All About The FED

Midday Update

The US Oil gains are around $1.20 as crude trades at $85.82 a barrel as energy stocks continue to surge higher due to significant impact coming from the tensions building up between Ukraine and Russia. President Joe Biden threatened to impose individual sanctions on President Putin over the Ukrainian crisis if an invasion is done.

This crisis poses a huge impact on the supply of oil and gas considering Russia is a major supplier of oil in Europe and a shortage of supply could lead to soaring crude oil prices. Crude oil inventories are due for release during New York session and investors will closely follow the statistics since supply of oil has a huge effect on the black liquid price.

During European session Equities extended their gains as investors eye major fundamental movers for the day. European indices are up over 1%; FTSE gains 1.64%, EUROSTOXX50 up 2.24% and DAX gains 2.12%.

The Canadian dollar continues to gain against the USD as oil prices continues to surge higher. The USDCAD dropped from 1.2630 during Asian session to 1.2567 during European session. The Bank of Canada is going to release their overnight lending rate which is forecasted to remain the same and traders remains cautious to hear any clues of change in monetary policy during the press conference by the governor later in New York session. CADJPY continues to rise; currently it’s trading at 90.82 from daily low at 90.075.

The major highlight for the day is the FOMC meeting minutes scheduled at 1900gmt, and officials will be dropping clues on the monetary policy and the much-anticipated interest rate cycle for the US. Investors will be following the governor’s speech to get clarity on the interest rate hike schedules in 2022 and an increase in interest rates could strengthen the dollar in the near-term. Traders should watch out for volatility on all US pairs.

The EURUSD steadily trades lower as investors price in on an early US interest rate hike as speculation suggest March 2022. The EURUSD continued to trade lower during European session although the price change remains rangebound between 1.1310 (daily high) and 1.1263 (yesterday’s low).

A break below 1.1263 could reinforce a bearish outlook on the EURUSD in the near-term, however a negative outcome from the FOMC report could trigger a bullish rally in the short-term towards 2022 high at 1.1470.

Bitcoin rebounded from $32,939 as early buyers defends the cryptocurrency from trading further downside. BTCUSD is currently trading at $37,927 and a break above the $38,400 near-term resistance could be good news for whales anticipating a hold above $30,000.