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Market Update
The markets are somewhat calmer on Friday morning as geopolitical tensions between Ukraine and Russia eases. The foreign currencies were stronger early Friday morning with safe haven currencies slightly weaker.
The Dollar index bulls have managed to keep the near-term support at 95.70 as they attempt to recover dollar loses. The demand on the dollar renews as investors turn towards rate hike possibilities as Ukraine/Russia tension eases with US intervening to find a possible diplomatic resolution.
The GBPUSD extended gains for the 4th day straight influenced by positive UK retail sales for January. Inflation growth in the UK has been gradually rising and it reinforces the possibility of a rate hike by BOE in March.
The trend remains bullish on a medium-term with hopes of de-escalating geopolitical tensions between Ukraine and Russia. Cable’s upside gains are capped by a near-term resistance at 1.3640 and during European session.
GBPUSD just shaded off its earlier gains targeting 1.3600 support which coincides with the 50-day moving average. However, a break below that psychological support can cause short-term change in bullish outlook to bearish.
USDCAD edged lower during Asian session towards 1.26800 near-term support, before bulls changed the outlook in the near-term by defending the pair from further loses. The USDCAD has been rangebound for 3 weeks as investors took a cautionary stance during heightened geopolitical tensions.
The USDCAD slightly traded higher ahead of Canadian Retail Sales for December 2021. Although there is anticipation of minimum volatility, traders should watch out for US FED Monetary policy report release in New York Session.
The Japanese Yen is the weakest as demand for safe haven currencies diminishes. The yen suffered selling pressure as National Core CPI of Japan for January missed targets indicating slower economic growth.
The AUDJPY climbed higher early Friday morning attempting to breach the near-term resistance at 83.25 before bulls receded. NZDJPY also traded higher above 11 February’s high at 77.50 before giving some of its gains later in European session.
European stocks opened higher as investors are risk tolerant amid easing geopolitical tensions. The CAC40 index traded higher during European session gaining +0.97% and a break above the7000 near-term barrier can induce further upside. FTSE 100 followed suit, rising +0.58% as bulls defended 7500 near-term support.
US stocks closed lower on Thursday, with Nasdaq bulls failing to hold above 14500 near-term resistance. The index lost -2.96% and the market closed below a critical near-term support at 14200. A potential to trade lower towards 14000 psychological support is highly probable if bulls fail to reclaim the 14200 zone.
Gold continues to benefit from the soft dollar amid mounting US inflation. The yellow metal extended gains late Thursday reaching $1900, a price last seen since June 2021. Early European session, Gold shaded some of its gains as Net Volume failed to catch up with the bullish momentum. This divergence indicates that a corrective pattern could be due and $1875 target could be possible in the near-term.
