Biden – Putin agree to meet, lifting risk sentiment

Biden – Putin agree to meet, lifting risk sentiment

DAX => The index rises from weekly low

Gold => The commodity falls below 1900

EUR/GBP => The pair rises from 2-week low

DAX rebounds cautiously

The DAX fell 2.5% across the previous week, in risk off trade, as fears that Russia could invade Ukraine grew. Russia has continued to amass troops on the Ukraine border despite saying that it was withdrawing some troops. Over the weekend Russian drills continued. 

French President Macron proposed a Putin- Biden summit which both parties agreed to in principle, boosting risk sentiment and lifting stocks at the start of the week.
The German economic calendar sees the release of German producer prices and business activity data, which is expected improve in February, as Omicron cases and restrictions eased.

German PPI YoY

Ger. Composite PMI

Expected 1.5% MoM (3.5%)

Expected: 54.3 (0.5)

Previous: 5%

Previous: 53.8

Biden – Putin agree to meet, lifting risk sentiment chartWhere next for DAX?

The DAX dropped to a weekly low of 14908 before buyers re-entered the market and pushed the price higher, back over support turned resistance at 15000.

The bigger picture outlook is still bearish as the DAX trades below the multi-month falling trend line, & below the 50& 100 sma. The 50 sma has also crossed below he 100 in a bearish signal. Immediate support is seen at 15000, ahead of 14900 and 14800 which is a major support – any break below here would be significant.

On the upside a move over 15500 could expose the 50 & 100 sma at 15650 but a good amount of momentum is needed to get there.

Gold falls from 8-month high

Gold rose last week, marking the second straight week that it booked gains of over 2%.

The precious metal was in demand as risk aversion dominated amid fears of a Russian invasion rose substantially. In addition to deteriorating risk sentiment, a less hawkish than expected Federal Reserve also helped gold hit 1908 a fresh 8 month high.

Today, the precious metal is falling back toward 1890 amid cautious optimism that the Russia, Ukraine conflict can still be resolved diplomatically. The US is closed for a public holiday, so there is no US data. Russia headlines will continue to drive the metal.

EUR/GBP rises as Russia concerns ease

The euro fell 0.5% lower against the pound last week, after a series of stronger than forecast UK data prints and as Russia concerns grew.

The UK jobs market recovery continued, inflation rose to a fresh 30-year high and retail sales showed that consumers spent hard in January, despite surging inflation. The data fuelled expectations that the BoE could raise interest rates again soon, after raising rates in December and February.

Meanwhile, the euro was pressurised as Russia, Ukraine tensions rose. Today, the pair is rising as Russia appears to step back from the brink of war by agreeing a meeting with US President Biden.

PMI data from both the UK and the eurozone will also be in focus. Business activity is both regions are expected to improve. Should one show a larger recovery than the other, this could boost the currency.

UK retail sales MoM Jan

UK Composite PMI

EZ Composite PMI

Expected: 1% (4.7%)

Expected: 55 (0.8)

Expected: 52.7 (0.4)

Previous: -3.7%

Previous: 54.2

Previous: 52.3

 

Support can be found at 0.83 (January low) and 0.8280 (October ’20 low).

Resistance for the pair can be seen at 0.8390 (50 sma) and 0.8440 (100 sma).

 


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