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Jerome Powell hawkish tone, Ukraine referendum in sight?

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What's new?

The EUR fall on Tuesday for the third consecutive day and get closer to major support at 1.0905. The U.S bond market staggered further on Tuesday following the downtrend move from Monday after J.Powell's more aggressive hawkish comments yesterday about the FED pace interest rate increase this year.

Ukraine might hold a referendum with regards to a peace agreement with Russia. Any improvement on that side will be bullish for the EUR. European leaders are talking over a ban on importing Russian oil that keeps adding pressure to skyrocketing oil prices ($120 a barrel). JPY lost another 66 bps today, the USD/JPY is now trading above 120. The last time this level was reached was back in 2016…There is a clear divergence between FED and BOJ.

Kuroda might wait for more persistent inflation anchored into the Japanese economy before altering BOJ's monetary outlook. On one side, a weaker JPY fuel inflation, on the other side, the export-reliant nation benefits from weaker JPY.

Kuroda’s job is to find the right balance between fighting decades of low inflation and keeping a growth pace.

AUD felt after J.Powell's hawkish speech and fail to stay above 0.74. The Australian currency is balanced between high commodities price and monetary divergence between FED and RBA (Reserve bank of Australia).

What’s in the pipe?

  • U.S President J.Biden attends NATO emergency summit in Brussels on Thursday
  • U.S initial jobless claims on Thursday
  • Eurozone Markit PMIs on Thursday

FX rates

USD/JPY @ 119.22 - multi-year high - Very bullish trend
EUR/USD @ 1.1048 - Bearish trend
GBP/USD @ 1.3151 - Bearish trend
USD/CNH @ 6.3746 - Breach of the bearish trend

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