Today Statement: Sterling Soars on Job Market Data

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. 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.

Based on ActionForex.com Technical Outlook

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