No real market-moving scheduled news, it’s all been the headlines coming across the web. Most big trading desks will be adequately positioned ahead of tomorrow’s FOMC meeting announcement, and I expect higher volumes to resume from Thursday. There is also a split between the futures contracts as the end of the week marks a full move into the new June contract date. We also have a slight time discrepancy as the US shifted an hour earlier than say the UK. So If you’re thinking the markets are trading erratically, it is probably due to one of the above things. That plus the VIX is still above 30.
Ukrainian President Volodymyr Zelensky is literally between a rock and a hard place. His requests for Ukraine to be part of NATO have been squashed and although the sovereign country gave up the largest number of nuclear weapons on the promise they would be left alone, Russia has continued to press on with its invasion. In an online meeting of the Joint Expeditionary Force leaders earlier today Zelensky said “it must be admitted that Ukraine will not be joining the North Atlantic Treaty Organization (NATO)”. "For years we have heard about allegedly open doors, but we have also heard that we cannot enter there, this is true, we must admit this." So, the question is, if Ukraine is not joining NATO and will not be home to NATO’s weapons, why is Russia still advancing through the country? Today Russia went one step further away from Europe by sending a letter detailing that they would be leaving the Council of Europe. Though this was before being kicked out.
The euro had been holding on to the 1.1000 as best as it could but has ended the London session a lot lower and almost back to yesterday's close. The US dollar will be bid into the FOMC tomorrow adding pressure to the crosses and especially to the euro whilst the uncertainty remains in Ukraine. During the ongoing negotiations between the delegations of the two governments, Russian President Vladimir Putin said Ukraine "does not demonstrate a serious attitude towards finding mutually acceptable solutions.". The Kremlin reported that Putin made the comment in a phone call with European Council President Charles Michel. The euro also dropped after ECB President reiterated that the interest rate adjustments will come sometime after the end of the asset purchases and that the adjustments would be gradual.
The Producer Price Index for final demand increased 0.8% in February coming under expectations, seasonally adjusted, according to the latest report from the US Bureau of Labor Statistics (BLS). This rise followed advances of 1.2% in January and 0.4% in December 2021. In February, the Producer Price Index for final demand increased by 0.8%, according to the BLS. On an unadjusted basis, final demand prices moved up 10.0% (as expected) for the 12 months ended in February.
At the London close the US dollar started to edge back up towards the $100.
One cross which has been bullish all day/week is the USDJPY which is closing in on the swing higher from late 2016. A break through that market structure high is very possible with the next target being the 121.50-121.60 zone.
The strengthening dollar also had the effect of dragging cable back towards the breakout price. This is all coming ahead of the FOMC but could be reversed on the Bank of England rate decision, so I am expecting a level of support to form before a continuation higher.
The USDCAD hit my intraday long target and then proceeded to drop back down. The move coincided with Brent hitting and finding support at the rising trend line from December 2021. If Brent closes at these levels, it will be the first time under $100 per barrel since the start of March. A retracement back to the origin of the trend line would have Brent trading back at $65.50 per barrel.
The US clocks went forward over the previous weekend, so the Initial Balance and futures open are an hour earlier as the UK doesn’t adjust their clocks until the last Sunday in March. However, the IB target still works as there is a greater than 60% chance the price will reach a 50% extension of the iB, with the possibility of a full measure move less likely but still possible if the likes of Apple, Amazon, Google, Facebook, Tesla are all pulling in the same direction and in line with the other 95 companies in the Nasdaq.