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Ukraine talks: Is an agreement in sight?

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What’s new?

EUR progress just 0.09% yesterday and is pretty flat today on a prospect of more cease-fire talks between the two nation who meets in Turkey. Ukraine said its minimum goal out of talks with Russia will be an improvement in the current humanitarian situation. Any news in favour of deescalating the conflict will be positive on European currencies otherwise the downtrend momentum will continue to weight.

Oil extended the slide, Brent oil dealing at $107.98 down 1.34% for fear of China lockdown will lower demand. AUD/USD reacted badly to it as the commodity currency is positively correlated with commodity prices and Chinese economic activity.

The BOJ is reiterating an unlimited JGB 10yr operation on Thursday @ 0.25% aiming at protecting yield to rise significantly. The FX market is pricing a wider monetary policy divergence between the US and Japan and the rates market raised doubts about the ability of BOJ to sustain such a policy while inflation prices are soaring. George Saravelos global head of currency from Deutsche bank sum up the situation: “Either Japan will finally ‘make it’ out of deflation by tolerating a more sustained currency overshoot, or the BOJ will have to ‘break it’ and abandon yield curve control just like the RBA did last year.”

What’s in the pipe?

  • U.S GDP, on Wednesday
  • China Manufacturing, non-manufacturing PMIs on Thursday
  • Opec and non-Opec ministerial meeting to discuss production targets on Thursday
  • U.S jobs report on Friday

FX rates

  • USD/JPY @ 123.59 - Very bullish trend
  • EUR/USD @ 1.1003 - Bearish trend - major horizontale resistance : 1.1141
  • GBP/USD @ 1.3144 - Bearish trend - major support / resistance : 1.3209
  • AUD/USD @ 0.7507 - just bellow horizontal resistance (0.7531) - bounce off resistance
  • USD/CNH @ 6.3837 - Upwards breach of the bearish trend - major support : 6.3624

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