 The financial markets should have completed the first climax reaction to Russia to Ukraine. Both oil prices and gold spiked higher initially last week but pulled back since then. Stocks, in particular major European indexes, also staged a strong rebound after initial dive. Global benchmark treasury yields also rebounded. In the currency markets, Euro also attempted for a rebound, but was apparently capped. The common currency has indeed closed lower again Dollar and Canadian, which were the strongest two. The greenback was lifted by rise in yields, risk aversion, and expectation of Fed hike. Loonie was strongly support by stellar job data which reinforces BoC's tightening. On the other hand, Yen closed as the weakest one on divergence in monetary policy with others. Swiss Franc was the second weakest, but Sterling was not too far away. With upside breakout in USD/JPY, there is prospect of more rally in Dollar and selloff in Yen ahead. Meanwhile, European majors would likely stay under pressure, with a question on whether the tide of Swiss Franc is turning. Aussie and Loonie could be mixed overall until there is drastic moves in commodity prices again. |
