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Markets experienced a risk aversion sentiment as geopolitical tension takes another turn. President Putin vowed to push war in Ukraine and made a U-turn on a nuclear pact with the US making the geopolitical atmosphere tense. However, there is still good news for investors to be optimistic about in the near term.
German and French private sector activity is growing again while UK’s preliminary PMI data indicated the economy breaking out into an expansionary phase. Traders shift their focus to Canadian inflation reports along with US Housing data.
AUDUSD slumped by -0.38% early Tuesday as the dollar rebounded ahead of the Fed meeting minutes. The RBA meeting minutes failed to lift the Australian dollar although the Central bank sounded more hawkish as they forecast further tightening in the near term. The risk-sensitive Australian dollar gave its Monday gains for the dollar ahead of US Housing data for January and PMI data for February. The pair is currently sitting above 0.6850, a 7-week low and a break of the support could lead to a deeper sell-off towards the 0.6700 level.
EURCAD shed -0.22% in the aftermath of Eurozone PMIs ahead of Canadian inflation data. PMIs in the eurozone showed that business was livelier than anticipated in February although the data failed to uplift the EUR. The data may however limit the currency’s losses against the CAD. Optimism in the German economic sentiment improved in February settling at 28.1 vs the 22.0 expected. During the course of the day, Statistics Canada will be publishing retail sales and CPI figures. Buyers got rejected at the 1.4400 resistance giving sellers an opportunity to revisit 1.4300 and 1.4250 in the short term.
GBPJPY surged by +0.82% as the sterling got a boost from upbeat UK PMI data. The Composite, Manufacturing, and Services PMIs rose to 53.0, 49.2, and 53.3 respectively. The data showed stronger inflation in the country and may cause the BoE to continue monetary tightening to bring inflation down. Moreso, an improvement in business activity indicated that the UK may be avoiding a deeper recession. Earlier in Asian trade, the Japanese Services PMI for February came in at 53.6 beating expectations of 51.5. The pair trades above 1.2100 after establishing an intraday low at 1.1986. A rally above 1.2120 may give bulls some sustained buying.
European stocks slipped as traders digested earnings, Fed meeting minutes. UK100 was down by -0.09% as the 8000 level remains a near-term barrier, while 7950 stands as near-term support. CAC40 plunged by -0.61% towards the 7200 support level, and a bounce above that level could give bulls the 7370 level. DAX lost by -0.52% and critical levels to watch out for are the 15600 resistance and 15250 support level.
US stock futures eased as the dollar got a lift ahead of the Fed minutes. US500 futures extended its plunge by -0.42% drawing bears towards the 4050 support level and a break below that level can trigger selling pressure towards the 4000 level. Upside gains are capped by the 4150 resistance. US100 futures sank by -0.67% to 12200 support; the next key level is 11850. US30 futures dropped by -0.27% despite being rangebound between the 34200 and 33500 levels.
Commodities, crude oil extended rebound modestly although upside gains remain capped by a stronger dollar. The USWTI crude oil stocks were up by +0.19% shading off earlier losses as bulls bounced off the 76.00 level and upside gains were capped by the 80.50 level. Brent Crude oil added +0.12% and key levels are 86.50 resistance and 82.50 near-term support.
