Yesterday's session was dominated by reaction following the significant geopolitical developments surrounding the Ukrainian war over the weekend. The fighting is continuing and Russian troops are massing in the outskirts of the capital Kyiv. However, major markets appear relatively settled today. Traders may just be waiting for the next big development and are unwilling to take a view with any confidence, but some respite has taken hold, at least for now.  

For data traders, the manufacturing PMIs for February from major economies are the focus today. The US ISM Manufacturing data will be most keenly watched later in the session. 


Sentiment is looking more settled: USD is consolidating, with a mild risk positive bias across major pairs (even then though there is still a marginal EUR underperformance). European indices are mixed but US futures are a shade higher. Precious metals are consolidating, but oil is higher (likely due to US/Iran talks faltering) 

Treasury yields tick higher: A safe haven flow sent yields sharply lower yesterday, but the outlook is a little more settled this morning and yields are ticking slightly higher, albeit off earlier highs. [Risk neutral] 

Massive volatility in the Russian Rouble continues: A big jag back as the rouble rebounds. USD/RUB rate is -7% lower this morning at 94 (from 101 at Monday’s close).

Russian troops advancing: A massive convoy of Russian armoured vehicles around 40 miles in length is advancing towards Kyiv. Fighting continues across the country. 

Russia/Ukrainian officials will continue to talk: The first round of talks has yielded little progress, however, talks will continue.

US/Iran nuclear talks falter: US officials are prepared to walk away if Iran refuses to change its views. European officials are stating that a decision has to be made this week. [Oil positive]

China PMIs improve slightly, broadly inline: The Government’s official PMIs have improved slightly in February. Manufacturing has ticked up to 50.2 (from 50.1) with Non-Manufacturing to 51.6 (from 51.1). These were all but in line with estimates [Risk neutral]

RBA holds rates at +0.1%: The move was expected. The board is prepared to be “patient” and the Ukrainian war is a major source of new uncertainty. This is an entirely understandable view given the geopolitical climate. [AUD neutral]

Eurozone final Manufacturing PMI slightly revised lower: Final manufacturing was revised slightly lower to 58.2 (from 58.4 at the flash reading) [EUR slightly negative]

Cryptocurrency rebounds strongly: Bitcoin jumped around +7% yesterday and is another +3% higher today. 

Economic Data:

  • UK final Manufacturing PMI (at 0930GMT) Consensus is looking for no revision to the prelim reading of 57.3 in February
  • US ISM Manufacturing (at 1500GMT) Consensus is looking for a slight improvement in February to 58.0 (from 57.6 in January)


Broad outlook: Risk rebounding slightly across asset classes. 

Forex: G4 forex (EUR, GBP, JPY and USD) are consolidating. Commodity currencies are rebounding, with NZD leading the way.

  • EUR/USD continues to build support from the range floor around 1.1108/1.1120 and is again holding ground this morning. Newsflow is still a key factor, but there is also still a downtrend of lower highs in the past few weeks suggesting selling into strength still for further pressure on 1.1108/1.1120. Resistance at 1.1270/1.1280 is key.
  • GBP/USD has reacted well to selling pressure in recent days and buyers are still willing to support. Reaction at the 1.3485 resistance will be key (old floor throughout February) but there is initial resistance at 1.3438 to be watched. A close under 1.3357 (old Jan low) would suggest continued deterioration. 
  • AUD/USD is has recovered extremely well and is now higher to test the key resistance band 0.7270/0.7315. This comes after the RBA meeting and the AUD is looking increasingly well-positioned now for a potential upside break.

Commodities: Precious metals building higher once more. Oil is also strengthening again.

  • Gold has held on well to the four-week uptrend support around $1890, with support at $1877/$1886 still key. Initial resistance is yesterday’s high at $1929. Technically still strong on momentum.
  • Silver is ticking higher again as support around the 4-week uptrend continues to build. Initial resistance is now yesterday’s high of $24.75. The support band at $23.84/$24.00 remains key.
  • Brent Crude oil has jumped early today and is now testing the resistance band $103.50/$104.82. Technical momentum is looking strong again.

Indices: Indices remain extremely volatile to swings in sentiment.  

  • S&P 500 futures have broken a three-week corrective trend, but the bigger downtrend of the past two months is up at 4480. RSI momentum has improved by needs to be consistently above 50 to suggest a sustainably improving outlook.
  • DAX continues to struggle with sustainable traction for a recovery. Resistance lies at 14,676 which is under the much greater overhead supply between 14,810/15,000. Momentum looks worryingly corrective still too. Support at 13,797/14,030.
  • FTSE 100 remains very choppy with big swings in sentiment. Resistance is big around 7550/7560 whilst the bulls will hope to build from 7330/7395.