What you need to take care of on Wednesday, March 16:
The dollar started the day on the back foot but managed to recover the ground lost during US trading hours. The EUR/USD pair is trading at around 1.0940, while GBP/USD changes hands at 1.3035.
President Vladimir Putin said Kyiv is not serious about finding a mutually acceptable solution. The news cooled hopes for a diplomatic agreement. Earlier in the day, Ukraine President Volodymyr Zelenskyy’s adviser said they were confident they could reach a diplomatic solution in the next few weeks.
Beyond sanctions, Russia submitted a request to leave the Council of Europe after being suspended on February 25. Additionally, Moscow announced a series of sanctions on US authorities, including President Joe Biden and banned Canadian Prime Minister Justin Trudeau from entering the country.
European Central Bank President Christine Lagarde spoke at the WELT Economic Summit and noted that the uncertainty surrounding the economic outlook had increased dramatically, as the war would reduce growth and create inflation due to increasing energy and commodities costs. She also said that inflation is still forecast to decline gradually and settle near the central bank’s 2% target by 2024.
China announced record coronavirus contagions and put over 17 million people into strict lockdown, dampening economic growth expectations. Stocks and commodities were on the back foot amid concerns related to decreased demand throughout the first half of the day.
Gold bottomed at $1,907.04 a troy ounce, bouncing modestly ahead of the close to settle around $1,920 a troy ounce. Crude oil prices extended their latest decline, and WTI ended the day at $96.50 a barrel.
The AUD/USD pair spent the day inside a tight range, ending little changed sub-0.7200. The Canadian dollar benefited from falling oil prices and soaring commodities, resulting in USD/CAD falling to 1.2766.
Wall Street posted substantial gains despite mounting concerns related to the Russia-Ukraine crisis. US government bond yields were up, with the yield on the 10-year Treasury note reaching a multi-week high of 2.169% and finishing the day nearby.
The market’s focus shifts now to the Federal Reserve, as the US central bank will announce its monetary policy decision on Wednesday and is expected to trigger a rate hike of at least 25 bps.
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EUR/USD remains near 1.0400 post-US PCE
The US Dollar’s inconclusive price action allows some recovery in EUR/USD, keeping the pair around the 1.0400 region following the release of PCE inflation data for the month of January.
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Gold slumps to fresh multi-week lows below $2,840
Gold stays under bearish pressure and trades at its lowest level in three weeks below $2,840. The uncertainty surrounding the Trump administration's trade policy and month-end flows seem to be weighing on XAU/USD, which remains on track to snap an eight-week winning streak.
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GBP/USD clings to gains just above 1.2600 after PCE data
GBP/USD remains positively oriented in the 1.2600 neighbourhood as the Greenback is navigating a vacillating range following the PCE inflation release.
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The week ahead – US Payrolls, ECB rate meeting, ITV results – W/c 3rd March
Having seen the Federal Reserve keep rates on hold last month the US labour market continues to show remarkable resilience, despite seeing a slowdown in hiring in January, after a blow out December number.
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Weekly focus – Tariff fears are back on the agenda
While the timing of the EU measures remains still uncertain, Trump surprised markets on Thursday by signalling that the 25% tariffs on Canada and Mexico will be enacted when the one-month delay runs out next Tuesday.
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