Ukraine – Russia saga weighs on Bitcoin

  • Bitcoin dropped and is trading around $40000.
  • Ukraine – Russia crisis, weigh on market sentiment, pressuring the riskier asset- Bitcoin.
  • Lifchitz suggest “looks like a distraction from the real rates/inflation issue.”

 

Bitcoin descended and is trading around $40000 during Friday Asian Trading session. The worsening situation in Ukraine is the major catalyst in prompting investors towards safe haven asset and pullback from perceived riskier asset – Bitcoin.

Russian media reported Thursday that the Ukrainian military forces fired mortars and grenades in four Luhansk People’s Republic (LPR) localities. The LPR is located in the Donbas region, a territory internationally recognized to be a part of Ukraine but run by Russian backed separatists. Ukraine, however, denied shelling separatists’ territory, suggesting that this could be the false flag that Russia is trying to put out to set a pretext for an imminent invasion. That said, the Organization for Security and Co-operation (OSCE) in Europe has recorded multiple shelling incidents along the line of contact in the East Ukraine in the early hours of Thursday.

Whereas, Russian Ministry of Defense said that around 10 military convoys have left Crimea and released a video showing a logistics unit coming back to its home base after the completion of drills. Adding to this, the latest update from US satellite image company, Maxar Technologies, showed that Russia has pulled back from the Ukraine border. At the same time, the images showed a lot of Russian equipment is still deployed close to Ukraine and that some new equipment has also arrived recently. However, The developments did little to ease market fears about an imminent Russian invasion of Ukraine. Meanwhile, President Biden reiterated that the threat of a Ukraine invasion by Russia was “very high.” Thus weighs on the risk sentiment.

David Lifchitz, managing partner and chief investment officer at ExoAlpha, noted that “the situation is definitely weighing on risk assets, up like Feb. 15, down like today.” Meanwhile he also said that Ukraine-Russia saga is currently dominating news headlines and causing widespread weakness across global markets, Lifchitz suggested that the situation “looks like a distraction from the real rates/inflation issue.”

BTC/USD 4 Hour Chart:

Support: 39122.9 (S1), 37558.7 (S2), 35027.5 (S3).

Resistance: 43218.3 (R1), 45749.5 (R2), 47313.7 (R3).

The Ukraine – Russia saga takes a center stage as the market’s mover and weighs on Bitcoin. We expect a bearish trend for BTC/USD.

Cable trades high following FOMC news

  • The FOMC minutes failed to underscore the possibility of a 50bps hike at the March meeting, weighs on US Dollar.
  • There are plenty of risk-off Russia – Ukraine headlines which could help the safe haven – USD.
  • The rate hike expectation from BoE and upbeat CPI data favors the sterling.

 

Pound edged higher against the greenback on Thursday as the US dollar was pressured due to the less hawkish FOMC minutes despite mounting tension over Russia- Ukraine.

According to the January meeting minutes released on Wednesday, Fed officials last month agreed that, with inflation widening its grip on the economy and employment strong, it was time to tighten monetary policy; however decisions would depend on a meeting-by-meeting analysis of data. Strategists said the minutes suggested policymakers may not be as hawkish as expected.

Moving on to geopolitical front, alarmingly, the United States and NATO said Russia was still building up troops around Ukraine on Wednesday despite Moscow’s insistence it was pulling back. The Russian defense ministry said its forces were pulling back after exercises in southern and western military districts near Ukraine.

On the other hand, The pound was trading high since Wednesday after domestic data showed inflation in Britain at a nearly 30-year high. The Bank of England is expected to hike interest rates again. The Central Bank has hiked rate twice since December. Rates have risen to 0.5% from 0.1%. Another hike to 0.75% or 1% on March 17 after the BoE’s next meeting is expected.

The data showed that the Consumer Price Index on an annual basis showed a record to 5.5% in January, highest since March 1992, and above previous reading of December at 5.4%.

GBP/USD 4 Hour Chart:

Support: 1.3540 (S1), 1.3499 (S2), 1.3469 (S3).

Resistance: 1.3611 (R1), 1.3641 (R2), 1.3682 (R3).

Greenback trades low responding to less hawkish FOMC minutes, we expect a bullish trend for GBP/USD.

USD/JPY bids ahead of FOMC meeting

  • Governor Kuroda warns BOJ may suffer losses suppose if it exits easy policy.
  • US yet to verify pull back of Russian troops, weighs on the market mood.
  • Japanese manufacturer’s business confidence fell to an 11-month low in February.

 

USD/JPY bids above 115.60 level during Wednesday Asian session. BOJ Kuroda’s warning and the mounting Russia – Ukraine Tensions are the key catalysts in directing the pair.

Governor Haruhiko Kuroda said on Wednesday said “The Bank of Japan could temporarily suffer losses on its huge asset holdings if it were to end its ultra-loose monetary policy.” “The BOJ holds huge amount of government bonds, which means reducing the size will take a long time if it decides to exit from ultra-easy policy in the future” Kuroda said.

Elsewhere, The Russian defence ministry on Tuesday published footage that demonstrated it was returning some troops to base after exercises, however, US President Joe Biden said the United States had not verified the move. Russia’s claim that it pulled back troops “would be good, but we have not yet verified that,” Biden said. “Indeed, our analysts indicate that they remain very much in a threatening position.”

And Ukraine has also expressed skepticism about Russia’s statements of a pullback. “We won’t believe when we hear, we’ll believe when we see. When we see troops pulling out, we’ll believe in de-escalation,” Ukrainian Foreign Minister Dmytro Kuleba said. US president Biden said, “let there be no doubt: If Russia commits this breach by invading Ukraine, responsible nations around the world will not hesitate to respond.”

As per the latest Reuters poll published early Wednesday morning in Asia, “Japanese manufacturers’ business confidence fell to an 11-month low in February as measures to contain the pandemic and high raw material costs hurt sentiment.”

USD/JPY 4 Hour Chart:

Support: 115.28 (S1), 114.96 (S2), 114.66 (S3).

Resistance: 115.89 (R1), 116.19 (R2), 116.51 (R3).

Market await FOMC Minutes due later today As of now all the catalysts pressurizes the yen, we expect a bullish trend for USD/JPY.

Gold climbs high with mounting Russia – Ukraine tensions

  • The precious metal – Gold climbed to reach a eight month high on Tuesday Asian session.
  • Chatters of arrival of war troops, machines near Ukraine-Russia border creates tension and weighs on the market sentiment.
  • U.S. Federal Reserve officials continued sparring over how aggressively to begin interest rate hikes at their March meeting.

 

The yellow metal prices edged higher to an eight month high of $1879.46 on Tuesday Morning Asian session, as heightened tension between Ukraine and Russia precipitated investors to pullback from riskier assets and opt for safe haven asset.

On Tuesday early morning, In Europe, Talks regarding satellite image conveyed fresh arrival of troops and attack helicopters, ground-attack aircraft and fighter-bomber jets to forward locations on the Russia-Ukraine border gained momentum. Elsewhere, the local media news also included, “Ground units also appear to be in attack formations.”

Russian Foreign Minister Sergey Lavrov told President Putin that the US had put forward concrete proposals on reducing military risks and that he could see a way to move forward with talks. However, Russia’s Lavrov also mentioned that EU and NATO responses have not been satisfactory, and this increases the tensions and weighs on the market sentiment.

Amidst the Russia – Ukraine tension favoring the Gold, Supporting bullion on Tuesday was the benchmark U.S. 10-year Treasury yields easing thus decreasing the opportunity cost of holding non-interest-paying gold, while a slightly weaker dollar helped make the metal more attractive for overseas buyers.

Meanwhile, U.S. Federal Reserve officials continued to argue on how aggressively to begin upcoming interest rate hikes at their March meeting. St. Louis Fed President James Bullard, who called for a large 50 basis point increase in the previous week, reiterated calls on hiking interest rate faster on Monday.

However, Bullard’s colleagues were more cautious in their remarks, and the Fed will also release the minutes from its latest meeting on Wednesday.

Stephen Innes, managing partner at SPI Asset Management said “The (gold) market seems to be ignoring major central banks right now because investors are lost in the fog of war and it becomes very difficult to have a salient macro or fundamental view in this type of market where you really have to just go trade on a hair trigger.”

XAU/USD 4 Hour Chart:

Support: 1856.4 (S1), 1841.8 (S2), 1832.9 (S3).

Resistance: 1879.9 (R1), 1888.8 (R2), 1903.4 (R3).

The heightened geopolitical tension between Russia – Ukraine favors the safe haven – Gold. We expect a bullish trend for XAU/USD.