Risk sentiment tumbles as Russia invades Ukraine

Gold => The commodity rises towards a yearly high
Alibaba => The stock falls to a 3-week low
NZDUSD => The kiwi falls away from 0.68

Gold jumps on safe haven demand

Gold is surging higher to $1950 as Russia invades Ukraine.

News of attacks on Kiev, Ukraine’s capital sparked risk off trade, boosting demand for safe havens such as Gold and the Japanese yen, whilst hurting demand for riskier assets such as stocks. Fears of all out war in Europe and how the West will sanction Russia and the implication of those sanctions on the global economy are driving safe haven flows.

Today geopolitics will be the main driver for Gold, headlines from eastern Europe will be monitored closely. US GDP data, jobless claims and Fed speakers are likely to take a back seat today.

U.S. Q4 GDP

U.S. Jobless claims

Expected: 7% (0.1%)

Expected: 235k (10k)

Previous: 6.9%

Previous: 245k

gold chartWhere next for Gold?

Gold has been trading within an ascending channel on the 4-hour chart.

Today’s jump higher has seen the price break above the upper band of the channel as it heads towards $1950 round number and $1959 the high from January 2021. The RSI has tipped into overbought territory so some consolidation or even a move lower could be on the cards. Support can be seen at $1933 the upper band of the channel, ahead of $1914 the February 22 high.

Alibaba Q3 earnings preview

Alibaba is due to report Q3 earnings today ahead of the market open.

The earnings come amid macroeconomic headwinds and a broad sell off in the tech sector, the stock itself trades down 54% over the past 12 months. The e-commerce giant cut its full year forecast back in November, since then covid restrictions and slower consumer spending could have hurt the key holiday quarter.

Margins could also come under pressure due to international expansion and spending on logistics. Expectations are for EPS OF $2.54 on revenue of $38.68 billion compared to $3.35 on revenue of $33.66 billion. For full year, ending May earnings are expected to have declined 17.6% YoY to $8.26 and full year revenue is set to rise 21.9% to $134.98.

NZD/USD drops as Russia invades, NZ retail sales due

The New Zealand dollar, also known as the kiwi, was the best performing currency yesterday, up 0.6%, following the RBNZ’s 25 basis points interest rate rise and the more hawkish path projected for rate hikes this year, to a peak of 3.5%, up from 2.6%.

Risk appetite has since turned southwards following news that Russian is invading Ukraine, hurting demand for the riskier kiwi whist boosting the safe haven U.S. dollar. USDNZD is falling sharply lower away from 0.68 as geopolitical fears rise. In addition to geopolitical headlines and US GDP & Federal Reserve speakers, New Zealand retail sales and the trade balance will be in focus.

NZ Retail Sales QoQ Q4 Expected: -2.2% (5.9%) Previous: -8.1%

 

Support for the pair can be seen at 0.6703 (daily low) and 0.6689 (February 22 low)

Resistance can be found at 0.6800 (round number) and 0.6860 (December high)

 


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