Daily Market Bulletin – 3 March 2022

Market Developments

Markets continue to monitor the Russia-Ukraine war and the prospects for a potential second round of negotiations between the, while oil price continue to surge.

The military conflict in Ukraine has entered its second week and Russia's offensive seems to have intensified over the last few days, while the United Nations General Assembly denounced Russsia's invasion. Its resolution demands that Russia "immediately, completely and unconditionally withdraw all of its military forces from the territory of Ukraine within its internationally recognized borders." [1]

The White House toned down prior rhetoric of potential sanctions on Russian oil, as Principal Deputy Press Secretary Karine Jean-Pierre, told reporters yesterday that the administration does not have "a strategic interest in reducing the global supply of energy".

Fitch downgraded Russia's sovereign credit rating to "B", from "BBB", in the aftermath of strict sanction from Western countries. [3]

OPEC and allies, most notably Russia, agreed to raise monthly oil output by another 400,000 barrels/day in April, as they have been doing for some months now. The statement said that current volatility "is not caused by changes in market fundamentals but by current geopolitical developments", without specific mention to the war in Ukraine. [4]

Fed Chair Powell said that he is "inclined to propose in support of 25 basis point rate hike" in March, but did not rule out a larger increase in that meeting or in an upcoming one, during his Congress testimony yesterday. [5]

The Bank of Canada raised interest rates for the first time since 2018 on Wednesday, bringing them to 0.5%, from 0.25%. The Governing Council expects that rate will need to increase further. [6]

Main Asia-Pacific stock markets were mostly upbeat and European futures try to follow. In the FX space, the JPY Basket extends its decline, the US Dollar is mixed and the AUD rises against both.

Instruments Snapshot

EUR/USD is tepid above yesterday's nearly 2-year low (1.1056).

GBP/USD trades with positive undertone, reclaiming 1.3400.

USD/JPY stays on the front foot above 115.50.

USD/CAD extends losses towards 1.2600, helped by high oil prices and Wednesday's BoC rate hike.

AUD/USD continues its advance beyond 0.7300, setting new 2022 highs.

NZD/USD is mixed below 0.6800, covering earlier losses.

GER30 trades with positive undertone, retesting 14,000.

US30 is constructive above 33,900, following yesterday's rebound.

USOIL extends its rally to the highest level since 2008, testing 115.00.

XAU/USD is cautious, but defends 1,925.

Economic Calendar Picks (GMT)

Investors await Mr Powell's second day of testimony, this time in front of the Senate committee (15:00), while we also expect speech form the Bank of Canada governor Mr Macklem later on the day, following yesterday's rate hike by the BoC.

Other than that, we expect another round of PMIs throughout the day and US Jobless Claims (13:30).

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 Mar 2022 https://news.un.org/en/story/2022/03/1113152

3

Retrieved 03 Mar 2022 https://www.fitchratings.com/research/sovereigns/fitch-downgrades-russia-to-b-on-rating-watch-negative-02-03-2022

4

Retrieved 03 Mar 2022 https://www.opec.org/opec_web/en/press_room/6830.htm

5

Retrieved 03 Mar 2022 https://financialservices.house.gov/live/

6

Retrieved 02 Oct 2022 https://www.bankofcanada.ca/2022/03/fad-press-release-2022-03-02/

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