After the start of a week full of stress following the massive Western sanctions on Russia, the situation has changed almost completely with the latest news of the Russian-Ukrainian conflict helping to lift the mood of the market again. First there was the news that Ukraine will not continue the pressure to apply to join NATO, which gave hope that the conflict is starting to move on a better path, then this was followed by an official statement from Ukraine that they were ready for a more diplomatic solution. This clearly revived investor appetite, and risk on sentiment returned.
This caused instruments badly affected by geo-political issues to go back through the retracement process. USOIL, which had recorded its highest price since 2008 at $126, declined again and is now trading at $114. The next target is $108.50 if conditions continue to recover. Meanwhile, UKOIL also depreciated after hitting a record high of $131; it is now trading at $115. The next target is at the 200-period SMA (H1) level at $110 if the Bears remain in control of the market. This is clearly providing relief to investors who fear the continued rise in oil prices will put pressure on world inflation and in turn stunt post-Covid-19 economic growth.
The same situation can also be seen in the instrument XAUUSD, better known as Gold. After Gold hit a $2070 high on Tuesday, slightly lower than its 2020 high of $2075, it slipped back as low as $1975 on Wednesday and is now up slightly trading at the psychological level of $2000. This leaves room for a lower decline to around $1950 if the Russia-Ukraine situation continues to recover and calm down. If things get tense again, it’s likely $2075 will be tested and broken.
In addition, the key crypto instrument BTCUSD recorded a positive recovery after reaching the March low of $37,107 on March 7. BTC rebounded and is now trading above the $42,000 level with the psychological level of $45,000 becoming the center of attention. This was backed up by an inadvertently published Statement (published on Tuesday night), citing that US Treasury Secretary Janet Yellen revealed that President Joe Biden will issue executive directives to take a constructive approach in regulating the digital assets industry. Yellen also quoted that “Under the executive order, the Treasury will work with inter-agency colleagues to produce reports on the future of money and payment systems.”. This directly helped increase investor confidence and demand in cryptocurrencies.
There are still two days left before the trading week ends on Friday, with a thousand and one possibilities that could happen in the market continuing to provide volatility and an interesting dimension to trading this week. It should be noted that the ECB will report the outcome of its monetary policy meeting on today.
Recommended Content
Editors’ Picks
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.