Market Drivers – US Session – 17 March

Mohamed Abdelhamid 18 March, 2022 3:27 am Commodities, Forex Market, Market Update

The US Dollar remained under selling pressure throughout the day, accelerating its slump ahead of the London fix. The USD was affected by persistent weakness in government bond yields following the hawkish Federal Reserve’s announcement on Wednesday.

Economic Data
WTI crude has climbed near USD 102.00 as IEA renewed fears of supply shortage. The expectation of supply shortage from Russia has already been discounted by investors. The OPEC’s positive response to the urge of US President Joe Biden will fix the demand-supply gap.

The US Energy Information Administration reported on Thursday that domestic natural-gas supplies fell by 79 billion cubic feet for the week ended March 11. That compared with the average weekly decline of 70 billion cubic feet forecast by analysts surveyed by S&P Global Commodity Insights, which pegged the five-year average supply fall for the period at 65 billion cubic feet. Total supplies in storage stand at 1.440 trillion cubic feet, down 344 billion cubic feet from a year ago and 304 billion cubic feet below the five-year average, the government said. Following the data, April natural gas rose 17.7 cents, or 3.7%

Other Developments
By the end of the American session, US Secretary of State Antony Blinken said that Russia might be contemplating a chemical-weapons attack, helping the USD to recover some ground.

The Russian invasion of Ukraine keeps going without progress in peace talks. Financial markets enjoyed some temporal relief on news indicating that international bondholders received Russian bond coupon payments due 16 March in dollars. There’s an increased risk to global growth, while the war will only fuel inflationary pressures.

Ukraine and Turkey are working on setting up a meeting between Volodymyr Zelenskyy and Vladimir Putin. US President Joe Biden will talk to his Chinese counterpart Xi-Jinping on Friday to discuss the matter.

Global rating agency S&P cut Russia rating to ‘CC’ from CCC- while citing difficulties meeting debt payments due on its dollar-denominated 2023 and 2043 Eurobonds on Thursday.

The Bank of England hiked the benchmark UK interest rate by 25bps to 0.75% from 0.50%, as had been widely expected, noting that “some further modest tightening might be appropriate in the coming months,” a dovish twist that sent GBP/USD to an intraday low of 1.3087. The pair managed to recover some ground and settled at 1.3150.

The EUR/USD pair retreated from an intraday high of 1.1137 and finished the day in the 1.1090 price zone, while USD/CAD plunged to 1.2630 as oil recovered the upside, with WTI ending the day at $103.75 a barrel.

Gold flirted with $1,950 a troy ounce, ending the day at around 1,939. The AUD/USD pair retained most of its intraday gains and trades in the 0.7370 price zone.