Thursday March 24th, 2022

The US$ strengthens, oil prices are flat, equity markets are mixed, while US yields firm ahead of US Jobs data and more FOMC members speak. Equity & oil markets pare gains, US$ firms as investors weigh the risk of rising inflation, the impact of the war in Ukraine and increasing hawkish fed comments. Intraday markets will be focused on flurry of US data releases with US initial Jobless Claims, US Durable Goods Orders, US PMI, Nondefense Capital Goods Orders along with 4 Fed speakers will provide direction to the currency markets. In other news. President Biden meets NATO, G-7, and EU leaders in Brussels and G-7 to warn President Putin against using chemical or nuclear weapons. US & EU are closing in on a deal to cut demand for Russian Energy. Russia’s Deputy PM warned that global oil & gas markets would collapse if hydrocarbons were to be sanctioned. Russian stocks market reopened on Thursday for limited trading after its longest shut down since the fall of the Soviet Union. German coalition parties cut energy fuel tax & giving Eur 300 one time rebate to help with higher energy costs. In the currency markets. The US$ extends gains on hawkish Fed comments, JPY falls to its lowest levels since 2015, CNY touched a 9-day low, while AUD & NZD ease off 5-month highs. Russian RUB briefly tested below 90 after President Putin wants “unfriendly” currencies to pay for Russian gas in RUB. CNY & Asian currencies are flat on average vs US$. Trading currencies are mixed with AUD & CHF down 0.15%, JPY & NZD lower 0.4%, while ZAR is flat, MXN up 0.1%, and NOK rallies 0.6% vs US$.

Oil prices ease amid fresh hopes of Iranian oil coming online after the White House said on Wednesday that the US & its allies have made progress in Iran nuclear talks, but issues remain. C$ continues to edge firmer towards 2-month highs as commodity prices hold firm, on BoC hike expectations and on prospect of Canada increasing oil exports to alleviate tight global supply. Intraday US economic data releases and Ukraine updates will provide direction to the currency markets. Bias remains for further C$ strengthening. Support shifts to 1.2502 (2022 lows), while resistance remains at 1.2630.

Euro remains capped at 1.1050 amid a hawkish Fed. Euro attempted to rally following upbeat German and EU PMI data, but the single currency quickly slipped back below 1.10 vs US$ as investors refocuses on US data & Fed speakers today. Risk-aversion & interest rate divergence continues to keep Euro under pressure as the G7 & NATO summit focus on fresh Russian sanctions and the EU struggles with soaring inflation and energy prices. Support remains at 1.0940, while resistance holds at 1.1035.

EURGBP continues under pressure despite better-than-expected EU & German PMI results. Support resets to .8300 (1.2048) while resistance lowers to .8400 (1.1905)

GBP holds steady at 1.32 despite mixed PMI data. The UK PMI data showed that business activity in the manufacturing sector expanded at a slower than expected in early March. The UK office for Budget Responsibility announced that it lowered the growth forecast for 21/22 tax year to 3.8% from 6% previously. The pound is finding underlying support from the prospect of further BoE rate hikes after the UK saw inflation spike to 30-year highs. Support resets to 1.3180 while Resistance rises to 1.3300.