Friday March 25th, 2022

The US$ & oil markets weaken, equity markets are mixed, while US yields rise as markets focus on US consumer sentiment. Markets will focus on Michigan Consumer Sentiment Index after consumer & business confidence across Europe and the UK deteriorated in March due to worsening supply chain issues, high energy prices and ongoing uncertainties from Russian invasion of Ukraine. NATO & G7 remain unified warning Russia of a ‘response’ if it uses chemical weapons and President Biden calls for Russia to be removed from the G20. Intraday Michigan Consumer Sentiment Index, US Pending Home Sales and more Fed speakers will help provide direction to the currency markets. In other news. The EU strikes an LNG deal with the US as it seeks to cut its reliance on Russia. India tells visiting Chinese foreign minister that ongoing border issues impedes stronger ties. World stocks set for a 2nd consecutive week of gains for the first time in 2022. The EU targets big tech in sweeping new antitrust rules set to become effective in October. In the currency markets. Brazilian Real test highest levels since March 2020, up 13.4% ytd vs US$, JPY rebounds from a fresh 6-year lows of 122.43, while RUB weakens 4.5% rebounding towards 100.00 vs US$. CNY & Asian currencies firm 0.1% on average vs US$. Trading currencies firm with AUD, MXN NOK & NZD up 0.05%, CHF strengthens 0.4% and JPY rallies 0.6%, while outlier ZAR falls 0.25% vs US$.

Oil prices slip as concerns ease over Kazakhstan supplies, while the EU remains split on whether to impose an oil embargo on Russia. C$ continues to firm entering a possible 9th day of gains vs US$, the loonies longest win streak in 6-years and close to its 2-month highs of 1.2510. Intraday focus will be on BoC deputy Governor Kozicki and BoC Gravelle speeches with BoC expected to raise interest rates 200 basis points further in 2022. Bias continues favor a stronger C$, a break of 1.2502 opens the way to retest 1.2450 a key pivot to 1.2287 (Oct 2021). Support holds at 1.2502 while resistance lowers 1.2595.

Euro sits at 1.10 holding within its weekly range of 1.0960-1.1060. Consumer and Business confidence fell more than expected in Italy and Germany as concerns over the Ukraine invasion is felt across Europe. Euro is expected to remain under pressure from a combination of lingering Russia-related risks, high energy prices and the Fed-ECB interest rate policy divergence. Intraday US data and more Fed speakers will provide direction but expect Euro to remain within its current range today. Support remains at 1.0940, while resistance holds at 1.1035.

EURGBP bounces off intraday lows, but investors continue to favor selling Euro on rallies. Support resets to .8300 (1.2048) while resistance lowers to .8400 (1.1905)

GBP rebounds off lows after disappointing UK data. UK retail sales dropped to 7% vs 9.4% in February and consumer confidence fell to two-year lows to -31 vs -26 in February as high energy prices and supply chain issues continue to impact the economy. The pound has fallen 1.8% in March and is down 2.6% in 2022 vs US$, but against Euro the pound is up ½% ytd. Intraday US data and Fed speakers will be monitored but we expect the pound to hold within its current range today. Support resets to 1.3160 while Resistance lowers to 1.3235.