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Market Brief
The Reserve Bank of Australia (RBA) kept their cash rate at 0.10% as expected. One of their reasons but not the main one, is the new disruptions to the global economy caused by the Russia/Ukraine situation. Commodity prices are increasing, and the Australian economy remains resilient. There is a possibility that sometime around June the RBA will raise rates and that will be dependent on a couple more CPI readings.
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The AUDUSD has pushed higher towards 0.7300 with the next level of resistance at 0.7400. The AUDUSD is a good trending pair and after the retest of the descending trendline we could be going a lot higher.
Gazprom announced that gas transit via Ukraine continues, though it was noted that the Yamal-Europe pipe which had seen gas flow westwards to Germany is now stopped and flowing eastwards.
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Traders on the ActivTrader platform can trade the NGas April CFD which is currently making lower lows and lower highs. The sentiment indicator shows that 79% of traders on the platform are bullish NGas so this is likely to come lower to squeeze them out. The breakout level of 4.000 would be my downside target.
The Chinese Caixin Manufacturing PMI final reading came in better than expected at 50.4 for February showing a return to expansionary levels. The official NBS Manufacturing PMI for China unexpectedly inched higher to 50.2 in February 2022, compared with market estimates of 49.9, showing China’s manufacturing sector continues to be in expansionary levels for four consecutive months. Later this afternoon we get the US ISM Manufacturing PMI which is expected to also show an increase in activity.
The forex heatmap shows the CNY as being the weakest currency pair at the London open, with the Australian dollar relatively strong compared to its peers.
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Brent is continuing to push higher as the situation in Ukraine gets worse and at $100 per barrel again these higher levels are proving to be sticky. My concern is that demand will drop but also that there is a real possibility of another co-ordinated release from the US SPR as well as further increases from OPEC+ along with Iran. War will indeed see some supply disruptions but Russian oil being discounted and sold to China will force other nations to reduce their prices to keep market share.
