Risk-Off Trade as Ukraine Fears Rise

WTI Oil => The commodity falls towards $90

S&P 500 => The index falls towards 4450

AUD/USD => The Aussie falls below 0.72

Oil Pares Losses on Reports of Attacks on Russian Backed Rebels 

Oil prices rallied to 95.00 yesterday before falling sharply lower. The selloff extended a move lower seen on Tuesday when oil dropped 3.5% and puts oil on track for a 0.6% weekly decline – its first weekly decline after eight straight weeks of gains.
Oil prices fell, firstly after Russia said that it was pulling troops away from the Ukraine border, easing tension, and secondly, on news of progress in the US, Iran talks to revive the Iran nuclear deal.

An agreement is reportedly very close, and this could see sanctions on Iranian oil lifted, bringing more oil to the market. Today oil prices are recouping some of those losses on reports of fighting in Ukraine.
Russian-backed rebels in Ukraine have accused the Ukraine government of firing on them. Eastern European tensions will remain a key driver today.

What’s next for WTI oil?

Oil is struggling to extend losses after attempting to break below the rising channel within which it has traded since the end of last year.
Whilst the bearish crossover on the MACD is keeping sellers hopeful, a break below support at 88.50 is needed for further downside and to bring 85.10 the October high into focus.

Meanwhile, buyers are focusing on the bullish crossover of the 59 sma above the 100 sma. A move above 92.80, the high February 4, could open the door to 94.80 and fresh 7 year highs.

S&P Pares Fed-Inspired Gains as Geopolitical Fears Rise

The S&P 500, managed to close the previous session higher after mixed headlines from eastern Europe, strong US retail sales, and a less hawkish than expected Fed. US retail sales jumped in January to its highest level since May last year, as consumers kept spending despite Omicron and rising prices.

The minutes from the latest Fed meeting also boosted sentiment as policymakers supported a more measured approach to raising interest rates, cooling expectations of a 50-basis point interest rate rise in March.

Today the S&P500 futures are heading lower in risk-off trade, on reports of firing in Ukraine, raising fears again over Russian invasion. Speeches from Fed Bullard and Mester are also due.

AUD/USD Falls in Risk-Off Trade

AUD/USD is coming under pressure, falling back from a weekly high of 0.72 reached overnight as risk sentiment declined. Reports that Ukrainian armed forces are firing grenades have sparked risk aversion in the global market, hurting demand for the risker Aussie.

Fears of an imminent attack by Russia have been revived, despite Russia saying that they were pulling troops away from the border earlier in the week. NATO has insisted that there have been no signs of escalation at the border.

Losses in the Aussie are being limited by encouraging domestic jobs data which showed that the number of employed people increased by 12.9k in January. Looking ahead, Russia, Ukraine developments, U.S. jobless claims, and Fed speakers are expected to drive the pair.

Aus. Unemployment US Jobless claims

Actual: 4.2% (0) Expected: 219k (4k)

Previous: 4.2% Previous: 223k

Support can be found at 0.7140 (100 sma) and 0.71(round number).

Resistance for the pair can be seen at 0.7215 (round number) and 0.7250 (February high).

 

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