By Tad DeVan, Senior Currency Strategist, MTI
Week of: 02/21/22 – 02/25/22
What a wild week it’s turning out to be for the markets. Dow futures fell almost 500 points after Russian President Vladimir Putin ordered troops into Ukraine. The U.S. also unleashed a first tranche of sanctions on Russian financial institutions, sovereign debt, and several key individuals in the country.
Traders are closely tracking these developments as the mounting geopolitical concerns also further complicate the next move by the Fed, which has signaled that it is prioritizing to bring down inflation and raise interest rates.
Taking cues from the above developments and some data releases, major currency pairs saw some big moves this week.
The U.S. Dollar edged lower as President Joe Biden announced the first wave of sanctions against Russia while saying he hoped diplomacy was still available. Meanwhile, the NZD witnessed buying as the Reserve Bank of New Zealand (RBNZ) announced its third consecutive rate hike early Wednesday.
We still have the ‘Prelim GDP’ data which will be released on Friday. And expectations are that it’ll be even better than the ‘Advanced GDP’ numbers we saw in Q4 2021 (which was the best reading since 1984). Let’s see how it influences the U.S. Dollar.
While the euro was steady, the sterling saw some losses as investors turn cautious on the British currency amid the Russia-West stand-off Ukraine.
At the time of writing, the dollar index (DYX) stood at 95.91 (down 0.12%), while the euro (EURUSD) was trading at $1.1347 (up 0.19%). The safe-haven yen is currently trading at 115.00 per dollar (down 0.03%).
The rest of the week will see geo-political tensions and data releases dominate traders’ minds.
Will there be peace talks between Putin and Biden?
We’re not sure about that but there will be many slips between the cup and the lip.
And the markets will move with the news flow, making it a more challenging environment for traders.
To make sense of this and the Forex market, check out this new trend called the Kiwi Bull Rush and why it’s the giant market shift that’s staring everyone in the face.
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I hope to see you on the other side!
Have a safe and profitable trading week 😀