Daily Market Outlook, February 25, 2022

Daily Market Outlook, February 25, 2022 Overnight Headlines Russia Bombs Ukrainian Capital City Of Kyiv In The Early Morning Russia ‘Unlikely’ Achieved Military Goals In First Wave Of Invasion World Leaders Divided On Whether To Eject Russia From SWIFT China Refuses To Condemn Russian Attack, Deflects Blame To US PBoC Makes Biggest Weekly Cash Injection Since Jan 2020 CPI In Japan's Capital Perks Up, Ukraine Crisis To Add Pressure New Zealand’s C. Bank Aims To Raise Rates As Quickly As Possible Fed's Waller: 'Strong Case' For 50 Bps March Hike If Data Is Hot UK Consumer Confidence Hits 13Mth Low On Surging Living Costs China's Yuan Set For Third Straight Weekly Gain, Despite Invasion Bitcoin's Equity Correlation Rises As Crisis Whipsaws Crypto Market Oil Prices Surge As Russian Invasion Of Ukraine Rings Supply Alarms Asian Shares Mostly Rise, US Futures Slip; Markets Eye Ukraine RiskThe Day Ahead Stock markets staged some recovery in Asia despite a series of targeted sanctions announced by the West yesterday in response to Russia’s military offensive in Ukraine (reports suggest that forces are near the Ukrainian capital Kyiv). The sanctions include restrictions of exports of high-tech goods, limits on Russia’s access to western capital markets and restrictions on some wealthy individuals with links to the Kremlin. The measures, however, did not extend to cutting Russia from Swift, the global payments system. President Biden indicated that the US will release additional oil reserves as needed to cushion the economic impact. China’s central bank also provided additional liquidity to its banking system, which may have supported market sentiment. The simultaneous impact of higher global energy prices in increasing inflation and reducing economic growth is likely to further complicate the monetary outlook for major central banks. Even before the Russian invasion of Ukraine, UK GfK consumer confidence data released overnight showed a sharp fall to -26 from -19, the lowest since the start of 2021, with households becoming more pessimistic about their finances and the economy. Ahead today, the key economic data release is the US Fed’s preferred inflation measure, the personal consumption expenditure (PCE) deflator, which is expected to show another rise in annual headline inflation in January to over 6%, its highest for almost forty years. That would mirror the rise already seen in the CPI inflation measure to 7.5%. Given the further rise in global oil prices, expect a further increase in annual inflation rates in the coming months. In the Eurozone, the economic sentiment index is forecast to have improved in February, helped by rises in industrial and services confidence. The results, however, will have not captured the impact of Russia’s invasion of Ukraine. Earlier this morning, France released HICP inflation showing a bigger-than-expected rise to 4.1% in February from 3.3%. Next week’s Eurozone flash CPI estimate is forecast to show a rise in annual inflation from January’s 5.1%, with further increases in train especially after the recent surge in European natural gas prices. BoE Chief Economist Huw Pill is scheduled to give closing remarks on the final day of the Bank’s annual conference on the monetary toolkit. ECB President Christine Lagarde is also due to speak after today’s Eurogroup meeting. Asian stock markets mostly recovered some ground, with the Nikkei up nearly 2% and Chinese stocks also higher. UK equity futures are positive. Brent crude oil has fluctuated significantly, peaking above $105 a barrel yesterday before falling below $100. It has risen back above $100 overnightG10 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), 115.0 (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 EUR/USD back from the brink, positive close and interesting low EUR/USD rallied late on Feb 25 rising from 1.1106 low to close 1.1192 Today's range 1.11865-1.1228 Today's 1.11865 low matches the 61.8% retracement of 1.0340-1.2556 rise 1.1186 was the 2021 low Rebound may encourage traders to reestablish longs or add to losing bets The trapped nature of EUR/USD is related to SNB intervention Rebalancing of SNB intervention will weigh on strength If Turkey opts to rebuild reserves, it may also sell EUR/USD Sustained EUR/USD gains remain a low probabilityGBPUSD Bias: Bearish below 1.36 Bullish above. Risk appetite leads – data poses problems for BoE +025%, with the U.S. dollar a touch softer with buoyant Asian stocks Biggest UK consumer confidence drop since start of pandemic UK sees fastest wage rises in sectors reliant on EU workers Combination of falling sentiment and inflationary pressures quandary for BoE Charts; momentum studies, 5, 10 & 21 day moving averages edge lower 21 day Bollinger bands contract - neutral setup has turned negative Targets 1.3166-75 longer term, Dec 2021 low and 38.2% 2020-2021 rise Close above 1.3488 recent range low would end the downside biasUSDJPY Bias: Bullish above 114.50 Bearish below USD/JPY, JPY crosses off some from late New York highs, Ukraine news Risk mood better after Wall Street rise but Russia-Ukraine still weighs Nikkei down from early highs but still +1.4% on day @26,355 USD/JPY 115.62 to 115.18 EBS despite decent Gotobi Tokyo fix demand Still well above 114.41 low in late Asia/early London yesterday Massive option expiries today on 114, total 2.9 bln 114.00-70 Also 115.15-40 total $675 mln, 116.00-10 above total $602 mln US yields also firmer but off overnight highs, Tsy 10s last @1.952%AUDUSD Bias: Bearish below 0.7250 Bullish above AUD/USD whips back up; US inflation data the next cue AUD/USD whips back up to 0.7196 from day low 0.7139 Premature to count on further rise, but potential exists Would also cross over 38.2% Fibo resistance 0.7208 That creates a opening for another test of 100 DMA 0.7239 As Ukraine uncertainty persists, US CPI later might be next cue

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/daily-market-outlook-february-25-2022"
via IFTTT