Thursday March 24, 2022 - 14:59:16 GMT
Global-View.com - www.global-view.com
Share This Story:
|
|
Email
Tracking the Forex Flows in this Global Crisis?
The Russian invasion of Ukraine has set up a challenge to anyone trading global markets. Traders/investors have to weigh not only the political risks but the economic fallout that has seen surging energy prices exacerbate already rising inflation pressures. The latter, in turn, has raised expectations of central banks tightening monetary policy at a time when economic activity is likely to show signs of slowing.
As the table below shows the forex market, which had shown little net change prior to the Russian invasion of Ukraine, has seen a mixed bag for the dollar afterward. In fact, all major forex pairs were trading within 1% of the 2021 close before the invasion.
Since then, commodity currencies have been beneficiaries of rising commodity prices while the YEN has been the underperformer (USDJPY is at its high for the year). The GBP, EUR, and CHF have also moved lower vs the dollar but are off lows set earlier in the month.
|
|
Current rate *
|
12/31/2921
|
12/31=2/23
|
2/23/2022
|
2/23-3/24
|
12/31=2/24
|
|
EURUSD
|
1.0985
|
1.1368
|
-0.5%
|
1.1309
|
-2.9%
|
-3.4%
|
|
GBPUSD
|
1.3180-
|
1.3529
|
-+0.1%
|
1.3542
|
-2.7%
|
-2.6%
|
|
USDJPY
|
121.90
|
115.08
|
-0.1%
|
114.97
|
+6.0%
|
+5.9%
|
|
USDCHF
|
0.9315
|
0.9122
|
+0.6%
|
0.9181
|
+1,5%
|
+2,1%
|
|
USDCAD
|
1.2535
|
1.2639
|
+0.7%
|
1.2731
|
-1,5%
|
+0.8%
|
|
AUDUSD
|
.7505
|
0.7260
|
=0.4%
|
.7233
|
+3.8%
|
+3.4%
|
|
|
|
|
|
|
|
|
|
S&P
|
4474
|
4766
|
-11.4%
|
-4225
|
+5.9%
|
-10.3%
|
|
XAUUSD
|
1963
|
1826
|
+4.4%
|
1907
|
+2.9%
|
+7.5%
|
|
BTCUSD
|
42957
|
46219
|
=19.5%
|
37224
|
+15,4%
|
-7,1%
|
#current rate as of 14:30 GNT Marcg 24
US 2 year yield 2,15% vs. 0.73% end 2021
US 10 year yield 2.36% vs, 1,51% end 2021
Brent futures $118.90 vs $77.80 end 2021=) +53%_
The Russian invasion of Ukraine has set up a challenge to anyone trading global markets. Traders/investors have to weigh not only the political risks but the economic fallout that has seen surging energy prices exacerbate already rising inflation pressures. The latter, in turn, has raised expectations of central banks tightening monetary policy at a time when economic activity is likely to show signs of slowing.
As the table below shows the forex market, which has shown little net change prior to the Russian invasion of Ukraine, has seen a mixed bag for the dollar afterward. In fact, all major forex pairs were trading within 1% of the 2021 close before the invasion.
Since then, commodity currencies have been beneficiaries of rising commodity prices while the YEN has been the underperformer (USDJPY is at its high for the year). The GBP, EUR, and CHF have also moved lower vs the dollar but are off lows set earlier in the month.
This is where we currently stand as Ukraine’s resistance to Russia’s attacks has been stronger and gone on for longer than anyone had expected. What happens in a prolonged crisis is that while there are still reactions to crisis headlines (I call them air pockets), there tends to be limited follow-through or diminishing returns as traders get used to the daily flow of news. This has been thev case as traders tend to focus on shorter time frames to avoid the risk of a surprise headline and at times take advantage of air pocket reaction.
So, continue to look for the market to probe the path of least resistance, which in this case has been the YEN, which is weighed down by rising energy prices and a central bank that is least likely to tighten monetary policy. The other underperformers are likely to stay in choppy ranges barring an escalation of the Ukraine crisis unless recent dollar highs, especially vs EUR (1.0805), are taken out. Cross buying vs. the battered YEN, may be cushioning the downside in these currencies so keep an eye out to see whether these flows continue. I am not privy to central banks but if I was in their shoes I would be periodically intervening in my currency to prevent a meltdown that would exacerbate inflationary pressures.
Looking ahead, at some stage the focus will shift back to monetary policy, specifically the Fed where several officials have expressed a preference to frontload rate hikes. The next FOMC meeting is in May, so thus is still some time off before it comes on the radar.
Jay Meisler, co-founder
Global-View.com
jay@global-view.com
Forex Trading News
Forex Research
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
here.
Forex News
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."
We are starting an affiliate program to market some of our products.