Commodity Currencies Stronger amid easing geopolitical tensions

Market Update

Commodity currencies are generally stronger against the US dollar, while other foreign currencies are lagging as investors pay close attention to any developments between Ukraine and Russia.

The markets are behaving better, but still threatened with geopolitical instability since no formal agreement has been engaged, although reports indicate Russia withdrawing its troops from Ukrainian boarder on Tuesday morning.

During European session, USDCAD traded lower with bears targeting 1.26500 support. The pair has been range bound for 3 weeks straight between 1.2780 and 1.26500 support.

Inflation data for Canada are due for release later in New York Session; Consumer Price Index will be the major highlight of the day and traders should pay close attention. A break below 1.26500 could cause further loses in the near-term.

GBPAUD extended loses early European session after breaking the near-term support at 1.8915. The pair traded lower on Tuesday after failing to break outside the one-week price range capped by 1.905 resistance.

GBPAUD is currently trading below a 50-day moving average and pound could suffer further loses against the Aussie towards 1.8500 support.

AUDUSD bulls closed higher on Tuesday breaching 2-day resistance at 0.71500 and a continuation to the upside is highly probable. Upside gains are capped by a resistance at 0.7180 and a break above that area could reinforce bullish momentum and reclaiming 0.7200.

Investors focus on the employment rates due for release early Thursday morning which remains a pivotal indicator of inflation although the RBA remains relaxed to maintain the interest rates status quo.

US equities markets closed higher on Tuesday, as investors priced in on de-escalating geopolitical tension between Ukraine and Russian. The Nasdaq 100 closed higher on Tuesday gaining +2.47% as the index found a short-term support at 14200. A price action gap was left between 14265.50 and 14450 and price may seek to fill in the gap before any solid trend develops in the near-term.

The Dow Jones Industrial Index also gaped higher soaring 1.22% leaving a price action gap between 34 685 and 34565.

European Stocks gains are temporarily capped after a bullish rally on Tuesday as investors sentiment became more optimistic at Ukraine crisis development. The CAC40 remains rangebound with current price failing to break above 7000 near-term resistance, and a break above that area is pivotal for further upside momentum.

The FTSE100 slightly edged lower losing -0.14% as bulls loses stream below 7600 and further move to the downside is probable.

On the commodity market, Gold slightly gained during European Session opening, and bulls are likely to face a $1860 near-term barrier, which makes up a head and shoulder pattern. The current price may slightly edge lower targeting $1840 area and defending $1840 near-term support is pivotal in maintaining a bullish outlook.

Traders should watch out for US retail sales due for release in early New York session, since the yellow metal remains sensitive to inflation data.