Friday March 18th, 2022

The US$ rebounds, oil prices firm, equity markets are mixed while US yields are down as risk sentiment eases as Russia-Ukraine talks stall. Kremlin reports President Putin told Chancellor Scholz that the Ukraine is trying to stall talks. Russian missiles strike near Lviv as Russia tries to regain the initiative in the stalled campaign. The US views China is tilting towards supporting Russia on Ukraine, in a call today President Biden is expected to warn Premier Xi of US retaliation if China actively supports Russia. Intraday Ukraine/Russia updates, President Biden call with Premier Xi and Fed Bowman’s speech will help provide currency market direction. In other news. Russian Finance Minister says it transferred its bond payment to avoid a default. The Russia central bank leaves interest rate at 20%, the central bank said the Russian economy is entering restructuring phase. The Chinese aircraft carrier sails through the Taiwan Strait just hours before the Biden-Xi call. Norway’s economy faces negative impact from Ukraine war, statics agency says. Nickel tumbles 12% in the latest glitch start to London Trading. In the currency markets. The US$ rebounds as safe-haven buying returns on stalled peace talks and uncertainties on China’s stance on the Ukraine war. RUB weakens 8%, JPY hits 119 a fresh 6-year low and Euro weakens vs its peers. CNY and Asian currencies weaken 0.3% on average vs US$. Trading currencies are mixed with JPY, ZAR & NOK down 0.4%, while MXN, AUD & NZD are flat and CHF firms 0.15% vs US$.

Oil prices firm on a combination of stalling Russia-Ukraine peace talks stall, increasing supply crunch as traders avoid Russian oil purchases, dwindling stockpiles and uncertainty on Iran talks. C$ extends gains hitting its strongest level in 2 months vs US$ on positive economic data, strong commodity prices and anticipate of further BoC rate increases. Intraday Ukraine updates and key CAD Retail Sales will provide direction to the loonie. Expect market volatility to continue on Ukraine headlines. Support resets to 1.2585, if breached look for 1.2502 (2022 lows), while resistance lowers to 1.2690.

Euro falls below 1.1050 as risk-off sentiment returns amid stalled Ukraine peace talks. Euro continues be the most vulnerable currency to Ukraine war headlines and weakens vs its peers when the peace talks stalled. Germany’s Chancellor Scholz invites G7 leaders to a summit next Thursday. Intraday Ukraine headlines and Xi-Biden call will help provide direction to the single currency. Support resets to 1.0980, while resistance lowers to 1.1075.

EURGBP weakens as Euro comes under risk-off selling pressure as Ukraine peace talks stalls. Support holds at .8365 (1.1954) while resistance remains at .8450 (1.1834)

GBP slips below 1.3150 as safe-haven US$ bounces amid risk-aversion. The combination of a BoE cautious tone after Thursday’s rate hike and no tangible peace talk progress in Ukraine prompted a rebound in US$ buying. Domestically UK’s Chancellor of the exchequer Sunak said my priority going forward is to cut taxes. Sunak also warned the UK faces a GBP70bln hit from EU ban on Russian oil & gas and could tip Europe into recession. Ahead of an uncertain weekend in Ukraine expect the pound to remain under pressure. Support holds at 1.3080 while Resistance resets to 1.3165.