Gold and US equities diverge as global risks rise
|American stocks declined sharply after Joe Biden delivered a major warning about the crisis in Ukraine. In a press conference, he warned that Russia was on the brink of attacking Ukraine. He claims Russia is engaged in a false flag operation as an excuse to go in. The statement came as the two countries blamed each other for clashes that started on Thursday. The Dow Jones and Nasdaq 100 declined sharply while gold and the US dollar rose.
The US dollar rose after a slew of mixed economic data from the US. on Thursday, data by the Bureau of Labor Statistics (BLS) showed that the number of initial jobless claims rose to 248k last week. They have risen in the past few weeks. Further data showed that housing starts declined from 1.7 million to 1.63 million in January/Building permits, which is important data, also declined from 1.61 million to1.63 million. These numbers came a few hours after the Fed published hawkish FOMC minutes.
The economic calendar will have some important economic data today. In the morning session, the UK will publish the latest retail sales data. Analysts expect the data to show that sales held steady in January, with the headline figure rising by 8.7%. Core sales are expected to have risen by 7.9% in January. Sweden will publish the latest inflation data while the Fed will publish its monetary policy report. Canada will also deliver its retail sales data.
XAU/USD
The XAUUSD pair jumped sharply as investors rushed to safe assets. It rose to a high of 1895, which is significantly higher than this month's low of 1,820. It moved above the 25 and 50-day moving averages while oscillators like the Relative Strength Index and MACD also kept rising. Therefore, the pair will likely continue rising as the crisis escalates.
EUR/USD
The EURUSD pair moved sideways in the overnight session after mixed economic data from the United States. It is trading at 1.1367, where it has been in the past few days. On the four-hour chart, the pair is trading at the same level as the 25-day and 50-day moving averages. It is also trading between the 38.2% and 23.6% retracement levels. Therefore, the pair will likely remain in this range today.
USD/CAD
The USDCAD was in a tight range ahead of the upcoming Canada retail sales numbers. The pair is trading at 1.2692, which is between the support and resistance levels shown in red. It is also slightly below the 50% Fibonacci retracement level. The Chaikin oscillator has pointed upwards. Therefore, the pair will likely remain in this range later today.
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