Thursday February 17th, 2022

The US$ is steady, oil prices weaken, equity markets are mixed, while US yields are lower as risk-on sentiment eases. The market tone remains cautious with the West disputing Russian statements of troop pullback and claims of shelling in east Ukraine on Russian-backed rebels. Intraday Ukraine updates will continue drive risk sentiment, with focus on the Russian foreign minister Lavrov who said Russia will send a response to the US on security today. On the economic docket, US Building Permits, US Initial Jobless Claims & the Philadelphia Fed manufacturing survey may have a short-term impact on currency markets today. In other news. Oil prices ease after the French foreign minister says a decision on the Iran nuclear deal ‘days away’. President Biden will announce a US$1bln in infrastructure funding to clean up the Great lakes. Airbus rebounds to record profits as it strikes an upbeat tone on recovery. Covid. Hong Kong covid cases have multiplied by 60 times so far in February. Malaysia & South Korea break daily covid case records as the countries grapple with omicron. In the UK, weekly flights pick up as covid restrictions ease. In currency markets. The US$ steadies as the Ukraine headlines fuel caution, Russian RUB eases on shelling rumours and GBP firms on prospect of BoE rate hikes. CNY dips 0.1%, Asian currencies are flat while outlier THB is up 0.4% and IDR is down 0.4% vs US$. Trading currencies are mixed with ZAR & MXN are up 0.1%, AUD & CHF firm 0.15%, JPY & NZD strengthen 0.4%, while NOK falls 0.4% on weaker oil prices vs US$.

Oil prices fall as it balances between the ongoing Ukraine crisis and the prospect of Iranian oil coming back online. Albert finances set to flip back to black as oil prices surge ending seven years of deficits. C$ remains sidelined within a 1.2650-1.2750 range as Ukraine uncertainties impacts risk sentiment, and oil & US$ are both trapped rangebound. Intraday we will likely see more of the same until we see the of Ukraine uncertainties. Support holds at 1.2634, while resistance remains at 1.2755.Euro holds rangebound ahead of US data & Ukraine updates. Investor caution continues keeping the Euro capped below 1.1400 as Ukraine uncertainties remain. Geopolitical concerns will dominate currency markets, while intraday US data is likely to keep the US$ supported. In the bigger picture the prospect of multiple hikes from the Fed, BoC & BoE within 2022 and the prospect of the ECB keeping rates unchanged in 2022, we anticipate any Euro strength will be limited heading into March. Support remains at 1.1335 while resistance holds at 1.1425.

EURGBP weakens through .8370 and looks set to retest 2-year lows on the prospect of further BoE rate hikes. Support holds at .8300 (1.2048) while resistance remains at .8450 (1.1834)

GBP advances on the prospect of further BoE rate hikes. The pound extends gains as investors look beyond the ongoing Ukraine crisis and focus on the prospect of further BoE rate hikes after surging inflation data. Intraday markets will remain focused on Ukraine updates and the US data releases for direction. Support rises to 1.3550, while Resistance resets to 1.3640.