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Midday Update
Europe opened lower on Wednesday as the UK battles with inflation shocks amid rising energy prices. The UK inflation statistics hit a 6.2% raise, a figure seen in 30-years while the BoE indicates they are more worried about economic growth than inflation in the near term.
The Eurozone economy has been affected badly by the Russia/ Ukraine war and further sanctions on Russia may worsen the situation. President Biden is set to meet NATO and European leaders in Brussels on Thursday to push for more sanctions on Russia.
GBPUSD slipped -0.45% as investors withdraw from risk assets as UK inflation climbs to a 30-year high. The bullish outlook reversed quickly after failing to break above 1.3300 near-term resistance.
The GBPUSD remains suppressed by a stronger dollar after Fed Chair Powell and Daly indicate a more hawkish stance on the interest rate cycle to curb the current inflationary pressure in the US. Bears are currently sitting on 1.3200 support which coincides with a 50-day moving average and a break below that area may cause further downside towards 1.3145.
GBPNZD traded lower during the European session as the price remain capped below 1.9100 near-term resistance. The outlook is currently bearish as the trend breaches below a psychological barrier at 1.9000. The GBPNZD dropped -0.33% and the next area to watch out for is at 1.8862 which coincides with February 2021 lows. BoE governor Bailey will be speaking today, and traders will be paying attention to any policy clues.
EURGBP edged higher, +0.14% after bouncing off near-term support at 0.8300. The EURGBP is used as a benchmark pair to gauge the strength between Euro and Pound in the near term and it indicates that the euro was relatively stronger than the Pound early Wednesday.
If prices hold above 0.8300 psychological support the EURGBP may experience a rally to the upside in the near term. German Buba president Nagel will be speaking early New York session and traders will be tracking policy clues.
European Equities were slightly lower as Russia closes off major a pipeline causing supply jitters ahead of EU leaders’ summit. CAC40 was down -1.01% from 6700.00 near-term resistance as investors remain neutral. The DAX was down -1.09% from 14539.31 resistance as the index remains rangebound. FTSE bounced off a near-term resistance at 7500 dropping -0.18%.
US equities closed higher on Tuesday as US 10-year treasuries yields slid from multi-session highs. Nasdaq crossed a critical resistance at 14500.00 soaring +1.94% towards 15200.00, February highs. DJI Index gained +0.74% crossing up a 50-day moving average as bulls target 35000.00.
On Commodities, USWTI rose +2.62% ahead of the NATO, EU summit which raises a spectre of new Russian sanctions. The black liquid crossed above a critical barrier at $110 and a possibility to retest $114.00/barrel in the near term.
Brent futures were slightly down -0.15% after hitting $119.48 a barrel. Brent took a breather after rising for 3 consecutive days and a failure to break above $118.32, 10 March high, may see prices trading sideways as EU acknowledges that they cannot replace Russian oil overnight.
Gold remains steady at +0.42% above 1917, near-term support as Ukraine counters bets on Fed rate hikes. A break below that 7-day support may open room for a target at 1875.00 near-term support.
