Fundamental analysis GBPUSD, EURUSD, NZDUSD, AUDUSD, USDCAD, XAUUSD, Brent, WTI for 15.02.2022
At the beginning of this week, the main issue for the markets was a possible armed invasion of Ukraine by Russia. The Western media was heating the situation, and Bloomberg, citing an unknown source, called the exact date of the attack as February 15. The information background contributed to the rise in oil prices, as well as the strengthening of gold as a safe asset. At the same time, yesterday the Russian President and Foreign Minister notified the world that they want to solve the problem diplomatically, completely ruling out military intervention. And while the risk of armed conflict remains, the market is less volatile today, with gold and oil losing ground on Tuesday.
The easing of political tensions has shifted investor attention to high interest rates. U.S. inflation has reached its highest level in 40 years. The voting member of the Open Market Committee, Bullard, on Friday advocated aggressive monetary policy tightening. The official noted that such pre-pandemic inflation figures would force the Fed to raise rates immediately, without waiting for another meeting. Moreover, James Bullard advocated a 50 basis points rate hike at the regulator's March meeting.
EUR/USD is trading within a downtrend correction. The desire of ECB officials to tone down their recent hawkish rhetoric weakens the European currency. Eurozone GDP data released today was neutral and ZEW economic sentiment index was positive for institutional investors, however, it was less than expected. The pair is holding above the level of 1.1300, but the fundamental data points to a fall of the instrument.
GBP/USD is showing minimal growth thanks to positive statistics on the labor market in the UK. Wages rose by 4.3% in December; however such dynamics will increase the price pressure and in this case, the response of the Bank of England is important. It is also worth adding that the number of jobless claims in January decreased by 31.9 thousand. Thus, macroeconomic statistics from the UK remain positive and the decline of the pound is mainly due to high demand for the dollar and the decline in investors' appetite for risk.
NZD/USD and AUD/USD are under pressure amid declining interest in currencies with high beta coefficients. The New Zealand dollar is losing ground as economic activity is falling. New Zealand's manufacturing sector has been slowing for the sixth month in a row. The services sector also shows negative dynamics. The Australian currency is less prone to declines but the labor market data due out on Thursday is likely to be very weak. The USD/CAD is trading multidirectional. The Canadian dollar is potentially one of the most attractive currencies to invest in. Rising inflation, consumer spending, and the business activity component make the case for tighter monetary policy at the Bank of Canada's March meeting.
Brent and WTI both lost more than two dollars thanks to lower geopolitical tensions. The Ministry of Defense of the Russian Federation reported that military units are returning from exercises to their home base. However, it is worth noting the complexity of the current situation on the border between Russia and Ukraine. Meanwhile, it became known that OPEC+ is unable to increase production to target levels. At the moment the participants of the agreement are missing about 900 thousand barrels to the global market every day.
The XAU/USD, which reached its highest level since December 2021, fell to 1850, which is key support. The volume of short positions still exceeds the volume of buy positions by multiples. The fall was provoked not only by the geopolitical factor but also by the closing of a large volume of long positions on the border of the local maximum.