Daily Forex News By XtreamForex

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EUR/USD towards 1.1305 as threat of Russian aggression grows heavier

EUR/USD rallies early in the day as risk appetite fades with major Asian indexes printed in red. The EUSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.2 percent, while Japan’s Nikkei index lost 2.5 percent. At 1.1353, the Euro is now steady on the day against the US Dollar after correcting a significant portion of Friday’s sell-off to a high of 1.1369. A tumultuous start to the week following last week’s alarming US inflation figures combined with the threat of Russia’s invasion of Ukraine. US President Joe Biden and Russian President Vladimir Putin spoke by phone for an hour on Saturday about what many see as a last-ditch effort to repel Russia’s invasion of Ukraine.
However, the call brought no fundamental change to the deepening crisis, although the United States and Russia agreed to remain engaged in the coming days, according to a senior US official, who spoke on condition of anonymity reported to journalists. The official also told reporters that “Russia may decide to take military action anyway.”
Meanwhile, there is speculation that the Federal Reserve could raise interest rates by 50 basis points in March with talk of an emergency hike between meetings. That was boosted in part by the timing of the Fed board’s caucus on Monday, even though the event was supposed to be routine. However, not all members of the Fed sing from the same hymn. While Hawk and St. Louis Fed James Bullard debates 50 basis point hike at March meeting, San Francisco Fed President Mary Daly down played the need for a half point move in an interview on Sunday . Daly thinks being too “brutal and belligerent” politically can backfire.
Fed President James Bullard will be in the spotlight late Monday, with his recent calls for a more aggressive stance by the Fed, meaning a 100 basis point tightening in June. As for the other events of the week, minutes of the Federal Open Market Committee meeting will be released and traders will keep an eye on discussions regarding short-term policy plans. Analysts at TD Securities explained that the market will be eyeing balance sheet normalization plans, following the announcement of the “principles” for normalization in January data, the added the analyst.

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USD/CAD Traders Looking for Oil Price for Direction

USD/CAD steadies in Asia as traders remain jittery over the possibility of increased tensions around the prospect of Russia invading Ukraine. The price of oil, which CAD trades as a proxy, has increased in proportion to the Russian risk premium. As a result, the Loonie is a tough opponent for US Dollar bulls as USD/CAD rallies have dipped below previous daily highs. At the time of this writing, USD/CAD is trading at 1.2734 in a 10-pip range as geopolitical tensions, which could push oil prices further into triple digits, are watched very closely. . It has been almost confirmed that Russia intends to invade Ukraine, but only through the misinterpretation of the Ukrainian President’s Facebook messages to his country by various media sources.

Ukrainian President Volodymyr Zelenskiy has called on Ukrainians to wave the country’s flag from buildings and sing the national anthem in unison on February 16, a date that some Western media have cited as the start date Russian invasion. However, the comments were interpreted as if the President of Ukraine had been officially informed that Wednesday would be the day of the attack. Markets react in kind and sell out, but not so if an actual invasion does take place. There was an air of doubt in the air in the market and moves were limited to what looked more like a false start. Immediately after the first instinctive moves, a Ukrainian official said Zelenskiy was not planning an attack on the 16th, but was instead responding skeptically to foreign media reports.

Still, it was scary enough for energy markets that have pushed oil prices to all-time highs in the current bull cycle with WTI in $95.79 billion. USD/CAD then made a trip to print the session low of 1.2719. However, the US dollar is a double-edged sword and benefits from both risk aversion and the prospect of a faster pace of tightening from the Federal Reserve.

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EUR/USD pullback eyes 1.1300 ahead of Fed Minutes, US Retail Sales

EUR/USD takes offers to revive every day low close 1.1345, down 0.11% intraday, as the pair dealers merge the heaviest day by day hop in a fortnight during Wednesday’s Asian meeting. The significant cash pair merchants appear to regard the market’s mindful confidence while following the most recent improvements encompassing Russia, as well as blended worries over the US Central bank’s (Took care of) next move.

In doing as such, the statement overlooks playful remarks from European National Bank (ECB) Leader Load up Part Isabel Schnabel, distributed on Monetary Times (FT) during the late Tuesday. The policymakers said, per FT, “The gamble of acting past the point of no return has expanded.” On a similar line were fears of higher expansion raised by the ECB’s Financial Announcement.

The explanation could be connected to the raising chances of the Federal Reserve’s 0.50% rate climb in Spring, as well as firmer US expansion assumptions depicted by the 10-year breakeven expansion rate per the St. Louis Central bank (FRED) information. All things considered, the BOE Fed Watch Device signals around 60% probabilities of 50 premise focuses (bps) of rate lift in Spring yet the Reuters’ survey features the hesitation. “The US Central bank will start off its fixing cycle in Spring with a 25-premise point loan cost rise, yet a developing minority say it will select a more forceful half-direct push toward pack down expansion,” said Reuters
The most recent US information, be that as it may, came in blended as the US Maker Value File (PPI) information showed a hot industrial facility door expansion figure supporting the Federal Reserve’s rate-climb concerns. All things considered, the PPI rose past 9.1% YoY assumptions to 9.7%, versus upwardly reexamined 9.8% earlier, in January though the Maker Value File ex Food and Energy, otherwise called Center PPI, energized to 8.3% versus 7.9% market agreement. Also, NY Domain State Assembling List facilitated beneath 12.15 figures to 3.1, contrasted with – 0.7 past readouts.

Somewhere else, any desires for no further heightening in the Russia-Ukraine tussles, after Moscow moved back a portion of its soldiers from borders, appear to burden the US Depository yields. Nonetheless, the US stock fates battle to follow the Money Road benchmarks’ benefits. It should be noticed that the US Dollar File (DXY) guards the 96.00 limit regardless of downbeat yields, chiefly because of the market’s uneasiness.

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AUD/USD bulls are moving in as hopes of diplomacy succeeding continue to support risk

The AUD/USD is up 0.16 percent in the Asian session, trading at 0.7197, as risk appetite returns on what appears to be more signs of diplomacy shining through the cracks of fear of an impending war between NATO and Ukraine vs. Russia.

Initially, the Australian had taken a more cautious approach, fearing that Russia would invade Ukraine. According to a State Department spokesman, reports that US Secretary of State Blinken has accepted an invitation to meet Russia’s Lavrov late next week have calmed some nerves in Asia. In addition, US President Joe Biden will host a meeting on Ukraine on Friday with leaders from Canada, France, Germany, Italy, Poland, Romania, the United Kingdom, the European Union, and NATO.

According to Reuters, iron ore fell sharply this week as Beijing increased its efforts to restrain the steel-making mineral. “ANZ analysts noted that inventories of many resources were near record lows, just as manufacturers were looking to build up stocks in response to recent supply disruptions. This, combined with forecasts of strong global growth this year, suggested that resources could withstand higher interest rates.” Meanwhile, TD Securities analysts explained that “should geopolitical risk ease, aluminum prices are vulnerable as the disruptive lockdown in Baise ends, along with Chinese curtailments and easing European power woes.’

“Markets sensitivity to Ukraine risk is likely to rise heading into February 20th, which marks the end of war games in Belarus, as the West monitors for signs that Russian troops will return to base in a strong sign of de-escalation,” the analysts added. In contrast, failure to do so would almost certainly precipitate a significant increase in Russia’s risk premium.

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Bulls in the XAU/USD are retreating as markets place their hopes on a meeting between US Vice President Joe Biden and Russian President Vladimir Putin


The price of gold has been swinging back and forth in response to every headline involving Russia, Ukraine, and the latest diplomatic efforts to avert war. At the time of writing, gold is trading near $1,896, having previously ranged between a high of $1,908.32 and a low of $1,891.68.

The headlines are pouring in, but the market consensus is that a US-Russia summit will take place, which could help to defuse the situation in Ukraine. The White House has confirmed this, but with the caveat that there cannot be an invasion of Ukraine, and the US believes one is imminent. The United States announced that Russia appears to be continuing its preparations for a full-scale attack on Ukraine very soon.

Meanwhile, US Secretary of State Antony Blinken has agreed to meet Russian Foreign Minister Sergei Lavrov next week, which has calmed investor nerves and slowed demand for safe-haven assets. The White House announced that US President Joe Biden will provide an update on the Russia-Ukraine situation on Friday at 4 p.m. ET.

As the focus shifts to monetary policy at the Federal Reserve, the price of gold may soon fall back into the hands of the hawks. In this regard, ears will be to the ground for Fed speakers in the coming week.

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The USD/JPY is licking its wounds near a 13-day low due to lower yields and risk aversion

USD/JPY pares intraday losses near the lowest levels since February 03, bouncing off the multi-day low to 114.70 during Tuesday’s mid-Asian session. Despite the yen pair’s recent corrective pullback, the market’s risk-off mood supports the USD/safe-haven JPY’s demand. S&P 500 futures fall more than 1.5 percent, while US 10-year Treasury yields fall six basis points (bps) to 1.87 percent by press time. Furthermore, stocks in Asia-Pacific are losing money on a daily basis as a result of widespread risk aversion.

Fears of a Russian invasion of Ukraine are fueling the moves, as troops from Moscow move closer to borders after President Vladimir Putin summoned them to mark peacemaking efforts. The move was the market’s second setback after Russian President Vladimir Putin declared Donetsk and Luhansk in Eastern Ukraine independent states and signed a decree “on friendship and cooperation.”

Following that, Western warnings about Moscow’s readiness for an impending invasion of Ukraine gained credence and ruined the mood. The latest hints by the US, EU, Canada, and the UK to criticise Russian actions are also negative for risk appetite. Furthermore, Yomiuri cited Japan’s warning to halt chip exports to Moscow if it invades Ukraine, while Australia’s Prime Minister Scott Morrison stated that Australia will stand in lockstep with allies on sanctions against Russia. It’s worth noting that Japan’s Finance Minister (FinMin) Shunichi Suzuki stated that Tokyo will work with the Group of Seven (G7) countries to deal with Ukraine.

In terms of economics, Japan’s Corporate Service Price Index increased 1.2 percent in January, compared to 0.7 percent forecast and 1.1 percent expected. Holidays in the United States and Canada, on the other hand, provided a dull start to the week, despite the general risk-off mood.

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EUR/GBP is hovering around 0.8330 ahead of the Bank of England’s monetary policy report hearings

In the Asian session, the EUR/GBP is trading in a narrow range of 0.8330-0.8345, as investors await the Bank of England’s (BOE) monetary policy report hearings on Wednesday. The cross has remained volatile in recent trading sessions due to the obscurity of the Russia-Ukraine spat. Market participants, however, have been underpinning the pound against the shared currency, as the latter may be more impacted by the escalation of sanctions against Russia.
Both economies have imposed sanctions in response to Russia’s aggression against Ukraine. In a tweet on Tuesday, British Foreign Minister Liz Truss stated that her government will impose new sanctions on Moscow in response to their violation of international law and assault on Ukraine’s sovereignty and territorial integrity.

Later, Britain imposed sanctions on five Russian banks: Rossiya bank, IS bank, General bank, Promsvyazbank, and Black Seabank, while Germany blocked a new gas pipeline from Russia, despite the fact that Germany relies on Russia for domestic gas. According to The New Statesman, Russia accounts for 65 percent of Germany’s natural gas imports and nearly 40 percent of the EU’s.

Meanwhile, the European calendar is jam-packed with events on Wednesday, beginning with a speech by European Central Bank (ECB) member Frank Elderson and Vice President Luis De Guindos.

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Price Analysis of the AUD/JPY: Will History Repeat Itself? If this is the case, expect much lower levels in the future

Bears in the AUD/JPY have been breaking new ground below 83, paving the way for further declines in the coming days. The pair is the forex space’s risk barometer, and as the Ukraine crisis worsens, financial markets are being pushed to exit risk and seek safe havens like the yen. This renewed conflict and risk in markets over Ukrainian territory began in November of last year, when the first satellite imagery revealed a new buildup of Russian troops on Ukraine’s border.

It has escalated in recent months to the point where a Russian attack on Ukrainian territory is expected to be underway, according to Ukraine and the US. AUD/JPY has been created in kind, but given the complexities of the situation, any pullbacks are likely to fade. This is not a crisis that will be resolved in a single G& or UN summit before the end of the week. It is a dispute that has raged since 2013, when President Viktor Yanukovych rejected a deal for greater integration with the European Union backed by Russia but was quickly driven out of the country by protesters. Since then, a series of events in Russia’s attempt to reclaim the eastern territories have brought the country to its knees the relationship between Russia and the West to its lowest point since the Cold War.

This is a crisis that is here to stay, potentially (likely) worsening into outright conflict before any diplomatic middle ground can be found. As a result, for the foreseeable future, there is little chance of a recovery in AUD/JPY beyond recently printed highs made in recent sessions.

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EUR/JPY Price Prediction: Bulls need to break through the 200-EMA to move higher; 130.30 is the target

Despite the bearish opening gap on Monday, the EUR/JPY has been following the primary component of Dow Theory by remaining above Friday’s low of 128.73. The cross continues to form the higher high and higher low structure, but more filters are needed to complete it. On Monday, EUR/JPY opened at 129.16, close to the 61.8 percent Fibonacci retracement (the distance between Friday’s low and high of 128.73 and 130.30). This is typically used to provide significant support for an asset following a correction. These pullbacks are frequently viewed by investors as a good time to buy. The cross is trading in a narrow range of 129.15-129.43, indicating that the volatility bands are being squeezed.

Despite a ‘higher high and higher low’ structure, EUR/JPY is trading below the 50-period and 200-period Exponential Moving Averages (EMA) on a 15-minute scale, indicating a lacklustre move ahead. After trading in a bullish range of 60.00-40.00, the Relative Strength Index (RSI) (14) has dropped sharply near 30.00.Bulls are keeping an eye on the 200-EMA at 129.51, as a break of it will send the cross higher towards Friday’s high at 130.30 and Wednesday’s high at 130.71, respectively.

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XAU/USD is expected to fall below $1,900 as it loses its safe-haven appeal

Gold prices are aiming for support below $1,900 as the market’s risk-off impulse returns. The precious metal has been trading in a range of $1,890.92-1,911.00 as investors await a new catalyst from the Russia-Ukraine conflict. However, Russia’s invasion of Ukraine appears to be escalating. According to Maxar satellite images, the Russian military perimeter around Kyiv has grown to 40 miles, rather than the 17 miles initially reported. This could rekindle interest in the yellow metal.

Furthermore, the US dollar index (DXY) has been vulnerable as market participants have diverted funds away from the DXY and into riskier assets. The greenback has established a short-term ground near 96.80, reducing the precious metal’s exposure to the greenback. On Tuesday, the Institute for Supply Management (ISM) will release Manufacturing Purchasing Managers Index (PMI) data, which will fly under the radar. However, the Federal Reserve (Fed) Chair Jerome Powell’s testimony on Wednesday will be the key event to watch out for, along with another round of peace talks between Russia and Ukraine ‘in the coming days.’

The price of gold has risen as demand for safe-haven assets has remained strong. After rising as much as 2.2 percent earlier in the session, spot gold rose 0.6 percent to $1,898.25 per ounce. Gold futures in the United States finished 0.7 percent higher at $1,900.70. Gold, which is frequently used as a safe haven of value during times of political and financial unrest, has risen about 6.5 percent in February, reaching an 18-month high of $1,973.96 last week.

Russia’s ongoing aggression against Ukraine has weighed on risk assets such as US and European equities, as well as bond yields. Investors are grappling with uncertainty, with bank stocks plummeting as a result of tough Western sanctions imposed on Russia as it continued its invasion of Ukraine. The DJI and S&P 500 fell, but the Nasdaq managed to claw its way back to the top.

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AUD/USD rate stages another attempt for 2022 opening range breakout

AUD/USD appears to be unfazed by the RBA’s dovish forward guidance as it clears the February high (0.7284), and it remains to be seen if the update to Australia’s Gross Domestic Product (GDP) report will derail the recent advance in the exchange rate amid expectations for a slowdown in economic activity.

Australia is projected to grow 3.7% after expanding 3.9% during the third quarter of 2021, and indications of a slowing economy may keep the RBA on a preset course as the central bank pledges to “not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range.”

As a result, the advance from the January low (0.6968) may turn out to be a correction in the broader trend with the Federal Reserve on track to normalize monetary policy ahead of its Australian counterpart, but recent price action raises the scope for another run at the January high (0.7314) as it clears the February range.

In turn, AUD/USD may continue to carve a series of higher highs and lows over the coming days if it shows a limited reaction to Australia’s GDP report, and a further appreciation in the exchange rate may fuel the recent flip in retail sentiment like the behavior seen in 2021.

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GBP/JPY stays depressed below 155.00 as yields ease on Ukraine fears

GBP/JPY remains sidelined around 154.70 during Thursday’s Asian session, mildly offered after bouncing off a 10-week low the previous day. The cross-currency pair’s latest weakness could be linked to the market’s anxiety ahead of key data/events, as well as a lack of major catalysts. Cautious optimism from an anticipated round of peace talks between Russia and Ukraine battles increasing hopes of a faster rate-hike trajectory by the Fed to test the market sentiment of late.

A Russian negotiator was quoted to share the news of a probable round of diplomatic talks on Thursday. On the same line, Interfax also mentioned, “A potential ceasefire will be discussed in upcoming talks with the Ukrainian delegation.” It’s worth noting that a jump in the probabilities of a 0.50% rate hike in the March Fed meeting, per CME’s Fed Watch Tool, also challenges the market’s optimism. On the same line were the US inflation expectations that rose to a 15-week high, as measured by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data.

Elsewhere, global rating agencies like Moody’s and Fitch cut Russia’s ratings and contribute to the offbeat sentiment. At home, the Daily Express quotes data showing a jump in the EU nationals in the UK to shrug off Brexit criticism. Further, UK PM Boris Johnson spoke to Ukrainian President Volodymyr Zelenskiy and said, he will publish ‘full list of all those associated with the Putin regime’ per The Guardian. Additionally, Bank of England (BOE) policymakers, including Silvana Tenreyro and Jon Cunliffe, cited economic risks emanating from Russia’s invasion of Ukraine.

On the same line, Bank of Japan (BOJ) monetary policy board member Junko Nagaya said in a statement on Thursday, “Japan’s economic outlook remains highly uncertain from January onward.” Amid these plays, S&P 500 Futures print mild losses whereas the US 10-year Treasury yields also drop 1.2 basis points (bps) to 1.85% by the press time.

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Gold is surging and breaking records. $2,000/oz

At the start of the week, the price of gold in fast markets has just surpassed $2,000 per ounce. The catalyst is oil, as well as concerns about global stagflation. Oil prices have increased by 10% on Monday as a result of the threat of a ban on Russian products in the United States and Europe. Delays are also occurring in Iranian negotiations. Brent was quoted at $130.84, up $12.73, while US crude was up $9.92 to $125.60. At the time of writing, it is reported that US House Speaker Nancy Pelosi is considering legislation that would prohibit Russia from importing oil. This was a topic that roiled markets right away.

Pelosi stated last Thursday that she supports a ban on Russian oil imports into the United States. Biden has been hesitant to restrict Russian oil shipments to the US or impose energy sanctions, despite the fact that prices are already hitting US citizens’ pockets. However, the sanction has already received widespread support from Republicans and an increasing number of Democrats.

Commodity prices in general have had their best start to a year since 1915. Among the many movers last week, nickel increased by 19%, aluminium by 15%, zinc by 12%, and copper by 8%, while wheat futures increased by 60% and corn by 15%. This makes this week’s US Consumer Price Index a critical event for markets, with an annual growth rate of 7.9 percent and a core measure of 6.4 percent expected ahead of the European Central Bank meeting this week and the Federal Reserve meeting next week.

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With peace talks on the horizon, the XAU/USD remains below $2,000 per ounce

On Wednesday, gold suffered greatly as risk sentiment improved. After reaching a 19-month high at the start of the week, the precious metal fell back below $2,000 per ounce. Spot gold fell 3.3 percent to $1,976 per ounce, capping a rally that had taken it close to the all-time high set in August 2020. Gold futures in the United States fell 2.7 percent to $1,988.20. Profit-taking, as well as a sharp drop in oil prices, fueled the reversal, allowing buyers to scoop up bargains in the stock markets on stocks that had previously been hammered by concerns about Russian sanctions.

On Wednesday, a Russian airstrike severely damaged a children’s hospital in the besieged Ukrainian port city of Mariupol. However, risk sentiment improved as oil prices fell sharply after the United Arab Emirates said it would support increasing output as an OPEC member. Brent oil dropped from $131.50bbls to $105.91bbls. The price had reached a high of $138.03bbls at the start of the week in a market that was in disarray due to supply disruptions caused by sanctions imposed on Russia as a result of the conflict.

The price of oil is critical for gold. Oil’s rally has been a major source of concern as markets assess whether the global economy will face a stagflationary or inflationary shock. “The conflict in Ukraine has serious and obvious implications for commodity prices. Will the implications for inflation, however, be more long-lasting than those for growth? Certainly, global central banks are concerned about one particular channel of self-reinforcing inflation — inflation expectations could be de-anchored if the shock permeates the world’s psyche,” analysts at TD Securities explained.

“While the direct implications of the conflict on growth are more limited in the US, indirect implications may be more relevant as ongoing disruptions to supply chains may have a spillover effect, while inflation is also likely to act as a tax on consumers,” the analysts added. “If the shock depresses consumer sentiment at the same time, the Fed will have to walk a tightrope between its unemployment and inflation targets.” As a result, the market has concluded that the Fed will remain nimble in order to avoid tipping the US economy into a recession for the time being, but the subsequent rate path and the path for quantitative tightening are less clear.”

“In this context, gold bugs are more likely to profit from a subsequent increase in central bank demand for gold, having observed the events unfold as potential vulnerabilities for national accounts.”

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EUR/USD seeks to break a four-week downtrend near 1.1000, with a focus on US data and Ukraine

The EUR/USD is licking its wounds after the ECB while making its way to 1.1000, up 0.15 percent intraday during the mid-Asian session on Friday. The pair’s recent movements could be attributed to the market’s uncertainty about the key risk catalysts, as well as a USD pullback. Nonetheless, the major currency pair is on track to end its four-week losing streak.

The US Senate’s passage of a $13.6 billion aid package to Ukraine and a $1.5 trillion bill to avoid a government shutdown could magnify Western aid to Kyiv, as seen in today’s United Nations (UN) Security Council, which weighs on EUR/USD prices. Concerns about a new surge in China’s covid cases, as well as fears about Russia’s invasion of Ukraine, are all on the same page. The quote was under downward pressure as a result of this. The previous day’s US inflation data and subsequent hopes for faster Fed rate hikes may also have contributed to the pair’s weakness.

Alternatively, uncertainty over Russia’s military position in Ukraine, as well as a lack of major data/events in Asia, appears to limit EUR/USD downside. Having said that, reports of a Russian military attack on a Kharkiv institute containing an experimental nuclear reactor initially shook the market before the news of no negatives quelled fears. Similarly, reports that Moscow’s forces are gradually dispersing and may be retreating favoured the optimists prior to the US Satellite company Maxar’s update indicating more troops being redeployed.

Among these bets, the S&P 500 Futures fell 0.5 percent on the day, while US 10-year Treasury yields fell 4.4 basis points (bps) to 1.965 percent by press time. Furthermore, the US Dollar Index (DXY) remains undecided around 98.50 but remains determined to reverse the previous four-week uptrend.

It’s worth noting that the European Central Bank (ECB) cited inflationary challenges while releasing details on faster Quantitative Tapering (QT) the day before. Euro traders, on the other hand, focused on the eurozone’s currency’s downwardly revised growth forecasts and upwardly revised inflation expectations. “The ECB’s statement, which left the door open to raising interest rates before the end of 2022 because soaring inflation outweighs concerns about the fallout from Russia’s invasion of Ukraine, “The euro rose briefly before market sentiment turned negative,” according to Reuters.

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The AUD/USD is expected to fall further towards 0.7200 as China and the Fed join the Ukraine-Russia crisis

As market sentiment deteriorates ahead of Monday’s European session, the AUD/USD reverts to an intraday low around 0.7250, down 0.48 percent on the day. The risk barometer validates the market’s recent pessimism, as well as its apprehension ahead of this week’s key Federal Open Market Committee meeting (FOMC).
The improved progress in Ukraine-Russia peace talks was not enough to entice AUD/USD buyers, as the latest Russian shelling and demands for Kyiv to back down, as well as Ukraine’s push for more sanctions against Moscow, did. On the same vein, International Monetary Fund (IMF) Managing Director Kristalina Georgieva stated on CBS’s “Face the Nation” programme that Russia may default on its debts as a result of unprecedented sanctions over its invasion of Ukraine, but this would not trigger a default.

In other news, China has reported the highest daily covid infections since May 2020 and has imposed strict lockdowns in two states, bringing back the virus woes and weighing on the AUD/USD. The strength of US Treasury yields is also a challenge to the quote, as the 5-year bond coupon renews at an all-time high above 2.0 percent amid record inflation expectations, according to the 10-year breakeven inflation rate from the St. Louis Federal Reserve (FRED) data.

Among these bets, the S&P 500 Futures and the ASX 200 both pared early Asian session gains. Furthermore, Chinese stocks are falling, despite market expectations for a rate cut by the People’s Bank of China (PBOC). As a result, risk aversion may continue to weigh on AUD/USD prices until commodities regain upside momentum, which is less likely given China’s challenges.

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XAU/USD is approaching $1,935 as a result of China’s commodity woes and Ukraine concerns

Gold (XAU/USD) re-establishes an intraday low around $1,942, down 0.45 percent on the day, as COVID-19 concerns about China add to the yellow metal’s recent weakness during Tuesday’s Asian session. Bears are also aided by mixed concerns about the Russia-Ukraine crisis, as well as higher US Treasury yields amid expectations of faster monetary policy tightening by the Federal Reserve (Fed) Nonetheless, the yellow metal began the trading week on a negative note, owing to a stronger US dollar and uncertainty over the Ukraine-Russia standoff.

Following the largest daily increase in covid infections, the latest virus numbers from China did not provide any relief. “Mainland China reported 3,602 new confirmed coronavirus cases on March 14, according to the national health authority on Tuesday, up from 1,437 the day before,” The dragon nation also declared a virus-induced lockdown in Langfang, a city near Beijing. Oleksiy Arestovych, an adviser to Ukraine President Volodymyr Zelenskyy’s office, was quoted by Sputnik as saying that a Moscow-Kyiv peace treaty could be reached as soon as two weeks or before late May. On the same vein, Ukraine President Zelenskyy recently stated that peace talks with Russia will resume on Tuesday, following an abrupt halt on Monday. However, reports of a Russian drone over Poland and sanctions imposed on Moscow, as well as Russia-Belarus refusal to pay for energy supplies in USD, cast doubt on the mood and weighed on gold prices.

Among these bets, the S&P 500 Futures pared an early Asian session gain, while US 10-year Treasury yields hovered near the highest levels since July 2019, around 2.14 percent at the time of publication.

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The dollar is nearing a five-year high against the yen ahead of the Fed, while the Australian dollar is weak due to China concerns

On Wednesday, the dollar traded near a five-year high against the yen as investors awaited a Federal Reserve policy decision against the backdrop of the Ukraine war and China’s surging COVID-19 cases. Treasury yields jumped ahead of the Federal Open Market Committee decision, boosting the dollar against its Japanese counterpart, with traders fully pricing in the first interest rate hike in three years and giving a 13 percent chance of a half-point increase.

The dollar was also near its highest level this month against the Australian dollar, as commodity prices fell from multi-year highs, as markets remained hopeful that Russia-Ukraine talks would lead to an end to hostilities. Australia’s currency was also under pressure as top trade destination China saw new COVID cases more than double to a two-year high on Tuesday, raising concerns about the rising economic costs of the disease’s zero-tolerance policies.

Meanwhile, the euro has resumed its recovery from a near-22-month low earlier this month. This contributed to the dollar index remaining stable around 99.0, after reaching a high of 99.415 at the start of last week. “Whether forlorn or otherwise, there does seem to be some enduring optimism (coming from) the fact that Russia and Ukraine are still talking,” said Ray Attrill, head of FX strategy at National Australia Bank, helping the euro to stabilize.

In terms of the greenback, “the bigger question will be that there’s a lot of historical evidence that the dollar peaks as soon as the Fed begins the tightening cycle, so there’s a lot of interest in whether what the Fed does turns out to be something of a watershed in terms of a peak,” Attrill said, with the dollar index peaking around 100. The dollar index was last at 98.880, slightly lower than on Tuesday.

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With all eyes on the Xi-Biden negotiations, the AUD/USD remains under pressure approaching 0.7350

The AUD/USD broke a three-day rally from a monthly low during Friday’s Asian session, and is now trading at the intraday low of 0.7370. In doing so, the Aussie pair reflects the market’s trepidation ahead of a crucial phone conference between US President Joe Biden and his Chinese counterpart Xi Jinping, which will address a variety of topics, including the Ukraine-Russia situation. China’s Foreign Ministry acknowledged ahead of the meeting that China and Russia met on March 17 to discuss security cooperation. It’s worth mentioning that Beijing has repeatedly refuted US assertions that it is ready to assist Moscow in its conflict with Ukraine.

On a different page, Reuters reported that China recorded 2,416 new confirmed coronavirus cases on March 17, up from 1,317 the day before, according to the country’s national health authorities. ” It’s worth mentioning that COVID-19 daily infections have been decreasing in the previous two days after reaching an all-time high.

On the contrary, news of industry output restarting in five Shenzen districts keep buyers optimistic. In other news, Turkey is attempting to establish contact between Russian President Vladimir Putin and his Ukrainian counterpart Volodymyr Zelenskyy, but has received no confirmation. Fears of a Russian default add to the risk-off mindset.

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XAU/USD maintains small advances near $1,925, but lacks follow-through

Gold crept up in the early hours of Monday trade, but there was little follow-through purchasing or strong positive confidence. There appears to be no end in sight to Ukraine’s prolonged conflict, which has rejected Russia’s offers to hand up the port city of Mariupol. The deteriorating geopolitical environment put investors on edge, lending some support to the safe-haven precious metal. However, the advent of some US dollar buying worked as a headwind for the commodity priced in US dollars.

The fact that the Fed signalled last week that it may hike rates at all six remaining meetings in 2022 continues to bolster the buck. This, together with increased hawkish statements from important FOMC members and higher US Treasury bond rates, supported the dollar while limiting gains for non-yielding yellow gold. Nonetheless, the metal has managed to keep its head above the $1,920 level so far, as market players await Fed Chair Jerome Powell’s scheduled address later in the US session.

Traders will take cues from new developments in the Russia-Ukraine storey, which will play a significant role in determining market risk sentiment. Aside from that, the USD price dynamics should offer some push to gold in the absence of any market changing economic releases from the US. As earlier update Gold (XAU/USD) is licking its wounds at $1,928, up 0.30 percent intraday during the Asian session on Monday. The yellow gold suffered its largest weekly drop since June 2021, as market confidence strengthened during the previous week, impacting on the bullion’s safe-haven demand. However, Ukraine’s rejection of Russia’s capitulation demand in Mariupol has reignited risk aversion.

In addition to Kyiv’s willingness to fight in Mariupol, increased shelling in Ukraine by Russian soldiers reflects the bleak situation. The Chinese Envoy recently expressed willingness to de-escalate the conflict in Ukraine, but markets remain sceptical, as the past week’s discussion between US President Joe Biden and his Chinese counterpart Xi Jinping failed to deliver any important specifics on the critical topic. On the contrary, the debate over Taiwan heightened Sino-American tensions, reviving gold’s safe-haven demand. Other factors influencing market mood include rising covid numbers in China and the suspension of trade in Hong Kong by struggling real estate giant Evergrande.

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