. From recent multi-year lows, USD/MXN rose 2.5%.

Risk aversion caused the AUD/USD and NZD/USD to become negative, falling to 0.6580 and 0.6100, respectively. The weak Canadian Dollar continued to lose value; nonetheless, USD/CAD increased for the fourth straight day, rising above 1.3830 to its highest level since mid-October.

Lower yields helped gold rise above $1,830/oz, and the risk-off mood had no effect on it. Silver retreated to $20.00 after failing to hold gains. Bitcoin fell below $21,000 and reached its lowest level since January 20. Prices for crude oil decreased by more than 1%.

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