Wednesday March 30th, 2022

The US$ lower, oil prices rebound, equity markets and US yields are mixed as Russian promises in doubt. Ukraine’s Zelensky says Russia talks could be called positive but added Ukraine won’t slacken its defenses. Germany, US & allies agree to keep pushing for a Russian ceasefire, while the Kremlin said no breakthrough in Ukraine talks, lots of work remains. Intraday German CPI, US ADP Employment Change and US GDP will be a key focus for currency markets. In other news. Spanish inflation unexpectedly soars to 9.8%, the most in 40 years as energy costs soar. The US trade chief said the US needs a new approach to China, stressing economic independence to counter ‘unfair’ China trade practices. Ukrainian refugees top 4 million, nearing 10% of its population. Covid cases in Asia surpass 100mio, while in the US the CDC recommends a fourth Pfizer & Moderna dose. Germany takes steps for gas rationing over payment standoff with Russia & Poland to ditch Russian oil by the end of 2022 and coal by May. In the currency markets. The US$ continues to fall, while Euro & GBP extend gains and JPY the biggest mover, rallying 3.0 yen in last 2-days vs US$. CNY up 0.14%, while Asian currencies are mixed with INR, KRW & PHP down 0.3% on average while THB, TWD, MYR & SGD are up 0.25% on average vs US$.

Oil pricing firm 1.5% on supply concerns and the growing prospect of new western sanctions against Russia. Focus remains on the OPEC+ meeting on Thursday. C$ nears 5-month highs vs US$ on a combination of a weakening US$ and the rebound in oil prices. In April focus will shift to the Liberal budget on April 7th, and April 13th BoC meeting with expectations of a 50bp rate hike. Skepticism remains over Russian’s intensions on the pullback from Kyiv and we will likely see the Loonie continue to remain vulnerable to further volatility. Support holds at 1.2450 if breaks look for 1.2383 (Nov 2021), while resistance holds at 1.2553.

Euro loses steam after testing multi-week highs 1.1160. Increasing skepticism over Russia’s pullback intensions took the shine off Euro and it rebounded from intraday highs. Focus is shifting to the German inflation report today after Spain reported its highest inflation levels in 40 years. On the US economic docket today ADP Jobs data and GDP, alongside Ukraine updates will provide direction to the single currency today. Support resets to 1.1025 while resistance rises to 1.1160.

EURGBP hold steady a fresh monthly high, but as Ukraine optimism eases, we could see fresh Euro selling. Support resets to .8350 (1.1976) while resistance rises to .8475 (1.1800)

GBP clings to daily gains as the US$ remains under selling pressure. The pound overall remains on the back-foot on continuing dovish BoE comments, with the Deputy BoE governor saying that the path of interest rates was unpredictable due to unexpected shocks hitting the UK economy. The British Retail Consortium (BRC) said shop prices rose by 2.1% in March for the fastest annual increase since Sep 2011, up from Feb 1.8% increase. Intraday US data and Ukraine updates will provide the pound direction. Support resets to 1.3090 while Resistance lowers to 1.3175.