Wednesday February 23rd Morning Update

The US$ is lower, oil prices lower, equity markets lower while and US yields inches higher. After calling Russian moves an Invasion, the U.S. and allies step up sanctions pressure on Russia. The United States, the European Union, Britain, Australia, Canada and Japan responded with plans to target banks and elites while Germany froze a major gas pipeline project from Russia. Ukraine imposed a state of emergency and started conscripting reservists aged 18-60. In other news. Trudeau’s emergency powers upheld amid worries ‘Freedom Convoy’ could return. South Korea test-fires missile interceptor a month after North Korea launches. US Mortgage applications drop to lowest level in over 2 years. Covid. COVID vaccine supply for global program outstrips demand for first time. South Korea approves Pfizer vaccine for five-year-old. In currency markets. Chinese foreign minister said Taiwan is not Ukraine, Taiwan has always been an inalienable part of China. This is an indisputable legal and historical fact. RBNZ raised interest by 25bps and signal further tightening. NZD$ up 0.85% AUD up 0.60%.

USD/CAD continued with its struggle to make it through the 1.2780-1.2785 supply zone and came under some renewed selling pressure. An uptick in crude oil prices underpinned the commodity-linked Loonie and attracted fresh selling around the major. Support remains at 1.2689, while resistance steady at 1.2785.

Eurozone’s Inflation came in at 5.1% in January, on a yearly basis. ECB’s Holzmann said they could raise rates in summer before ending bond buys. Russia/Ukraine uncertainty remains the focus for this currency pair. Support lowers to 1.1285 while resistance holds at 1.1425.

BoE heavy-hitters Andrew Bailey and Ben Broadbent testify to a parliamentary committee. With talk of rate increase in the UK, there could be some pressure on the EURGBP. .8300 area remains a crucial level for the pair. Support holds at .8300 (1.2048) while resistance remains at .8450 (1.1834)

BoE’S Haskel said “an upside risk to the inflation forecast could arise from geopolitical events while his colleague Bailey sees clear risk of inflation sticking at high level. The market is pricing in another 25 basis-point rate hike on March 17 followed by another in May. Support lowers to 1.3525, while resistance adjusts to 1.3610.