Market sentiment is again on edge this morning amid news of potential escalation in tensions in Ukraine once more. Russian sources are suggesting that Ukraine government forces have attacked Russian-backed rebels in eastern Ukraine. There is subsequently a highly cautious tone to trading on indices, whilst US futures are moving lower again. A flight to safety is also enabling JPY outperformance in forex and precious metals to climb once more.

Last night’s FOMC minutes told us little new, whilst today’s calendar is packed with lower-tier US data this afternoon. The focus will remain squarely on developments in Ukraine.  


Sentiment turning sour again: There is a safe haven bias across major markets again. US futures are dropping, precious metals climbing (gold breaking to a new 8-month high) and JPY is a standout performer in forex.

Treasury yields have started to fall again: Yields have been in choppy consolidation in recent days, but the 10-year yield is -4 basis points lower today on a move into safety across markets. [Risk negative] 

Ukraine tensions mount again: Reports (from Russian sources) of Ukrainian government forces attacking rebels in eastern Ukraine stokes tensions again. The US claims Russian is adding troops to frontline positions, not withdrawing them.

FOMC minutes show nothing new: The minutes are three weeks old now and markets have seen inflation spiking higher again since then. No real hawkish surprises in the minutes. [USD neutral]

Australian unemployment hints of further improvement: There was no change to the headline rate of 4.2% in January (as expected) but there was a larger than expected employment change and the participation rate improved to 66.2 (from 66.1% in December) [Mildly AUD supportive]

Oil negative pressure: The US is in the “very final stages in Iran nuclear talks”. This is seen as a route to increasing Iranian oil supplies and pulled the oil price lower yesterday. An early rebound today has come on the Ukrainian tensions. [Oil volatility]

Cryptocurrency tailing off again: Crypto is still acting as a risk asset class and as such has fallen back on the elevated Ukrainian tensions this morning. Bitcoin is ranging between $41,500/$45,800.   

Economic Data:

  • US Weekly Jobless Claims (at 1330GMT). Claims are expected to reduce slightly to 219,000 (from 223,000 in the previous week). 
  • US Philly Fed Manufacturing (at 1330GMT). The index is expected to drop back slightly to 19.9 in February after the surprisingly strong 23.2 in January.
  • US Building Permits (at 1330GMT). Permits are expected to fall to 1.74m in January (from 1.89m in December). 
  • US Housing Starts (at 1330GMT). Starts are expected to remain steady around 1.70m (1.70m in December). 


Broad outlook: Markets turning back into a flight to safety this morning. Higher-risk assets are underperforming.

Forex: JPY is the standout performer, with USD also marginally positive; the AUD and CAD are underperformers.

  • EUR/USD has rebounded from a sharp decline overnight but is still unable to overcome the resistance around 1.1360/1.1385. This is an old pivot band that needs to be overcome to open the top of the trading range of 1.1120/1.1495. For now, we are neutral. Initial support is at 1.1320 with 1.1280 key near term.
  • GBP/USD is still holding ground as it has been ticking higher within the range between 1.3485/1.3645. With technical signals on daily and 4-hour chart neutral, we stand aside within this mini-range and are looking for a closing breakout to gain direction.
  • AUD/USD has been edging higher in the past couple of weeks and has picked up well from 0.7085. Despite the early slip lower this morning, there is still a positive bias in the near-term outlook for a test towards 0.7250 resistance. Initial support 0.7140/0.7150.

Commodities: Precious metals are pulling higher once more, with oil volatile on its own newsflow.

  • Gold threatened to turn corrective, but newsflow on Ukraine has once more sent the precious metal sharply higher this morning. A move through $1877 negates near-term corrective pressure and if the geopolitical tensions remain then gold will attract buyers. A move to an 8-month high has opened $1900/$1916 (May/June 2021 highs). Initial support $1870/$1877.


  • Silver is also moving back higher and is eyeing a retest of the recent resistance at $23.99. Initial support is at $23.30/$23.40. Above $23.99 opens upside towards $24.70.
  • Brent Crude oil has been volatile on newsflow (Iran and subsequently Ukraine). The uptrend has again been threatened but support at $90.40/$91.00 has held firm. There is still the threat of a technical correction, but newsflow is a key factor for now. Resistance is at $96.40.

Indices: US futures are tailing off, whilst European indices are beginning to form lower highs and lower lows again.  

  • S&P 500 futures have been in a near-term range 4422/4484  for the past couple of sessions, but are beginning to tail off again. The immediate risk is towards 4422. Traders will be keeping a close eye on geopolitical developments to drive near term direction. Initial resistance is at 4467.
  • DAX has started to tail off and form intraday lower highs and lower lows in the past couple of sessions. This is all coming under the resistance of a 6-week downtrend (c. 15,500). Initial support is at 15,255. 
  • FTSE 100 has tailed off in the past 24 hours and is leaving resistance now at 7634. Near term, momentum is turning corrective and a move below 7550 would open 7485/7500 again.

Support and Resistance levels