Daily Market Outlook, March 8, 2022

Daily Market Outlook, March 8, 2022 Overnight Headlines Morgan Stanley Back Cautious Fed Hike As Inflation Fuelled Russia Strikes Civilian Targets As Talks Make Little Progress Russia Warn Of $300 Per Oil Barrel, Cut To EU Gas Supplies Key US Lawmakers Strike Agreement To Ban Russian Crude US Congress Nears Deal To Aid Ukraine, Fund Government Biden To Sign Crypto Order, Firms Face Sanctions Pressure Iran Negotiator Leaves Vienna As Nuclear Talks Hit Standstill EU Aim Cut Russia Gas Dependence By Near 80% This Year UK Back Plan To Harden Sanctions Powers, Moves To Lords UK Face Biggest Income Squeeze Since 1970s Over Ukraine JPMorgan Boots Russian Debt Widely Tracked Bond Indices OPEC's Barkindo: No Control Over Events Roiling Oil MarketThe Day Ahead Asian stock markets are down sharply this morning as the global slide in equities continues. The Brent crude oil price is hovering close to $127bbl, around 25% higher than a week ago, and gas prices on some measures are around 80% higher. Reports indicate that US lawmakers have reached the outline of a deal to ban imports of Russian oil and are calling on allies to follow suit. The British Retail Consortium’s measure of sales showed 6.7% annual sales in February down from 11.9% in January. Annual comparisons were flattered by last year’s lockdown measures, but reports suggest that the figures point to a decline in monthly volumes. German industrial production rose by a higher-then-expected 2.7% in January. There seems to be nothing in today’s data calendar that is likely to distract market attention away from developments in Ukraine. The primary focus right now is probably on the very sharp further rise in energy prices seen in recent days. The big question is whether central banks will primarily see this as a further indication of inflationary pressures that needs to be responded to with tighter monetary policy or as an escalation of the downside risks for economic growth. Policymakers at the US Federal Reserve and the European Central Bank are both in their blackout periods ahead of their latest monetary policy updates and that will also be true for the Bank of England after today. Therefore we will not get an immediate reaction to recent developments from any of them. Today’s Eurozone Q4 2021 GDP release is an update. An upward revision to German growth suggests that the outturn for the Eurozone will also be revised up to 0.4% from the original 0.3% estimate. Nevertheless, that still leaves the pace well below that in the previous two quarters. The easing of Omicron restrictions should provide a support in Q1 2022 but after that the outlook currently looks uncertain. In the US, the NFIB small business optimism index for February will provide an update on how that sector is being impacted by supply restrictions. Already released results for some components painted a mixed picture of the labour market in February. On the one hand employers are still finding vacancies hard to fill. However, both hiring plans and plans for wage increases were both scaled back. The second reading for Japanese Q4 GDP is expected to be revised up modestly due to a bigger boost from private sector investment. Meanwhile, Chinese inflation data, to be released early Wednesday, are forecast to show annual CPI inflation still running at a low level. However, producer price inflation is more elevated, and it could be given a further lift in coming months by the recent rise in commodity prices. G10 FX Options Expiries for 10AM New York Cut(Hedging effect can often draw spot toward strikes pre expiry if nearby (P) Puts (C) Calls ) USDJPY - 116.60/70 459m. 114.00 774m. EURUSD - 1.1550/60 994m. 1.1130/40 546m. 1.1100 730m. 1.1010/20 536m. 1.0990/1.1000 1.94bn (1.75bn P). GBPUSD - 1.3350/60 550m. AUDUSD - 0.7350/60 632m. 0.7260/70 740m. 0.7240/50 677m. NZDUSD - 0.6650 683m. USDCAD - 1.2600 410m. EURGBP - 0.8510 434m. 0.8430 437m. USDCHF - 0.9340 400m. 0.9300 400m. 0.9210/20 860m. EURSEK - 10.39 580m. USDCNH - 6.45 400m. 6.38 705m. 6.35 460m. 6.30 470m. 6.29 400m.Technical & Trade ViewsEURUSD Bias: Bearish below 1.15 Bullish above Modest recovery continues in Asia as shorts pare back EUR/USD opened -0.73% at 1.0853 - but off the intraday low at 1.0806 Asian markets steadied and EUR/USD edged higher after trading 1.0849 early EUR/USD traded as high as 1.0885 and was around 1.0875 into the afternoon Pair was oversold and modest rebound due mostly to short-covering It is still trending lower with 5, 10 & 21-day MAs in a bearish alignment Only a break above 10-day MA at 1.1095 would suggest waning momentum Resistance is at Monday's 1.0967 high as break ends 11 days of lower highs Bids are tipped ahead or 1.0800 and a break below targets 1.0636GBPUSD Bias: Bearish below 1.36 Bullish above. Overextended, but trend is strong, risk appetite key +0.1%, towards the top of a 1.3102-1.3119 range with steady flow UK consumer spending rises sharply in February... Spending rise on end of lockdowns - inflation to hit hard in coming months Charts; momentum studies, 5 10 & 21 daily and weekly moving averages fall 21 day Bollinger bands expand - signals suggest downtrend remains strong Trades at levels unseen since Dec 2020, targets 1.2831, 50% 2020-2021 climb Close above the falling 1.3327 10 day moving average would end downside bias Oversold short term - suggests selling strength rather than breaksUSDJPY Bias: Bullish above 114.50 Bearish below USD/JPY still heavy above 115.50, more offers to 116 USD/JPY better bid in late Tokyo trading, to 115.54 fresh high of day Low very early in Asia 115.24, bids trail down from area Japanese importers especially good buyers on dips Word is some specs also covering shorts into today's Tokyo close Exporters still topside but in no very large way Reports of some players buying 116 USD calls on bank recommendations Ukraine, risk-off mood to help cap upside despite perkier US yields Nikkei closes -1.7% on day at 24,790.95, AXJ, E-Minis all in redAUDUSD Bias: Bullish above .7100 Bearish below AUD/USD looks precarious after reversing opening rally AUD/USD slides below close to 0.7290 from day-high 0.7347 Turnaround tentatively breaks stride with higher oil prices WTI came off 1.0% early Tues on OPEC meet, but last up 1.7% OPEC met with US shale execs but no help forthcoming AUD/USD falls back under 200 DMA - capping at 0.7320 Has also dropped below 61.8% Fibo resistance 0.7340 If 0.7292 base of Bollinger uptrend channel fails, downside exposed

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