Hello, welcome to the Key To Markets preview of the Week Ahead.
If you have any questions about this information, please contact your KTM Account Manager who will be happy to assist.
5-day performance as of February 24, 2022. 18:30 GMT
In case you missed it….
Russia invades Ukraine. After recognising breakaway regions of Ukraine as independent, Russian President Putin launched a full-scale invasion of Ukraine.
Russia sanctioned. The invasion brought about harsher sanctions on Russia from the United States, the EU and the UK.
USD/RUB hits record high. The Russian ruble lost over 6% in one day to trade at 90 to the US dollar for the first time.
EUR/USD tanks 300 pips. Forex markets have turned risk-off with traders making a flight to safety of the US dollar, as well as the Swiss franc and yen.
Dollar index through resistance. The 97 level was decisively breached, taking DXY to its highest since June 2020.
European NatGas explodes. The price of European natural gas rose 60% in one day, the highest on record on the day of the invasion.
Oil reaches $100/bbl. Markets priced in likely oil and gas supply disruptions by pushing Brent and WTI crude oil contracts past $100 per barrel.
Gold soars towards $2k. The ultimate haven asset soared, extending its recent winning streak. XAU/USD crossed $1970 per oz.
Nasdaq enters bear market. The Nasdaq saw some of the biggest losses on the day, falling over 20% from its record high last year, before rebounding.
BTC offers no haven. Bitcoin led huge losses across cryptocurrencies, slumping double digits, failing to live up to its reputation as ‘digital gold’ when time called.
Tesla stock down 40% from high. Shares of Tesla have dropped to 700 USD, well off record highs over 1200.
Source: Royal Bank of Canada
Russia’s stock market crashed after Russian President Putin ordered a full-scale invasion of Ukraine that involved attacks on key military sites and infrastructure near the capital of Kiev. Russia’s benchmark MOEX index slumped over 45% on the day of the invasion as investors sold investments exposed to harsh new sanctions on Russia.
Looking past the immediate impact of the war, it is worth considering both Russia’s and Ukraine’s importance in global commodity markets. There have already been supply-chain bottlenecks pushing up commodity prices and leading to inflation. Sanctions on Russian-produced commodities mean even lower supply, which stands to push up prices even further.
Source: FX Street
The Russian invasion of Ukraine caused a huge sell-off in global stock markets and sent gold and oil prices soaring. What happens next – the next moves from Russia, Ukraine and NATO will be key to market performance next week, likely over-shadowing other major events.
Interestingly, stocks rebounded sharply off the lows on Thursday as dip-buyers came in to save the day. The buying happened as the S&P 500 entered a correction and the Nasdaq entered a bear market. Could this ‘blow off bottom’ mark the end of months of selling?
The price of both crude oil futures contracts finally hit $100 per barrel on the day of the Russian military operation inside Ukraine’s borders. The level has been a target for many and has already seen some profit taking. This week OPEC will decide production quotas for the next month.
With the new month comes on-farm payrolls data. Expectations are that 400k jobs were created in February, down slightly from the 470K in January. The January numbers were a big surprise, especially in light of weak ADP data. Good numbers are needed to counter fears of stagflation.
Two major central banks have policy-setting meetings this week. Neither the Reserve Bank of Australia or Bank of Canada are expected to hike rates just yet. The most interesting might be commentary on whether the Ukraine crisis could delay tightening policy.
Here you can find analysis of the major asset classes including the major forex pairs, gold, oil, and the S&P 500.
EUR/USD just held onto its multi-year low near 1.115 with an intraday false breakdown. It came after 1.13 support dramatically gave way. The range remains intact but the volatility of the move lower makes a re-test of 1.10 much more likely.
GBP/USD dropped sharply through 1.336 support but rebounded to close above it intraday. Near term momentum is bearish but in the bigger picture the pair is range bound while above the December low just under 1.32.
USD/JPY successfully tested support from the long-term rising trendline and double-bottomed at 114.5 before ripping through resistance at 115.2, then stalling at 115.7. These same levels are now support for a possible move back to the highs at 116.3.
AUD/USD – like the other major FX – dropped through major support, in this case the rising trendline we drew last week and then rebounded intraday. While above this trendline the Aussie can re-challenge the high at 0.728, else major support is 0.70.
USD/CAD has been one of the cleanest breakouts with the least sign of a reversal off the highs in the USD. 0.278 /0.28 was resistance turned support. If this holds we can expect a test of the high around 0.295.
XAU/USD made a massive run-up to and then reversal from its highest since August 2020 at 1970. 1960 is a long term resistance formed by the October and December peaks, in which sellers pushed the price back under 2000, breaking a sharp uptrend line.
BRENT broke over and then reversed from above $100 per barrel to back under $95 – the former resistance, which is now support. Should the rally continue, $105 is the next upside target, while 90 remains major support.
US500 fell into 10% correction territory before rebounding off the low. The trend remains down, while below the previously drawn downtrend line. The low formed after the January sell-off was support and is now resistance
Thank you very much for reading – and have a great week trading!
The given data provided contains additional information, forecasts, analysis and market reviews published on the Key to Markets website.
Before making any investment decisions, you should know that:
– Key to Markets publishes analysis of any kind solely for information purposes and such analysis should not be construed as investment advice or a solicitation to buy or sell any financial instruments including without limitation CFDs.
– Key to Markets will not be liable for any loss or damage, which may arise, directly or indirectly from use of or reliance on the data provided by Key to Markets.
– Whilst all reasonable efforts are made to ensure that all content sources are reliable and that all information is presented, as far as possible, in a comprehensible, timely, accurate and complete manner, Key to Markets does not guarantee the accuracy or completeness of any information contained in the analysis.
– Past performance is not a guarantee of future results.