The market opened with choppy price action on Friday as investors eye the first round of the 2022 French presidential election race on Sunday. The election comes at a time when the Eurozone is battling against rising inflation under Ukraine/Russia war cloud and investors are looking for a direction of the market from the result of the election. Scholz will be meeting with UK prime minister Boris Johnson and a possible discussion on additional sanctions towards Russia.
Fed’s tightening signals continue to dominate the market as Bullard projects a 3-3.25% rate hike this year boosting the Dollar strength. EU’s Von Der Leyen visits Kyiv later today and president Zelensky will be speaking to the French parliament later today.
The EURUSD rebounded from 1.0850, a monthly low gaining +0.06% as the Dollar index retreats from a 2-year high. The EURUSD soar to 1.0892 during the European session although upside gains remain challenged by 1.0900 psychological resistance. A break above 1.0900 could renew bullish interest while a failure to break that area will continue to underpin EURUSD selling pressure as war risk sentiment lingers on.
The GBPCAD dropped -0.21% after a 2-day corrective pattern from 1.6300 near-term support. Investors eye the Canadian employment report for March ahead of the BoC interest rate hike. A possible retest of 1.6550 area although a failure to hold above 1.6300 may reinforce selling pressure to 1.6200, September 2019 lows.
The USDJPY was mildly up by +0.12% as bulls’ momentum recedes due to a softer dollar. The pair was trading at 124.00 and a break above that area may give room for upside momentum towards 125.00, a 7-year high. The USDJPY has been boosted by policy divergence between BoJ and Fed, although BoJ could intervene if the JPY continues to tumble.
European equities opened higher as investors tolerate some degree of risk ahead of the French presidential elections. The DAX was up +1.16% at 14320, while the CAC40 gained by +0.35%, with gains capped by 6600 near-term resistance. The FTSE was lagging behind with 0.10% gains as bulls attempt the 7700.00 resistance.
US futures markets rebounded from weekly lows as Fed hawkish sentiments fade. The S&P500 soared by +0.38% from 4450, 2-week support, and a possible target at 4500.00. Nasdaq futures were up +0.36% and bulls face a 14750.00 barrier after rebounding from 14400.00 support. The Dow Jones futures index extended gains by +0.40% after finding near-term support at 34185.00. A break above 34800 may give room for further upside towards 35354.00
In commodities, Oil continues to tumble on Friday as demand recedes. USWTI dropped by -1.00% from 97.75 high and bears could trade lower to $92.00/barrel. Brent slumped by -1.28% and the next level to watch out for is the 96.99 support.
The benchmark US10-year yield extended gains by +0.79% slightly below 2.80%, January 2019 high reinforcing investor sentiment of pricing a more aggressive policy cycle.