Fundamental analysis GBPUSD, EURUSD, NZDUSD, AUDUSD, USDCAD, XAUUSD, Brent, WTI for 01.03.2022

On Tuesday, volatility in the Forex market has decreased. Investors' attention is still turned to the situation in Eastern Europe. At the same time, the speech of the Fed head before the Congress, which is scheduled for Wednesday, may have a strong impact on the market dynamics. The fact that the Fed will raise rates in March is not in doubt, the key question is the size of the first increase. The conflict in Ukraine will not make the Fed abandon its plans, as the inflation rate has reached its highest level in 40 years. In this regard, it is important to hear the assessment of the economic consequences of the conflict from the head of the U.S. regulator, as higher oil prices put additional price pressure on the U.S. economy. Investizo believes that Jerome Powell will focus on high prices and the U.S. dollar will strengthen, as this scenario requires maintaining the pace of monetary policy tightening. However, if Powell expresses concern about possible economic turmoil amid Russia's military special operation, government bond yields could fall along with the U.S. currency. Jerome Powell will probably not make any predictions and will say that it is too early to assess the consequences of the hot phase of the Ukrainian crisis.

Yesterday EUR/USD generally reacted positively to the negotiations between Russia and Ukraine. At the same time, we should not forget about the close economic ties between the Russian Federation and the European Union, especially in the energy sector. Taking into consideration the special operation of the Russian Federation, the inflationary risks, and the expectations of strong statistics of the labor market in the USA, the market participants have a right to expect the fall of the pair and the renewal of the local lows. It is also worth noting the slowdown in manufacturing activity in Germany, France, and the Eurozone as a whole.
GBP/USD is showing a minimal decline despite the strong business activity and mortgage lending statistics. The UK Business Activity Index rose to 58 basis points in February, better than forecast. The dynamic indicates that the economy is recovering from the pandemic. Mortgage lending rose on expectations of higher inflation and rising rates, while consumer lending fell sharply in January.

AUD/USD has slightly strengthened following a meeting of the Reserve Bank of Australia. The regulator has expectedly kept its key rate. At the same time, the head of the RBA said that inflation was less than the central bank forecast, indicating a positive trend in the economy. The NZD/USD also moved into positive territory on Tuesday. The US dollar remains the main safe-haven asset for diversifying risks, and currencies with high ratios are not in demand among market participants. Investizo recommends considering the possibility of buying above the level of 0.6815. USD/CAD shows mixed dynamics today. Canadian GDP data will be released today and tomorrow the pair will be heavily influenced by the Bank of Canada's monetary policy meeting. Before the troops in Ukraine, the chances of a 50 basis points rate hike were estimated at 70%, at the moment it is 50%. If the Canadian central bank limits itself to 25 basis points, the pair will resume its strong growth.

Brent and WTI are both trading above $100/bbl. The European market is ready to look for ways to reject Russian oil products because of the military invasion, which will increase the deficit in the market, amid growing demand.

XAU/USD is holding above the 1900.00 level. Gold, as well as the US dollar, are the major safe investment assets. The metals market is highly dependent not only on the geopolitical factor but also on the results of Jerome Powell's speech to Congress.