Forex Today: Markets recovered their optimism, but will it last?

Valeria Bednarik FXStreet

What you need to take care of on Thursday, March 3:

Financial markets shrugged off fears, at least temporarily by the end of Wednesday. Demand for the greenback receded, although it ended the day mixed across the board. It was quite a busy day, with inflation-related concerns temporarily returning to the table.

The EU released the preliminary estimate of its February CPI, which jumped to a record 5.8% YoY. Speculative interest forward bets for an ECB rate hike before year-end, despite policymakers noting that Eastern European developments are sending uncertainty to fresh, unknown levels.

US Federal Reserve chief Jerome Powell testified on the Semi-Annual Monetary Policy Report before the House Financial Services Committee. Powell hinted at a 25 bps rate hike in March, which helped Wall Street rebound, as market participants were betting on a 50 bps rate hike. He also referred to the new levels of uncertainty created by war but repeated that the central bank would do whatever is necessary to maintain price stability, including reducing the balance sheet.

The EUR/USD pair recovered from a multi-month low of 1.1058 and trades around 1.1130 heading into the Asian opening. GBP/USD finished the day with gains around 1.3380 after falling to 1.3270.

The Bank of Canada lifted interest rates by 25bps to 0.50% as expected on Wednesday, adding that it expects it would need to further increase interest rates. The central bank announced it would continue with the reinvestment phase of its balance sheet, maintaining its overall holdings of Canadian government bonds at roughly the same level.

The CAD appreciated against the greenback, with the pair currently trading at around 1.2650. AUD/USD surged to 0.7300, helped by upbeat Australian Q4 GDP figures.

Crude oil prices soared amid the Eastern Europe war. The OPEC+ agreed to raise oil output by 400k BPD in April, but the announcement fell short of cooling prices. The barrel of West Texas Intermediate is currently at around $110.80.

Spot gold retreated from its recent highs but holds on to weekly gains. It is currently changing hands at $1,925 a troy ounce.

Russian attacks on Ukraine persists, although the second round of talks will resume early on Thursday. A ceasefire would be discussed then. Such headline further supported the market’s optimism, despite escalating global tensions.

Bitcoin hits major resistance before BTC begins a 20% price spike

Like this article? Help us with some feedback by answering this survey:

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

GBP/USD loses momentum, flirts with 1.3200

GBP/USD is struggling to maintain its positive bias on Thursday, retreating toward the 1.3200 region in response to the pick in the buying interest around the Greenback. That said, Cable remains under scrutiny as cautious market sentiment keeps investors focused on the US-Iran conflict and political effervescence in the UK.

EUR/USD trims gains, challenges 1.1400

EUR/USD now gives away part of its earlier advance, receding toward the 1.1400 contention zone on Thursday. Meanwhile, the pair’s recovery comes amid extra losses in the US Dollar, at the time when while investors continue to monitor developments in the Middle East and sentiment surrounding global technology stocks.

Gold remains bid and close to $4,100

Gold accelerates its recovery and approaches the key $4,000 mark per troy ounce at the end of the week, adding to Thursday’s advance. However, expectations for a hawkish Fed remain steady and keep the yellow metal’s potential upside contained.

Crypto Today: Bitcoin at $60,000, Ethereum at $1,500, and XRP at $1 face a make-or-break test

Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are trading in the red on Friday after three consecutive days of losses, testing their respective make-or-break support levels.

Week ahead – NFP report to challenge Dollar strength and the hawkish Fed

Dollar strength dominates markets, as the hawkish Fed overshadows geopolitics and lower oil prices. NFP week could drive September Fed hike expectations and boost market volatility. The euro lacks fresh bullish catalysts, all eyes on the preliminary inflation report and the ECB Forum.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.