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Weekend tensions continue to drive market volatility. Oil, Gold jump higher.

Published: 28.02.2022
by Joseph Jeffriess

Russia continued its war in Ukraine over the weekend. Reports suggest that the invasion is not going as quickly as first hoped for, as the Ukrainian people have put up strong resistance to the Russian invasion, and there has been news that poor planning has slowed down the Russian army with tanks running out of fuel. The humanitarian cost continues to mount with pictures showing residential buildings hit by Russian fire.

The world continues to condemn the invasion. Russia continues to see numerous anti-war demonstrations in several of its cities, as well as mass protests around the world. The EU, Britain and NATO continue to pressure Russia with new sanctions, while aid (lethal and non-lethal) is being sent to Ukraine. Britain and the EU have banned Russian planes from using their airspace, which has also been reciprocated by Russia. We could also see some Russian banks being barred from SWIFT access due to the conflict. With the world rallying against the Kremlin, the word Nuclear was dropped. Orders were given to put nuclear deterrence forces on high alert on Sunday. As horrible as this word is, many see it as a threat due to the swift backlash. Reports continue to emerge that talks could happen between Ukraine and Russia close to Belarus, but we will have to watch that as it develops.

Marketwise it’s already been a busy day. We saw strong gaps as markets came back online this morning. Gold, Oil, stock indexes and FX all posted heavy gaps to start the week.

After the weekend’s updates, oil and gold gapped to the upside as traders looked for safer assets. Oil leads these gains with a 5% gain at this point. We will be watching today to see if buyers could retest $100 – gold like oil finished last week lower as traders jumped back into risk assets. Today, gold opened at 1917.15. Despite the push higher, we still see plenty of supply in this area. Could the weekend’s events spur new buying like we saw last week?

The USD has started the week firm, as has JPY. The USD index sees 0.86% in gains and continues to push at resistance. 97.30 is a level we’re watching at the moment. On the flip side, the EURUSD is very close to testing last week’s lows after a sharp move lower to start the week. A break below 1.1115 could start to suggest that sellers are looking to push on with a new continuation lower.

Stock indexes have been hammered into the start of the new week—the German DAX taking the brunt of the selling in the major indexes. So far, GER30 is trading 3.32% lower. US indexes are also sharply lower, but our focus will be on the European indexes and, in particular, the DAX (GER30) as they now look to be taking a lot more punishment.

Out of the Russian Ukraine crisis, we have some solid data coming out this week, including US employment data. But in all honesty, we feel that this crisis will continue to take centre stage this trading week.

USOUSD daily

USD Index daily

GER30 daily

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