Daily Market Bulletin – 3 February 2022

Market Developments

Investors appeared cautious amidst Brexit jitters, persistent geopolitical woes and disappointing Meta (Facebook) earnings report.

In a new challenge to Brexit, Northern Ireland Democratic Unionist Party minister Edwin Poots, ordered officials to stop border checks at the Irish Sea, as reported by BBC [1]. The checks are part of the Northern Ireland Protocol, agreed between UK and EU, in their post-Brexit deal.

The US Department of Defense announced yesterday that it "will move approximately 3,000 service members to Romania, Poland and Germany in response to Russia's continuing build-up of forces on its western border with Ukraine and in Belarus". [2]

Meta's (Facebook-parent) quarterly results and mostly the forward guidance, disappointed investors and the stock plunged in extended trading, after the report. Revenue rose 20% year-over-year, to a solid $33.671 in Q4 2021, but for the first quarter of 2022 the firm projected Revenue of just $27-29 billion.

The new reporting segment "Reality Labs (RL)", which is tasked with delivering the Metaverse, lost $10.193 billion in 2021. [3]

Ahead of today's Senate hearings, US President Biden's nominees for the Federal Reserve, weighed on high inflation in their prepared remarks.

Trade the News: View our Economic Calendar

Dr Lisa Cook said that "our most important task is tackling inflation", Ms Raskin Bloom noted that "It is an important task of the Federal Reserve to reduce inflation and one that must be a top priority while we continue to sustain our economic recovery", while Dr Philip Jefferson commented that the central bank must "ensure that inflation declines to levels consistent with its goals". [4]

OPEC and allies, a group known as OPEC+, did not surprise yesterday, by agreeing to adjust upward the monthly overall production by 0.4 mb/d for the month of March 2022. [5]

Main Asia-Pacific stock markets there were mostly down, with mainland China and Honk Kong still out on holiday. In the FX space, the US Dollar finds support after a poor first half of the week, while main Commodity Currencies (CAD, AUD, NZD) are soft against it.

Instruments Snapshot

EUR/USD faces headwinds around 1.1300, after its solid performance during the first half of the week.

GBP/USD retreats and tests 1.3550, ahead of the BoE.

USD/JPY takes a breath and reclaims 114.50, trying to end the four-day losing streak.

USD/CAD attracts buyers and defends 1.2650.

AUD/USD is on the back foot below 0.7150, after 2 profitable days.

NZD/USD is on the defensive towards 0.6650.

GER30 is in negative territory, giving 15,600 up.

US30 pauses its six-day advance, struggling to hold 35,600.

USOIL is on the back foot, below yesterday's fresh 7+ year highs (89.74).

XAU/USD is soft, probing 1,805.

Economic Calendar Picks (GMT)

Central banks dominate today's calendar, as the Bank of England (BoE) and the European Central Bank (ECB) hand down their monetary policy decisions, with their governors holding press conferences.

The BoE is forecasted to deliver its second straight rate hike, while not much seems to be expected from the ECB, although markets will be looking for any commentary around rates.

We also expect a series of PMIs from various countries, as well as Jobless Claims and Factory Orders from the US.

At the beginning of Thursday (00:30), markets will turn the Monetary Policy Statement form the Reserve Bank of Australia (RBA), for the bank's economic and rate forecasts.

Automaker Ford and tech giant Amazon stand out from today's earnings, reporting after US markets close.

See the economic calendar here.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 03 Feb 2022 https://www.bbc.co.uk/news/uk-northern-ireland-60237565

2

Retrieved 03 Feb 2022 https://www.defense.gov/News/News-Stories/Article/Article/2920844/us-to-deploy-3000-troops-to-romania-poland-germany/

3

Retrieved 03 Feb 2022 https://s21.q4cdn.com/399680738/files/doc_financials/2021/q4/FB-12.31.2021-Exhibit-99.1-Final.pdf

4

Retrieved 03 Feb 2022 https://www.banking.senate.gov/hearings/01/25/2022/nomination-hearing

5

Retrieved 25 Jun 2022 https://www.opec.org/opec_web/en/press_room/6796.htm

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