Daily Market Outlook, February 24, 2022 Overnight Headlines Russia Attacks Targets Across Ukraine After Putin Orders Strikes NATO: Very Much Looks Like Russian Invasion Of Ukraine Has Begun BoJ Won’t Roll Back Stimulus Soon But Watching Rising Costs Australia Business Investment Bounces In Q4, Outlook Upgraded Fed’s Daly: Need At Least Four Rate Hikes This Year, Probably More ECB’S Stournaras: APP Should Continue At Least Until Year-End Australia, NZ Dlrs Caught In Risk Fallout From Ukraine Crisis Ten-Year JGB Yields Hit 3-Week Low As Russian Forces Invade Ukraine Oil Surges Above $100 For First Time Since 2014 As Russia Attacks Ukraine US Eyes Strategic Oil Reserves Release As Prices Rise On Ukraine Fresh Losses Hit Asia Stocks As Putin Orders Military OperationThe Day Ahead Stock markets and Treasury yields fell overnight while oil prices, gold and safe-haven currencies rose after Russia launched military attacks across Ukraine in a major escalation of the crisis. Ukraine has declared martial law and President Biden said the US and its allies will apply ‘severe’ sanctions in response, which are expected to include further restrictions on Russian banks and export controls on key technologies. The focus remains on Russia-Ukraine tensions, where overnight events have ended hopes of a diplomatic solution to the crisis. The impact on global energy prices and economic confidence could further intensify difficult policy trade-offs for central banks. There are several central bank speakers making appearances today, including at a Bank of England annual conference on the monetary toolkit. There is a limited slate of data releases. Governor Bailey will kick off the BoE’s two-day conference on the monetary toolkit with a welcome address. The conference ‘will bring together academics, practitioners and policymakers to discuss monetary policy instruments and the new strategy questions that central banks are facing’. Notably, BoE Deputy Governor Broadbent will chair a panel from 4pm on the unwinding of QE. Panellists include the Fed’s Daly and the ECB’s Schnabel. There will also be focus on Fed speakers in separate events, include Barkin and Mester who will talk about the economic outlook. Data wise, the UK CBI distributive trades survey will provide an early look at retail activity in February. Last month’s survey showed a rise in the net balance for the volume of sales. Perhaps more interesting is the overnight release of UK GfK consumer confidence which we see falling to -21 from -19. In the US, Q4 GDP is expected to be revised marginally to 7.0% (annualised quarterly growth) from 6.9%. Weekly initial jobless claims have been quite volatile recently. Expect initial claims to fall to 220k from 248k, supported by a waning Omicron impact. Asian stock markets are a sea of red, with the Nikkei down nearly 2% and the Hang Seng more than 3% lower. European equity futures are down as much as 5% (German DAX index). Brent crude oil increased above $100 a barrel for the first time since 2014, while US 10-year Treasury yields fell below 1.90% and gold moved closer to $2000 an ounceG10 FX Options Expiries for 10AM New York Cut(Hedging effect can often draw spot toward strikes pre expiry if nearby (P) Puts (C) Calls ) EUR/USD: 1.1200-10 (1.65BLN), 1.1225 (649M) 1.1245-55 (1.6BLN), 1.1260-70 (782M)1.1275-80 (620M), 1.1285-00 (4.38BLN), 1.1315-25 (1.28BLN) 1.1330-40 (1.2BLN), 1.1345-50 (690M), 1.1375-85 (980M) 1.1395-1.1410 (647M), 1.1425-35 (1.04BLN), 1.1455-60 (390M) USD/JPY: 113.45-55 (915M), 113.65-75 (940M) 113.90-00 (875M), 114.30 (388M), 115.00 (375M) 115.25 (570M), 116.00 (441M), 116.15-20 (510M 116.40 (1.39BLN) EUR/GBP: 0.8350-55 (520M). USD/CHF: 0.9300-10 (985M) USD/CAD: 1.2605-50 (975M), 1.2850-55 (395M) AUD/USD: 0.7125-30 (1.04BLN), 0.7140-50 (575M) 0.7225-35 (3.2BLN), 0.7250 (388M), 0.7270 (483M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.15 Bullish above Breaks key support as Ukraine crisis deepens EUR/USD opened -.20% at 1.1304 after easing in mounting Ukraine crisis After trading at 1.1309 it came under pressure on reports Russia was ready to invade Selling accelerated after Putin authorized military operation in Donbass EUR/USD breaking key support at 61.8 of 1.1122/1.1495 move at 1.1264 Heading into the afternoon it is at session low at 1.1255/60 A clear break below 1.1260 would open up eventual test of trend low @ 1.1122 Market focus is entirely on crisis in Ukraine and whether it escalates Risk assets under heavy pressure with Eminis down over 1.60% on news USD and safe-haven likely to remain bid as crisis unfoldsGBPUSD Bias: Bearish below 1.36 Bullish above. Heavy, as Ukraine fears support the U.S. dollar Off 0.15%, as safe haven USD firmed on Ukraine fears… Risk off – E-mini S&P -1.5%, Brent +1.9%, 10yr UST -8bp 1.9199% 52% of Britons are feeling the cost of living pinch – poll Sterling trades at the base of a 1.3522-1.3553 range – busy on Ukraine news Charts; momentum studies, 5, 10 & 21 day moving averages conflict 21 day Bolli bands contract – neutral setup suggests a range 1.3643/61 Feb high, 76.4% 2022 fall and upper 21 day Bolli strong resistance 1.3467, 61.8% January-February bounce a viable range baseUSDJPY Bias: Bullish above 114.50 Bearish below USD/JPY pulled down by JPY cross sales, Ukraine still The Russia-Ukraine situation continues to escalate, market risk off Risk off sentiment pushing EUR/JPY, JPY crosses lower, weighs on USD/JPY USD/JPY 114.74-115.15 choppy, holding precarious above key supports Ascending 55-DMA 114.77, daily Ichi cloud 114.44-70, 100-DMA 114.35 below Upside seen capped for now ahead of descending 200-HMA at 115.19 Many Japanese players side-lined ahead of US NFP release tomorrow US backing away from highs yesterday, Treasury 10s @1.925%, high o/n 2.0% EUR/JPY 129.06-130.03, looking to break lower still, 129.36 low yesterday GBP/JPY 155.25-88, AUD/JPY 82.52-83.17, some AUD/JPY demand on dips Nikkei -1.1% @26,161, E-Minis -1.6% @4156, AXJ mostly off large tooAUDUSD Bias: Bearish below 0.7250 Bullish above AUD/USD hammered by onslaught of war in Ukraine AUD/USD dives to 0.7167 from open 0.7233, down 0.9% vs close Melts throughsupport floor 0.7194 May reach Fibo support at 0.7126 before the day is over Russia launches full-scale invasion of Ukraine Mass risk-off across various assets triggered as oil spikes UST yields slide, US stock futures dunked 2.4%, crypto slammed
Source: Tickmill
