Market sentiment worsened this past week around the globe as geopolitical strains around Ukraine mixed with the road ahead for tightening monetary policy. On Wall Street, futures tracking the Nasdaq 100, S&P 500 and Dow Jones declined 1.5%, 1.4% and 1.7% respectively. In Europe and Asia, the DAX 40 and Nikkei 225 sank 2.5% and 2.0% respectively.
A meeting between the US and Russia will be taking place this week and the Euro could be vulnerable to elevated volatility. In addition to the proximity of the European Union, the latter’s dependence on gas from Russia could result in supply disruption amid escalating conflict. That would be a pickle for the European Central Bank, which is slowly opening the door to tightening.
Next week offers a thinner economic calendar than what has been experienced over the course of the month. Although the are several speeches scheduled from Federal Reserve policymakers and ‘high’ rated data releases, it seems highly likely that news flow around the Russia-Ukraine conflict will be the primary driver.
On Monday, February 21, Fed Governor Michelle Bowman will give a speech at the American Bankers Association Conference for Community Bankers.
On Tuesday, February 22, the December US house price index will be released before of the US cash equity open. Shortly after stocks start trading, the February US Markit manufacturing PMI and the February US Conference Board consumer confidence reading are due.
On Wednesday, February 23, weekly US MBA mortgage applications figures will be released.
On Thursday, February 24, the second estimate of the 4Q’21 US GDP report, the January US Chicago Fed national activity index, and weekly US jobless claims data will be released at 13:30 GMT. January US new home sales are due shortly after the US cash equity open. Atlanta Fed President Raphael Bostic and Cleveland Fed President Loretta Mester will give remarks at 16:10 GMT and 17 GMT, respectively.
On Friday, February 25, the Fed’s preferred gauges of inflation, the January US PCE and core PCE reports, will be released at 13:30 GMT, as will the January US durable goods orders report and the January US personal income and spending figures are due. At 15 GMT, the January US pending home sales report will be released.
EUR/USD
Euro weakened last week due to geopolitical tensions with the Russia-Ukraine situation. The tensions are calming down in Ukraine but still there is no clear direction for the EUR.
FORECAST: NEUTRAL
Resistance: 1.1350, 1.1400, 1.1450
Support: 1.1300, 1.1250, 1.1200
GBP/USD
The Pound has the same fate as the Euro depending on headlines concerning the Ukraine geopolitical crisis. We remain Neutral this week with an eye on the Fed headlines
FORECAST: NEUTRAL
Resistance: 1.3600, 1.3650, 1.3700
Support: 1.3550, 1.3500, 1.3450
AUD/USD
AUD/USD has to safeguard 0.7150 as bears are hopeful around it. The escalation of the Russia-Ukraine tensions on weekend has underpinned the risk-off impulse. The headlines from the Russia-Ukraine tussle will remain the major driver for the AUD/USD.
FORECAST: NEUTRAL
Resistance: 0.7200, 0.7250, 0.7300
Support: 0.7150, 0.7100, 0.7050
USD/JPY
We’re likely to be in a news driven market on Monday because of the intensifying situation in Ukraine so traders should look for heightened volatility. We remain long on the USDJPY.
FORECAST: BUY
Resistance: 115.50, 116.00, 116.50
Support: 115.00, 114.50, 114.00
USD/CAD
Canadian inflation reaches 5.1% in January, a 30 year high with the Loonie little changed, in the middle of a narrow three-week range. WTI falls 2.2% on the week, after a new seven-year high on Monday.
FORECAST: SELL
Resistance: 1.2750,1.2800, 1.2850
Support: 1.2700, 1.2650, 1.2600
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