Market Update
The market is in a more positive mood today following news that a summit meeting the leaders of Russia and the United States could pave the way for a ratcheting down in border tensions in Ukraine.
This all came after French President Macron spoke with Biden and Putin over the weekend. The outcome was that Macron has set up a potential Biden-Putin summit meeting.
Interestingly, one of the caveats is provided there is no Russian invasion of Ukraine. This has got the market excited. The ‘summit’ news gave a lift to risk trades, which got hit hard over the weekend.
US equity index futures dropped heavily last Friday, however, they are now surging into positive territory on the summit proposal. This is one of the issues with being short of the major US index’s, it can be a risky proposition.
Additionally, the majors on the foreign exchange market surged against the USD. The EUR, NZD, AUD, GBP are all moving higher this morning, while the JPY and CHF are up also against the dollar.
The EURUSD pair rallied from around 1.1320 to above 1.1360 at the time of writing. The EURUSD pair is obviously a canary currency for the Ukraine crisis, due to the sensitivity with the location of the conflict and the energy concerns it brings.
Oil and gold have also lost ground on the summit news. This was always going to happen on positive news. The $1,850 and $1,830 levels offer critical support for the yellow metals
Notably, the Japanese flash Manufacturing PMI’s for the month of February fell sharply earlier today. The PMI data came in a 52.9, which was a big drop from the previous reading of 55.4.
The People’s Bank of China has left the 1- and 5-year Loan Prime Rates (LPR) unchanged at the setting today. Both had seen small rate cuts in January.
Bitcoin has recovered back above the $39,000 level, further underscoring its place as a risk asset. The top crypto broke under the $38,000 level over the weekend. Bulls need to get past the $40,400 level to gain further upside traction.
Traders now await the outcome of the preliminary March eurozone PMI data today. As always, the reading from Germany and France will be key, and are the German PMI could be a big mover for the euro currency.
