Risk sentiment tumbles as Russia, Ukraine conflict deepens
EUR/CHF =>The pair falls over 1%
BP (US) => The stock is set to fall below $30
AUD/JPY => The pair falls towards 83.00
EUR/CHF tumbles in risk off trades
Risk off trade is set to dominate as the new week begins boosting the safe haven Swiss Franc, whilst pulling the euro lower.
Russia, Ukraine headlines continue to drive the markets. Over the weekend, sanctions against Russia were ramped up and Russia intensified its attack on Ukraine.
Russia is now excluded from the Swift international money transfer system, needed for international financial transactions, and restrictive measures have been placed on the Bank of Russia preventing it from deploying international reserves to undermine sanctions. Russia has responded by putting its nuclear forces on standby, a clear sign of the extent of the escalation. There is no eurozone economic data due today, a speech by ECB’s Christine Lagarde will be watched. Swiss GDP data is due.
| Swiss GDP Q4 YoY | Expected: 3.7% (0.4%) | Previous: 4.1% |
Where next for EUR/CHF?
EUR/CHF trades down over 1%, the pair trades below a steep falling trendline dating back to early February and below its 50 & 100 sma in a bearish chart. The RSI points to further downside whilst it remains out of oversold territory.
Immediate support can be seen at 1.03 the January low ahead of 1.0280 the 2022 low. On the upside, buyers will need to retake the 50 sma at 1.0430 in order to expose the 100 sma at 1.0484, above here the buyers could gain momentum.
BP quits Russia
BP announced over the weekend that it will end its stake in Rosneft, the Russian oil giant, where it is the second largest shareholder after the Russian government.
BP will sell out of its entire 19.75% stake, following Russia’s attack on Ukraine. Which has made the oil giant re-think its involvement in Russia. BP is set to take a hit of $25 billion in its Q1 results but has not said how it intends to exit the stake. Prior to the announcement BP was trading at its lowest level since January 5th after hitting a post pandemic high in early February.
AUD/JPY falls ahead of RBA decision
AUD/JPY managed to rise 1.3% across last week, its fourth straight week of gains. The riskier aussie rose against the safe haven Japanese yen, despite Russian invading Ukraine.
Whilst risk sentiment took a big hit mid-week on the invasion, by Friday the market mood has improved considerably. Heading into the new week, the pair falling lower as risk aversion once again dominates overshadowing Australian retail sales. Sales rose in January as Omicron cases slowed, and the economy started to recover. The RBA is due to make its interest decision later, whilst the Australian central bank is not expected to hike rates, it could adopt a more hawkish stance after ending QE last month.
| Aus. Retail sales | Expected: 1.8% (6.2%) | Previous: -4.4% |
Support for the pair can be seen at 82.55 (50 sma) and 0.82 (last week’s low)
Resistance can be found at 83.73 (falling trendline resistance) and 84.00 (February high)
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