Europe roundup: British pound gains against the dollar as spring statement in sight, European stocks rise, gold subsides, oil rises towards $116 as EU Weighs Russian Ban – March 22, 2022

Market overview

• UK public sector net borrowing 12.35 billion, forecast 8.50 billion, -7.83 billion previous

• UK public sector net cash requirement in February 2.478 billion -21.992 billion previous

• EU January current account 22.6 billion, forecast 24.3 billion, previous 22.6 billion

• EU January current account nsa -1.7 billion forecast, 35.7 billion previous

• Consumer confidence in Belgium in March – 16 forecasts, 1 previous

• EU construction production in January (monthly) 3.94% forecast, -1.54% previous

• Canadian IPPI in February (monthly) 3.1%, previous 3.0%

• Canadian IPPI in February (Annual) 16.4%, previous 16.9%

• RMPI Canada February (monthly) 6.0%, previous 6.5%

• US Red Book (Annual) 12.4%, previous 12.6%

Forward-looking economic data (GMT)

• No data forthcoming

Future Outlook – Events, Other Releases (GMT)

•2:35 pm Williams, member of the American FOMC, takes the floor

•3:15 p.m. Cunliffe, member of the BoE MPC, speaks

• 17:00 EU ECB Lane speaks

•6:00 p.m. Daly, member of the FOMC, speaks


EUR/USD: The euro fell against the dollar on Tuesday as investors braced for more aggressive US rate hikes. The dollar strengthened after U.S. Federal Reserve Chairman Jerome Powell delivered his strongest message yet on Monday on his fight against too-high inflation as he signaled more monetary policy tightening. aggressive than expected. Investors will watch for any positive signals from Ukraine, but the territory issue could kill any chance of a deal to end the war. Immediate resistance can be seen at 1.1037 (38.2% fib), a break up can trigger a rise towards 1.1124 (50% fib). On the downside, immediate support is seen at 1.0991 (14DMA), a break below could take the pair towards 1.0928. (23.6% fiber).

GBP/USD: The pound strengthened against the dollar on Tuesday ahead of the Chancellor’s spring statement on Wednesday. Attention turned to UK inflation data and UK Finance Minister Rishi Sunak’s spring statement, both due on Wednesday. Sunak, who is preparing the budget update, said on Tuesday it was more important than ever to take a responsible approach to public finances. The Bank of England raised its interest rate by 25 basis points on Thursday and signaled a slower pace of tightening, but the pound has outperformed the dollar since the decision. The pound rose 0.2% against the US dollar to hit $1.3190. Immediate resistance can be seen at 1.3253 (50%fib), a break up can trigger a rise towards 1.3318 (61.8%fib). On the downside, immediate support is seen at 1.3190 (38.2%fib), a break below could take the pair towards 1.3108 (23.6%fib).

USD/CHF: The dollar fell slightly against the Swiss franc on Tuesday as investors braced for aggressive US rate hikes as a lack of progress in Russian-Ukrainian peace talks continued to weigh on sentiment. The conflict raged as Ukraine said on Monday it would not obey Russia’s ultimatums after Moscow demanded it stop defending beleaguered Mariupol. Russia’s invasion of Ukraine sparked a rally in commodities, including oil and industrial metals, on concerns over supply disruptions, with crude prices surging as some members of the European Union were discussing a possible oil embargo on Moscow. Immediate resistance can be seen at 0.9329 (38.2% fib), an upside break can trigger a rise towards 0.9365 (23.6% fib). On the downside, immediate support is seen at 0.9310 (14DMA), a break below could take the pair towards 0.9299 (23.6% fib).

USD/JPY: The dollar hit its highest level in six years against the yen on Tuesday as the Bank of Japan reiterated its support for an ultra-accommodative monetary policy. Japan must maintain an ultra-loose monetary policy lest inflation hurt the economy, Bank of Japan Governor Haruhiko Kuroda said on Tuesday – contrasting with Powell’s overnight hawkish comments from the fed. The yen hit a six-year low at 120.50, down 0.8% on the day, after losing more than 4% against the dollar this month as rising US yields and deterioration of the trade balance are sucking up the liquidity of the world’s third-largest economy. A strong resistance can be seen at 120.80 (daily high), a break up can trigger a rise towards 113.00 (psychological level). On the downside, immediate support is seen at 120.23 (23.6% fib), a break below could take the pair towards 119.76. (38.2% fiber).

Summary of actions

European stocks rose on Tuesday, supported by energy stocks extending a rally amid higher oil prices and gains for banks following hawkish comments from the chairman of the US Federal Reserve.

At (12:47 GMT), Britain’s benchmark FTSE 100 last traded 0.44%, Germany’s Dax was up 0.65%, France’s CAC was last up 0.52 %.

Summary of raw materials

Gold prices fell on Tuesday, following a pullback in crude oil prices, with pressure also coming from the head of the US Federal Reserve’s hawkish approach to fighting inflation that pushed Treasury yields higher.

Spot gold fell 0.4% to $1,928.30 an ounce at 10:53 GMT. US gold futures fell 0.1% to $1,928.00.

Oil hit $116 a barrel on Tuesday, adding to a 7% rise the day before, buoyed by supply risks from a possible European Union oil embargo on Russia and concerns over attacks on Saudi oil installations.

Brent crude rose 26 cents, or 0.2%, to $115.88 a barrel as of 1140 GMT. U.S. West Texas Intermediate crude slipped 10 cents to $112.02. Both contracts had sold for more than 7% on Monday.