What you should know on Friday, March 4:
Risk aversion continued to lead on Thursday amid the war crisis gripping Eastern Europe. The Russian stock market remains closed, but shares of EU companies with Russian exposure plunged. Meanwhile, the country is teetering on the brink of non-compliance amid global sanctions. However, attacks on Ukraine continued and Russian President Vladimir Putin told his French counterpart Emmanuel Macron that the goals of Russia’s operation in Ukraine would be achieved anyway.
Wall Street opened with substantial gains but quickly turned red amid concerns related not only to the war but also to an aggressive US Federal Reserve. On his second day before Congress, Fed Chairman Jerome Powell said policymakers are prepared to raise rates by more than 25 bps in upcoming meetings, which will further reduce demand for high-yield assets.
The mood improved and stocks rebounded, halting the dollar’s rally, thanks to news out of Ukraine. Kiev said it had reached a tentative agreement with Russia to organize safe corridors to evacuate civilians. Under the agreement, a ceasefire would be observed where safe corridors would be created. In addition, the third round of talks has been announced for next week.
Meanwhile, Bank of Canada Governor Tiff Macklem said he would not rule out a 50 basis point hike in the future as there is plenty of room to raise interest rates this year.
The EUR/USD pair tumbled to 1.1032, its lowest level since May 2020, amid safety calls. The pair hovers around 1.1060 as it heads towards a daily close. GBP/USD is trading at the 1.3350 zone.
The Australian dollar was among the best performers as AUD/USD hit a fresh 2022 high of 0.7347, holding close ahead of the Asian open. The USD/CAD pair rallied and settled around 1.2675 as crude oil prices finally eased a bit.
Gold prices rose modestly. Gold (XAU) is trading around $1,933.00 a troy ounce, having spent the day inside Wednesday’s range. WTI peaked at $116.51 per barrel, but is currently trading around $108.00.
Source: Fx Street
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