Monday February 7th, 2022

The US$ is flat, oil prices slip, while equity markets & US yields are mixed to start the week. The US$ index remains resilient vs a basket of major currencies following Friday’s better than expected Nonfarm payrolls report. There are no high-tier macroeconomic data releases today, expect currency markets to remain rangebound, US yields hold near 1.9% and expect the neutral market mood to continue intraday. In other news. France’s President Macron flies to meet President Putin in the latest attempt to alleviate tensions in the Ukraine. Oil prices fall on positive signals from the US – Iran talks. China say’s US tariff extension on solar products hurts new energy trade. Covid. Canada, Ottawa declares a state of emergency as Canada trucker covid protests paralyses the city. Australia to reopens its borders to international visitors. In China, Olympic Ice Hockey, Canada beat Russia after refusing to take to the ice over covid results. In currency markets. RUB recovers to 3-week highs ahead of French/Russia talks, ZAR consolidates after the Presidential address and GBP firm’s vs Euro. CNY tumbles 0.45% while Asian currencies are down 0.1% on average vs US$. Trading currencies are mixed with NZD & ZAR down 0.15%, NOK weakens 0.3%, while MXN is up 0.05%, and AUD, CHF & JPY firm 0.2% vs US$.

Oil prices slip on positive signals from ongoing US-Iran talks. On Friday President Biden restored sanction waivers to Iran to allow international nuclear cooperation projects as the talks on 2015 deal enters its final stretch. C$ bucked the trend and firmed in early trade despite oil prices slipping in early trades as markets focus on the BoC March-2nd rate decision after 5-year yields hit their highest level on Friday in nearly 3-years. Bias remains to sell on any rallies with view C$ will strengthen into the BoC rate decision. Support holds at 1.2647, while resistance remains at 1.2740.

Euro rally stalls and looks vulnerable for a retest of 1.1350. The Euro steadies after the ECB hawkish comment-momentum appears to be stalling after stronger than expected US NFP on Friday. Technically a break of 1.1425 could see the market drop to 1.1350 and potentially fully retrace to 1.13 as investors focus on the prospect of a Fed hike in March. Intraday with no key data releases expect markets to consolidate, but with a bias of a weaker euro. Support rises 1.1425 while resistance resets at 1.1475.

EURGBP stabilizes near 2-week highs as markets weigh both BoE actions and comments vs the change in tone by the ECB. Support resets to .8400 (1.1905) while resistance lifts to .8500 (1.1765)

GBP weakens in early trading as investors focus on Brexit & the uncertainty of PM Johnsons leadership. Brexit talks resume on Thursday with UK’s Truss & EU’s Sefcovic in hopes to resolve the Brexit stalemate. UK PM Johnson continues to face difficult questions over “partygate” with talks that a vote of no-confidence may be called as early as this week. Meanwhile cautious remains from BoE Chief Economist “we should not anticipate that rate hikes will be aggressive in the medium-term” added pressure to the pound. Support resets to 1.3485, while Resistance lowers to 1.3560.