Market Drivers – US Session – 28 February

Mohamed Abdelhamid 1 March, 2022 4:32 am Commodities, Cryptocurrency, Forex Market, Market Update

The USD has capitalized on safe-haven flows at the beginning of the week amid escalating geopolitical tensions and sanctions. Over the weekend, Washington and EU allies along with other Western nations decided to exclude some Russian financial institutions from the global payment system, SWIFT.

Economic Data
The US economic calendar featured the Chicago Purchasing Managers Index and Dallas Fed Manufacturing Business Index data for February but geopolitical headlines are likely to continue to drive the market action.

The Dallas Fed manufacturing business index climbed to 14.00 for February versus prior reading of 2.00.

The Chicago Business BarometerTM fell 8.9 points to 56.3 in February, weakening for the first time since November 2021. New Orders slowed, with almost a quarter of firms surveyed seeing a decline.

Other Developments:
More worryingly, Russian President Vladimir Putin put deterrence forces, including nuclear arms, at the highest threat level. Later in the day, delegations from Russia and Ukraine talks yilded no agreement.

Reflecting the risk-averse market atmosphere, the cost of raising US dollar funds in the euro swaps market rose sharply on Monday after Western nations had mounted sanctions against Russia.

Three-month euro cross-currency swaps hit 38.25 basis points, the highest since mid-March 2020, the beginning of the coronavirus pandemic, as foreign banks and companies scrambled for dollar funding.

Investors were willing to pay around 38.25 basis points over interbank rates to swap three-month euros into dollars.

Treasury bond yield is down more than 3% at 1.9% and US stocks futures are down between 1.5% and 2.25%. The American WTI crude is rising more than 5% near $96.00.
Belarus will send troops to support the Russian invasion and Ukrainian President Zelenskyy told the UK’s Boris Johnson that Monday was a crucial period for his country.

The Russian rouble lost more than 40% against the dollar in the interbank market on Monday. The central bank of Russia announced that it hiked the benchmark interest rate to 20%.

EUR/USD opened with a big bearish gap and was last seen trading near 1.1150, where it was down 1% on a daily basis.

After closing the previous week in the negative territory below $1,900, gold surged higher on Monday and touched a daily top of $1,931 before retreating toward $1,910 into the European session and during the US session.

USD/JPY is staying relatively quiet near 115.50 as the safe-haven Japanese yen holds its ground against the the USD.

Bitcoin extended its rebound to $40,000 on Saturday but suffered heavy losses toward the end of the weekend. BTC/USD lost nearly 4% on Sunday and was last seen consolidating its losses near $38,000. Ethereum fell more than 5% on Sunday after closing the previous three trading days in the positive territory and it’s posting small daily losses at $2,600.