Market Analysis

WTI crude oil prices are once again up following ease in tensions between Russia and the West

OIL

WTI crude oil prices are once again climbing during early Wednesday trading, after the previous session’s losses which came after an easing in tensions between Russia and the West, following Moscow’s partial withdrawal of troops from the border with Ukraine. Yesterday’s price drop resulted from investors closing positions to realize profits when some of the geopolitical tension started to fizzle-out; however, the fundamentals behind oil’s recent price gains remain in place, with insufficient supply in the face of growing global demand. Even as chances grow of a peaceful resolution for the dispute in Eastern Europe, mounting demand and a tight supply will keep prices supported, with the $100 per barrel mark looming ever closer.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

FOREX

The US dollar index is falling during early Wednesday trading, carrying the momentum initiated during the previous session. There has been a slight easing of tensions between Russia and the West, after Moscow announced a partial withdrawal of troops from its border with Ukraine. The markets have so far reacted with optimism, pricing-out some of the geopolitical risk that had driven a flight to haven assets, amongst which we can include the US dollar. However, the greenback’s losses are unlikely to be too pronounced because despite the relief generated by yesterday’s troop withdrawal, tensions are still running high in Eastern Europe. Also, later today the Federal Reserve will release the minutes of its latest meeting; further hawkish signals from the US central bank may reignite support for the dollar.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

GOLD

Gold prices are recovering some of the losses recorded during the previous session, as Wednesday’s trading gets underway in Europe, but not yet coming close to the multi-month maximums reached on Tuesday morning. Moscow’s partial troop withdrawal from the border with Ukraine appears to have improved the mood in the financial markets, with some risk appetite returning and haven assets, such as gold, losing appeal as investors reassess geopolitical risks. The other factor likely to impact the performance of the precious metal in the short term is the release of the Federal reserve’s minutes for its January meeting, which are coming out later today. These minutes could potentially impact the US dollar and affect the price of gold, too, due to the inverted correlation between the two assets.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

EUROPEAN SHARES 
EU share markets extended a rally on Wednesday, as risk-appetite continues to grow despite disappointing PPI data from China overnight. Most sectors were in the green following the European opening bell today, with investors welcoming easing tensions between Russia and the Western coalition after President Putin confirmed the partial withdrawal of Russian troops from the border with Ukraine. However, in addition to the geopolitical situation, investors will also have to face other market drivers today. Macro data and monetary policies will be in focus as investors look forward to the FOMC minutes of its latest meeting today, where hawkish sentiment is widely expected following the latest jump in the US CPI print. Moreover, volatility surges may be seen in the Retail, the Energy sector and oil markets in general as traders wait for the US Crude Oil inventories as well as US Retail Sales data for January. On the Treasury front, EU bonds stayed stable while the US 10-year yields hold gains above the key 2% level, meaning nervousness remains in the markets despite risk appetite resurgence this week.

Pierre Veyret– Technical analyst, ActivTrades

Source: ActivTrader

 

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