Market sentiment has started to improve marginally as the European session has taken hold. There is still considerable uncertainty around potential conflict as Russian troops mass at the Ukraine border. However, Russia has stated that it is willing to negotiate. Despite this uncertainty, risk appetite has looked more positive today. The flight to safety seen over the weekend has started to reverse again. This means that the outperformers of the past couple of sessions (Gold, JPY and USD) are pulling back. Instead, we see support for indices and pro-cyclical forex (AUD and NZD).

UK unemployment data came in with a slightly positive tone. Markets will be looking towards Eurozone data on growth and unemployment this morning, in addition to the German ZEW. US factory gate inflation (PPI) will take the focus later.   


Sentiment looking to improve: Indices are rebounding, whilst USD and JPY are underperforming. 

Treasury yields are ticking back higher again: The 10-year yield is back above 2% this morning. This needs to be watched as if yields spike higher again, it would be risk negative. For now, markets are happy to accept this move. [Risk neutral] 

Russia/Ukraine conflict uncertainty: Mixed news overnight, with Russia supposedly “willing to negotiate”. However, at the same time, US satellite pictures show Russian troops positioned at the border with Ukraine.

RBA ready to be patient over inflation: The Reserve Bank of Australia minutes from the February meeting suggest patience to see how inflation evolves. [AUD neutral]

Japanese GDP with a slight miss: Japanese Q4 growth came in slightly lower than expected at +1.3% QoQ (+1.4% expected) [JPY slightly weaker]

UK unemployment and earnings slightly positive: Unemployment as expected at 4.1% in December with earnings coming in slightly higher than expected (including bonus at 4.3%). January’s claimant count was slightly lower than expected. [GBP supportive]

Cryptocurrency stable: Signs of support forming. Bitcoin has rebounded from $41,555 to a five-day high this morning. 

Economic Data:

  • Eurozone GDP (at 1000GMT). The second reading of growth is expected to be unrevised at +4.6% for Q4.
  • German ZEW Economic Sentiment (at 1000GMT). The sentiment is expected for the Eurozone’s largest economy is expected to improve slightly to 53.5 in February (from 51.7)
  • New York Fed Manufacturing (at 1330GMT). An improvement to +12.0 is expected in February (after -0.7 in January). 
  • US PPI (at 1330GMT). Headline PPI is expected to fall slightly to 9.1% in January (from 9.7% in December), with core PPI falling to 7.9% (from 8.3%). 


Broad outlook: Markets look far more settled today, with risk appetite improving across asset classes.

Forex: JPY and USD are underperforming, with EUR, AUD, and NZD all rebounding.

  • EUR/USD has rebounded from 1.1280 (above 1.1270 key near-term support) and is looking to improve now. The key test now lies with the reaction to resistance at 1.1360/1.1385. This is an old pivot band within what is now a trading range of 1.1120/1.1495. 
  • GBP/USD has held on well to the 1.3490/1.3500 support and is now ticking higher again today. This leaves a mini trading range between 1.3490/1.3645. We are neutral within this mini range and are looking for a closing breakout.
  • AUD/USD has picked up encouragingly from 0.7085 and is now looking to improve once more after 3 days of decline. Initial resistance is at 0.7185, with an upside break opening 0.7250. 

Commodities: The spike higher on precious metals is threatening to unwind. The oil rally is also pulling back.

  • Gold spiked to a new 9 months high this morning at $1879, however has pulled back as broad market sentiment has improved. Trading volatility is elevated right now and there is a risk in either direction. Moves will take on newsflow. The concern is that an improvement in the geopolitical tensions could see gold pulling sharply lower. Initial support at $1850 then $1841 and $1820.


  • Silver is unwinding the strong gains of recent sessions after the rally has peaked at $23.99. Support at $23.50 will be a near term gauge, with the first key support band $22.85/$23.00.
  • Brent Crude oil has just eased back from further multi-year highs this morning. The peak of $97.15 has ushered in some near term profit-taking. There is a hint of negative divergence on the daily RSI momentum. The support at $93.80/$94.55 will be the first test.  Key support remains at $90.50/$90.90.

Indices: Wall Street has jumped higher this morning but needs to overcome overhead supply. European markets are also higher.  

  • S&P 500 futures have jumped this morning after the choppy consolidation of Monday. However, the band between 4427/4454 is now a key overhead supply. This will be a key gauge of recovery today. The buyers will also look to use 4410/4428 as a band of support.
  • DAX has jumped higher this morning, once more using the medium to longer-term support area 14,810/15,000 as a springboard for recovery. Reaction to the initial resistance band 15,285/15,350 will be a gauge for the progress of recovery today.  Initial support is at 15,140/15,230. 
  • FTSE 100 has jumped higher this morning to test the initial resistance band 7580/7610. This will be a gauge of the recovery. Initial support at 7545/7555 will be seen as a platform to move higher from.

Support and Resistance levels