Russia – Ukraine Concerns Remain, UK Jobs Data Due
EUR/GBP => The precious holds above 0.8350
USD/CAD => The pair rises towards 1.2750
AUD/USD => The Aussie holds above 0.71
EUR/GBP rises ahead of busy economic calendar
EUR/GBP lost 0.14% yesterday, marking its third straight day of losses. The pair hit a weekly low after ECB President Christine Lagarde stuck with her more dovish tone, saying that the ECB will act when the time is right and any moves to tighten monetary policy will be gradual. This is in contrast to the BoE which has already raised interest rates twice and could do so again in the coming months. Today, EUR/GBP is rising ahead of UK jobs data. Expectations are for the labour market recovery to continue but at a slower pace in the period, given the impact of Omicron. Wage growth is forecast to slow which should mean that price pressures start to ease. The euro will look towards the release of the Eurozone’s Q4 GDP, although this is a second revision and so often provokes less of a reaction in the market. German ZEW sentiment is expected to show morale improving and could lift the euro.
| UK Unemployment
Wage growth |
Expected: 4.1% (0)
Expected: 3.9% (0.3%) |
Previous: 4.1%
Previous:4.2% |
What’s next for EUR/GBP?
After running into resistance just beyond the 100 sma, EUR/GBP fell lower, breaking through the 50 sma, dropping to a low of 0.8350. The bearish crossover which appears to be forming on the MACD supports further downside. Sellers will need to take out support at 0.8340 before looking to 0.83 the January 31 low. Beyond here 0.8283 the year-to-date low comes into play. On the upside, it would take a move above 0.8410 to negate the near-term downtrend
USD/CAD Looks to Oil Prices, US PPI
USD/CAD is rising, recouping losses from the previous session after the CAD traced oil prices higher. The price of oil, Canada’s main export rallied amid fears of a Russian invasion. However, tension has eased slightly, as Russia appears willing to take a final shot at diplomacy, and oil prices have slipped down from a fresh 7 year high of $95.17 per barrel, which is pulling on the loonie. Should tension rise, oil could quickly rally to $100 boosting the CAD. That said, it is worth keeping in mind that the US dollar is not only a safe haven but is also strengthening the prospect of more rate hikes this year. Today investors will continue to watch Russia – Ukraine developments closely. Crude oil API stockpile data could influence oil prices, whilst the US dollar will watch PPI wholesale inflation data.
| US PPI YoY Jan | Expected: 9.1% (0.6%) | Previous: 9.7% |
Support can be found at 1.28 (January 28 high) and 92.00 (2022 high)
Resistance for the pair can be seen at 1.27 (50 sma) and 1.2645 (early February low)
AUD/USD Remains Above 0.71 After RBA Minutes
AUD/USD is heading lower for a second straight day on Tuesday, after losing 0.14% yesterday. The riskier AUD came under pressure amid fears of a war in eastern Europe after the US said that Russia could invade Ukraine this week. Risk sentiment remains shaky which is weighing on the Aussie. However, the minutes from the latest RBA meeting are offering support to the currency. The minutes revealed that inflation had risen faster than policymakers were expecting a rise in inflation, which takes the central bank closer to raising interest rates. Although, policymakers added that they are yet to be convinced that the high inflation levels will be sustained.
Support can be found at 0.71 (round number) and 0.7060 (50 sma)
Resistance for the pair can be seen at 0.7170 (50 sma) and 0.72 (round number)
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