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Home ANALYSIS

The NZD is the strongest and the EUR is the weakest as the NA session begins

A.R Chowdhury by A.R Chowdhury
March 4, 2022
Reading Time: 9 mins read
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The NZD is the strongest and the EUR is the weakest as the NA session begins

Forex

The strongest to weakest of the major currencies

As the North American session begins, the NZD and the AUD are the strongest of the major currencies, while the EUR is the weakest. The USD is mixed to higher ahead of its jobs report that will be released at 8:30 AM ET.

Overnight, the fire at the Ukrainian nuclear power plant once again stirred up the anxiousness from the Russian invasion of Ukraine. However concerns about a nuclear disaster seems to be have been averted as the fire took place outside of the nuclear reactor area. Nevertheless Russian forces have seized the largest nuclear power plant Zaporizhzhia which supplies more than 1/5 of the electricity that is generated in Ukraine. The implications include the an easier take-over ofthe entire country, as well as the potential for more disruption of energy supplies in Europe.

A view of the market shows:

  • European shares are down sharply.
  • US shares are also lower.
  • US treasury yields are lower.
  • Crude oil prices are higher..
  • Gold prices are higher.
  • Bitcoin is lower.

As mention the NZD and AUD are higher. That is not typically the ‘flight out of risk” reaction, but being isolated, and rich with natural resources may be a benefit in the big picture (at least for now). The storyline can change, however.

As for the US jobs report, nonfarm payrolls is expected to rise by 400K after last months 467K advance. This type report along with the inflationary implications from disruptions as a result of Russia’s invasion would not be great news for the inflation expectations.

Fed chair Powell during his testimony on Capitol Hill this week said that he would look to raise rates by 25 basis points in March. However he would not be opposed to raising rates at a larger pace at future meetings or meetings given the trajectory of inflation and risks of it becoming more embedded. He also answered “Yes” when asked if he would act in a Volcker-esque way to combat inflation. The number of Fed tightening’s in 2022 moved up to six from 5 yesterday.

A snapshot of other markets as North American traders start their trading during shows:

  • Spot  gold 
    Gold

    Gold is the most widely traded and important commodity. Prized for its historical importance and used for trading an exchange of goods, the gold market today is estimated at nearly $2.4 trillion.The value of gold fluctuates constantly, as it trades on public exchanges where it has a price that is determined by supply and demand. Gold has historically had tremendous significance and even today is extremely sought after. Gold has been used as a currency as it doesn’t corrode, and the material allows for some absorption of light creating a yellow glow, which lends the name yellow metal.Ultimately, institutional and retail investors buy and sell gold contracts or physical gold, thus creating the demand and supply flow.This can be pure speculation, to acquire or distribute physical gold, or as a hedge for commercial application. For day-traders, the purpose of trading gold is to profit from its daily price movements.How to Trade GoldDay-trading gold is speculating on its short-term price movements. Of note, physical gold is not actually handled or taken possession of, rather the transactions take place electronically and only profits or losses are reflected in the trading account.There are a number of ways to ultimately trade gold. Retail brokers typically offer exposure to gold through contracts-for-difference (CFDs).Beyond retail brokers, the main way to trade gold is via a futures contract. This represents an agreement to buy or sell something, i.e. gold at a future date. Buying a gold futures contract doesn’t mean you actually have to take possession of the physical commodity.Day traders close out all contracts (trades) each day and make a profit based on the difference between the price they bought the contract and the price they sold it at. However, on a futures exchange, gold moves in $0.10 increments only. This increment is known as a tick. It is the smallest movement a futures contract can make. If you buy or sell a futures contract, how many ticks the price moves away from your entry price determines your profit or loss.

    Gold is the most widely traded and important commodity. Prized for its historical importance and used for trading an exchange of goods, the gold market today is estimated at nearly $2.4 trillion.The value of gold fluctuates constantly, as it trades on public exchanges where it has a price that is determined by supply and demand. Gold has historically had tremendous significance and even today is extremely sought after. Gold has been used as a currency as it doesn’t corrode, and the material allows for some absorption of light creating a yellow glow, which lends the name yellow metal.Ultimately, institutional and retail investors buy and sell gold contracts or physical gold, thus creating the demand and supply flow.This can be pure speculation, to acquire or distribute physical gold, or as a hedge for commercial application. For day-traders, the purpose of trading gold is to profit from its daily price movements.How to Trade GoldDay-trading gold is speculating on its short-term price movements. Of note, physical gold is not actually handled or taken possession of, rather the transactions take place electronically and only profits or losses are reflected in the trading account.There are a number of ways to ultimately trade gold. Retail brokers typically offer exposure to gold through contracts-for-difference (CFDs).Beyond retail brokers, the main way to trade gold is via a futures contract. This represents an agreement to buy or sell something, i.e. gold at a future date. Buying a gold futures contract doesn’t mean you actually have to take possession of the physical commodity.Day traders close out all contracts (trades) each day and make a profit based on the difference between the price they bought the contract and the price they sold it at. However, on a futures exchange, gold moves in $0.10 increments only. This increment is known as a tick. It is the smallest movement a futures contract can make. If you buy or sell a futures contract, how many ticks the price moves away from your entry price determines your profit or loss.
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    it is trading up $12.57 or 0.65% at $1948
  • Spot silver is trading up six cents or 0.25% at $25.22
  • WTI  crude oil 
    Crude Oil

    Crude oil is the most popular tradable instrument in the energy sector, offering exposure to global market conditions, geopolitical risk, and economics. The instrument is strategically relied upon and situated in the global economy. Crude oil has proven to be a unique option for traders given volatility and the efficacy of both swing trading and longer-term strategies. Despite its popularity, crude oil is a very complex investing instrument, given the litany of fluctuations in oil prices, risk, and impact of politics stemming from OPEC. Short for the Organization of the Petroleum Exporting Countries, OPEC operates as an intergovernmental organization of 13 countries, helping set and dictate the global oil market.How to Trade Crude Oil Crude oil is most commonly traded as an exchange-traded fund (ETF) or through other instruments with exposure to it. This includes energy stocks, the USD/CAD, and other investing options. Crude oil itself is traded across a duality of markets, including the West Texas Intermediate Crude (WTI) and Brent crude. Brent is the more relied upon index in recent years, while WTI is more heavily traded across futures trading at the time of writing. Other than geopolitical events or decisions by OPEC, crude oil can move due to a variety of different ways.  The most basic is through simple supply and demand, which is affected by global output. Increased industrial output, economic prosperity, and other factors all play a role in crude prices. By extension, recessions, lockdowns, or other stifling factors can also influence crude prices. For example, an oversupply or mitigated demand due to the aforementioned factors would result in lower crude prices. This is due to traders selling crude oil futures or other instruments.  Should demand rise or production plateau, traders will bid increasingly on crude, whereby driving prices up.

    Crude oil is the most popular tradable instrument in the energy sector, offering exposure to global market conditions, geopolitical risk, and economics. The instrument is strategically relied upon and situated in the global economy. Crude oil has proven to be a unique option for traders given volatility and the efficacy of both swing trading and longer-term strategies. Despite its popularity, crude oil is a very complex investing instrument, given the litany of fluctuations in oil prices, risk, and impact of politics stemming from OPEC. Short for the Organization of the Petroleum Exporting Countries, OPEC operates as an intergovernmental organization of 13 countries, helping set and dictate the global oil market.How to Trade Crude Oil Crude oil is most commonly traded as an exchange-traded fund (ETF) or through other instruments with exposure to it. This includes energy stocks, the USD/CAD, and other investing options. Crude oil itself is traded across a duality of markets, including the West Texas Intermediate Crude (WTI) and Brent crude. Brent is the more relied upon index in recent years, while WTI is more heavily traded across futures trading at the time of writing. Other than geopolitical events or decisions by OPEC, crude oil can move due to a variety of different ways.  The most basic is through simple supply and demand, which is affected by global output. Increased industrial output, economic prosperity, and other factors all play a role in crude prices. By extension, recessions, lockdowns, or other stifling factors can also influence crude prices. For example, an oversupply or mitigated demand due to the aforementioned factors would result in lower crude prices. This is due to traders selling crude oil futures or other instruments.  Should demand rise or production plateau, traders will bid increasingly on crude, whereby driving prices up.
    Read this Term
    is trading of $2.73 of $110.40
  • Bitcoin is trading down about $900 at $41,584
  • Wheat futures are up 6.61% to 1209 cents or $12.09. Corn futures are meanwhile up 3.41% at 773.25 cents or $7.73.

In the premarket for US stocks, the major indices are lower. The futures implying

  • Dow industrial average -337 points after yesterday’s -96.69 point decline
  • S&P index -40.5 points after yesterday’s -23.03 point decline
  • NASDAQ index -117 points after yesterday’s -214.07 point decline

In the European equity markets, the major indices are sharply lower:

  • German DAX, -3.8%
  • France’s CAC, -3.8%
  • UK’s FTSE 100 -3.5%
  • Spain’s Ibex -3.2%
  • Italy’s FTSE MIB -4.9%

In the US debt market, yields are moving back to the downside today on flight to safety flows. The last few days of seen yields rebound/steady themselves on inflation concerns. Now the push me/pull me flows are back into relative safety mode

US yields

US yields are lower on flight to safety flows

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In the European debt market, yields are also lower with Germany down the most. Rates in Germany are back down in negative territory after rising above and below over the last few trading days. The yield reach as high as 0.331% less than a month ago (on February 16). That was the highest level since December 2018.

European yields

European benchmark 10 year yields

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A.R Chowdhury

A.R Chowdhury

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