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Yields are lower, oil is higher, stocks are lower, the EURUSD is lower, and the USDJPY is lower as well. As the Russia/Ukraine scenario deteriorates, all the balls are in motion.
• Yields are low, with the 10-year yield falling -6.1 basis points on the day to 1.968 percent. The maximum for the day was 2.063 percent.
• The price of crude oil increased to a high of $94.66. This increased the price over the February 4 high of $93.14.
• Gold is up $30 to $1856.63. That is up 1.68 percent on the day.
• Stocks have fallen, with the Dow -338 points or -0.97 percent at 34910, the S&P -64.21 points or 1.43 percent at 4441, and the Nasdaq down -301 points or -2.12 percent at 13886.
The dollar’s movements in the Forex market are erratic. The JPY is the most powerful currency. The EUR is the most vulnerable:
- EURUSD: The EURUSD has fallen lower, falling below the day/week low of 1.13684 and the lower swing range of 1.1359 to 1.13684. Shorts are currently at peril in that area. The longer you stay below, the more bearish you are. The low has reached 1.1331, slightly shy of the peak set last Wednesday. The half-way point between the 2022 lows and the current highs is 1.13075.
- USDJPY: The USDJPY has also gone down (flight into the relative safety of the JPY), with the price falling below the 100 hour MA at 115.60 and the 200 hour MA, as well as 50% of the recent move upward from the February low, cutting over around 115.23. The current exchange rate is 115.16.
- EURJPY: The EURJPY has fallen since the EUR is close to the epicentre of the crisis and vulnerable to trade restrictions that might harm energy supplies to Europe. The JPY has benefited since it is a safe haven currency. The 200 hour MA was broken, and the percentage was 38.2 percent at 131.27. That is now a danger. The 200-day moving average is 130.486.
- That, too, was broken on the slide lower, but buyers found support at that MA level (PS. the 100 day MA is at 130.11, which may have also aided the rebound from a technical standpoint).
· The S&P 500 is currently down more than 2%.
· The NASDAQ index is down around 3%.
· The main US market indices are currently trading at a new session low, with the S&P index down more than 2% and the NASDAQ index down over 3%.
· The S&P 500 has dropped below the 200-day moving average, which is now at 4452.10. Remember that the price closed above that MA level on Wednesday (it also closed above that MA level last week on Wednesday), but the break failed on Thursday. Falling below the 200-day moving average is a negative signal right now.
Gold is attempting to break through the top of a huge consolidation pattern. What does the Ukraine-Russia war imply for gold? Gold has been holding around $1800 for more than a year, but a sequence of higher lows has been developing since the beginning of 2021, and it is now threatening to break out of the long-term wedge.
It’s far too early to call today’s $35 rise and break over the top a breakthrough, but it’s worth keeping a watch on.
It is not necessary to be long gold in the event of a Russian invasion of Ukraine. If Russia is subjected to punitive sanctions, it may be forced to use its vast gold holdings to prop up its currency. As a result, you must use caution in that regard.
On the other hand, if oil and gas prices rise, it will be a severe shock to inflation expectations in the United States and Europe, implying that interest rates may rise aggressively and bonds may collapse. As a result, gold serves as a safe haven.