AUDNZD

Wall Street dropped hard during the first session after a long weekend. S&P 500 dropped 2.00%, Dow Jones moved 2.06% lower, Nasdaq plunged 2.50% and Russell 2000 slumped 2.70%.
While US stocks launched the day in bad moods, declines accelerated after solid US data (services PMI coming back above 50) boosted USD and Treasury yields, with 10-year rate climbing above 3.9%.
Indices from Asia-Pacific traded lower as well but scale of the drop was smaller. Nikkei dropped 1.3%, S&P/ASX 200 traded 0.3% lower, Kospi slumped 1.7% and Nifty 50 declined 1%. Indices from China traded 0.2-0.8% lower.
DAX futures point to a flat opening of the European cash session today.
NZD gained after RBNZ delivered a 50 bp rate hike, putting cash rate at 4.75% - the highest level since late-2008. Majority of economists expected such a move but there were some calls for 25 bp hike or even pause following a recent cyclone hit.
RBNZ signaled need for more rate hikes and confirmed its peak rate forecast at 5.50%.
AUD weakened following disappointing data for Q4 2022. Wage index increased by 0.8% QoQ (exp. 1.0% QoQ) while construction work completed dropped by 0.4% QoQ (exp. +1.5% QoQ).
Cryptocurrencies trade mostly lower - Bitcoin drops 1.6% while Ethereum and Dogecoin decline 1% each. Litecoin bucks the trend and gains 1%.
Energy commodities are pulling back amid overall increase in risk aversion - Brent drops 0.3%, WTI trades 0.4% lower and US natural gas prices plunged 2.5%.
Gold and silver trade little change while platinum and palladium jump around 0.8% each.
NZD and JPY are the best performing major currencies while AUD, CAD and USD lag the most.

AUDNZD is plunging today amid a mix of NZD-positive and AUD-negative news. The pair pulled back from the resistance zone marked with 61.8% retracement and plunged back below recently-broken 200-session moving average (purple line). AUDNZD is attempting to make a break below the zone marked with 50% retracement, which would pave the way for a test of 1.0870 area, marked with 38.2% retracement.

BREAKING: German IFO Data Meets Estimates, DE30 Muted

German IFO Institute published the latest survey data for February today at 9:00 am GMT. Data came in mostly in-line with market expectations with headline Business Climate index reaching 91.1 (exp. 91.2). Current conditions subindex missed estimates by quite a big margin while Expectations subindex turned out to be slightly better than expected. However, as scale of deviations from median estimates was small, there were no major reactions on the market. EURUSD ticked lower while DE30 was flat following the release.

> IFO Business Climate index for February: 91.1 vs 91.2 expected (90.2 previously)
> Expectations: 88.5 vs 88.4 expected (86.4 previously)
> Current Conditions: 93.9 vs 95.0 expected (94.1 previously)

DE30 barely saw any reaction to in-line IFO data. Index continues to trade near 15,300 pts price zone, that has limited recent downward moves.

NZDUSD - A fall is possible.

If the assumption is correct, the NZD/USD pair will fall to the area of 0.6008–0.5890. In this scenario, critical stop loss level is 0.6388.

AUDUSD

The Australian dollar is the worst performing G10 currency today, dragged down by disappointing macro data. Australia's seasonally adjusted wage price index rose by 3.3% YoY in Q4, after an upwardly revised 3.2% rise in Q3 and below analysts’ estimates of 3.5%. This was the highest reading since Q4 of 2012, amid further improvement in business conditions in the wake of the COVID pandemic. Wages in the private sector quickened to 3.6%, the highest since Q3 of 2012; while those in the public one accelerated to 2.5%, the highest since Q2 of 2019.

Meanwhile construction work completed dropped by 0.4% QoQ, well below market estimates of 1.5% rise, while Australia’s Westpac Leading Index marked -0.1% figure in January, the second time in a row. Also stronger-than-expected US economic data and hawkish remarks from policymakers also bolstered expectations the Fed would keep pushing interest rates higher to bring down inflation, weighing on the Aussie further. Today market attention will focus on the release of the latest FOMC monetary policy meeting minutes, due later during the US session,  which may determine the short-term trajectory for the pair.

From technical point of view, AUDUSD approaches a major support zone between 0.6810 - 0.6790, which is marked with previous price reactions and 78.6% Fibonacci retracement of the upward wave launched at the beginning of the year. Should break lower occur, sell-off may deepen towards the lower limit of the 1:1 structure at 0.6725 or even January lows at 0.6688. Nevertheless as long as price sits above the aforementioned support zone, another upward impulse may be launched towards local resistance at 0.6870.

USDCAD - Growth is possible.

If the assumption is correct, the USDCAD pair will grow to the area of 1.3691–1.3850. In this scenario, critical stop loss level is 1.3440.

US100

> US indices finished yesterday's trading mixed. S&P 500 dropped 0.16%, Dow Jones moved 0.26% lower, Nasdaq gained 0.13% and Russell 2000 added 0.34%.
> FOMC minutes triggered a hawkish reaction on the markets, with USD gaining somewhat and indices slashing gains. Document noted that a few FOMC members opted for a 50 bp rate hike and that all members agreed more tightening is needed.
> Indices from Asia-Pacific traded mixed today. S&P/ASX 200 dropped 0.4%, Kospi moved 0.8% higher while Nifty 50 traded flat. Indices from China traded 0.2-0.4% lower.
> DAX futures point to a slightly higher opening of the European cash session today.
> Fed Williams said that demand is still exceeding supply and that monetary policy must ensure that balance is restored. Williams said that 2% inflation is foundational target.
> RBNZ Governor Orr said that cyclone-related price pressures may require higher rates to be kept for longer. Orr also said that a large inflationary shock would be needed for RBNZ to return to 75 bp rate hikes.
> Australian capital expenditures increased 2.2% QoQ in Q4 2022 (exp. +1.0% QoQ).
> API report pointed to a 9.89 million barrel build in US oil inventories (exp. +1.1 mb).
> Nvidia rallied almost 9% in the after-hours trading, following the release of earnings report for November 2022 - January 2023 period. Revenue reached $6.05 billion (exp. $6.00 billion) while adjusted EPS came in at $0.88 (exp. $0.81). Company expects revenue to reach $6.5 billion in February - April period, above Wall Street estimate of $6.33 billion.
> Cryptocurrencies are trading mostly higher - Bitcoin gains 1.1%, Ethereum adds 1.8% and Tezos jumps over 5%.
> Energy commodities trade mixed - Brent and WTI trades 0.3-0.4% higher while US natural gas prices drop 0.2%.
> Precious metals catch a bid amid USD weakening - gold gains 0.4%, silver adds 0.7% and platinum jumps 1%.
> NZD and AUD are the best performing major currencies while USD and JPY lag the most.

Nasdaq-100 (US100) trades within a short-term downward channel. Index took a hit yesterday following release of FOMC minutes but managed to find support at 200-period moving average (purple line, H4 interval) and climbed back above the price zone marked with 38.2% retracement of the upward move launched in late-December 2022.

Oil

This week marks the first anniversary of the Russian invasion of Ukraine. While the conflict was expected to be short-lived, the reality turned out to be quite different. Ukraine defends itself thanks to its determination, support from the West and numerous sanctions imposed on Russia. Meanwhile, the invader is still not willing to retreat despite several defeats. Financial markets, meanwhile, have changed markedly over the last 12 months, although some of the price movements were rather surprising. Price movements on many markets reached several dozen or even several hundred percent in the past few months. However, currently the situation stabilized and earlier moves are being reversed on several markets.

Energy commodities

Russia was one of the largest suppliers of energy resources not only for Europe, but also for many nations around the world. Global community feared that outbreak of the conflict at the end of February 2022 would halt exports of key commodities from Russia. The Kremlin itself decided to use gas as a tool to blackmail Europe. However, after initial price shock on gas, oil and coal markets, prices fell and stabilized as Europe found other suppliers of these key commodities. Putin wanted Europe to freeze over the winter but reduced consumption, supplier diversification and warmer than expected weather pushed the prices below pre-war levels.

TTF natural gas: -42% y/y
US natural gas: -57% y/y
Brent: -17% y/y
ARA coal: +8% y/y

This week marks the first anniversary of the Russian invasion of Ukraine. While the conflict was expected to be short-lived, the reality turned out to be quite different. Ukraine defends itself thanks to its determination, support from the West and numerous sanctions imposed on Russia. Meanwhile, the invader is still not willing to retreat despite several defeats. Financial markets, meanwhile, have changed markedly over the last 12 months, although some of the price movements were rather surprising. Price movements on many markets reached several dozen or even several hundred percent in the past few months. However, currently the situation stabilized and earlier moves are being reversed on several markets.

Energy commodities

Russia was one of the largest suppliers of energy resources not only for Europe, but also for many nations around the world. Global community feared that outbreak of the conflict at the end of February 2022 would halt exports of key commodities from Russia. The Kremlin itself decided to use gas as a tool to blackmail Europe. However, after initial price shock on gas, oil and coal markets, prices fell and stabilized as Europe found other suppliers of these key commodities. Putin wanted Europe to freeze over the winter but reduced consumption, supplier diversification and warmer than expected weather pushed the prices below pre-war levels.

TTF natural gas: -42% y/y
US natural gas: -57% y/y
Brent: -17% y/y
ARA coal: +8% y/y

Lockheed Martin and BP gained following the outbreak of the Russia-Ukraine war. Lockheed gained over 20% while shares of BP rallied over 40%.

Sanctions, economy, inflation and China

Conflict between Russia and Ukraine is still ongoing. The West is providing massive support for Ukraine, by providing it with weapons, training for its military personnel as well as economic relief. Apart from that, a number of sanctions have been levied on the Russian finance sector and key export commodities. The Russian economy has benefited from sky-high energy commodity prices and it has allowed it to experience a smaller hit than the Ukrainian economy.

Commodity price increases and shutdown of some communications lines boosted inflation around the world. However, it should be said that inflation was on an uncontrolled, upward trajectory even before the outbreak of war. It seems that central banks have achieved at least a partial success but it should be said that a bulk of current deceleration in price growth is driven by a drop in commodity prices.

One should not also forget about China, whose ambition it is to change the direction of dependence on Russia. Current Russian commodity sales revenue is generated mostly via sales to Asia. On the other hand, China has not decided on a similar move as the Russian and refrained from invading Taiwan as it could be a massive disruption to global supply chains.

Will the end of war trigger a market bull run?

Investors have been hoping for months for any signals suggesting a potential cease fire or peace negotiations. Currently, such a scenario seems neither quick, nor likely. Markets got used to war. One cannot rule out the possibility of Russia further restricting flows of energy commodities given that numerous countries embrace price caps that Russia opposes. On the other hand, it does not seem to be the base case scenario. The end of the war would be good news primarily for Ukraine but would unlikely be a breakthrough from a market point of view. However, it could pave the way for a quicker solution to issues like inflation or risk of economic recession. On the other hand, financial markets have been flooded with negative news as of late and such good news like the end of the Russia-Ukraine war could be a trigger for the return of the bull market.

EURTRY: CBRT Cuts Rates by 50 bp, TRY Weakens

Central Bank of Republic of Turkey announced its latest rate decision today at 11:00 am GMT. Median expectation among economists surveyed by Bloomberg was for a 100 basis point rate cut while median expectation in Reuters poll was for 50 basis point rate hike. CBRT decided to go with a 50 basis point rate cut, slashing the one-week repo rate from 9.00 to 8.50%. The Bank said that decision was allowed by improvement in inflation trends and that scale of rate cut is adequate to support recovery. Central bank said that it is assessing the economic impact and damage of recent earthquakes that hit Turkey and Syria.

EURTRY gained following a 50 bp rate cut from CBRT.

NZDCAD

The NZDCAD pair continued to provide correctional bearish tracs due to facing strong negative pressures caused by stochastic crawl below 50 level, to suffer additional losses and settle near 0.8360 level.

We notice the price consolidation within the bullish track that depends on 0.8390 level forming strong support line that allows us to wait to gather the additional positive momentum to manage to start activating the bullish track and expect to rally towards 0.8430, followed by attempting to breach 0.8485 obstacle in order to ease the mission of reaching additional stations in the upcoming period.

US100

Indices from Asia-Pacific traded lower at the beginning of a new week. Nikkei dropped 0.1%, S&P/ASX 200 traded 1.1% lower, Kospi slumped 0.9% and Nifty 50 moved 0.8% lower. Indices from China traded 0.2-0.8% lower
DAX futures point to a slightly higher opening of the European cash session
US index futures little changed compared to Friday closing prices
UK prime minister Sunak is set to meet with EC President von der Leyen today to discuss the Brexit deal (Northern Ireland protocol). UK deputy PM Raab said that great progress has been made and that long-standing issue is close to be solved
ECB President Lagarde said that a 50 bp rate hike at the March meeting is not certain and remains data-dependent. ECB Visco said that peak rate could be 3.75% but it remains data-dependant
BoJ Governor nominee Ueda said that CPI growth will slow below 2% in fiscal-2023 but it will take time for the 2% target to be met sustainably and stably. He also said that current monetary easing conducted by Bank of Japan is appropriate
Conway, RBNZ chief economist, expects New Zealand official cash rate to peak around 5.5% around the middle of the year (4.75% currently)
Russia halted pipeline oil deliveries to Polish refiner PKN Orlen over the weekend
New Zealand retail sales dropped 0.6% QoQ in Q4 2022
Australian business inventories dropped 0.2% QoQ in Q4 2022 (exp. 0.0% QoQ)
Cryptocurrencies trade lower - Bitcoin drops 0.3%, Dogecoin trades 0.7% lower while Litecoin pulls back 0.4%. Ethereum gains 0.1%
Energy commodities trade mixed at the beginning of a new week - oil drops 0.9% while US natural gas prices jump 1.4%
Precious metals pull back slightly amid USD strengthening - gold trades 0.1% lower, silver drops 0.2% and platinum pulls back 0.5%
USD and EUR are the best performing major currencies while NZD and AUD lag the most

Nasdaq-100 futures (US100) climbed back above the 12,000 pts mark but some selling pressure appeared as the European trading drew close and another pull back cannot be ruled out.

Silver - Growth is possible.

If the assumption is correct, the XAGUSD pair will grow within the wave v of 1 to the area of 24.58 – 26. In this scenario, critical stop loss level is 20.36.