Market update 24/03/2022
EUR/USD
The market most traded FX pair is set to dip towards the 1.09 mark amid renewed energy prices concerns. The US dollar is set to see some benefits from new energy-related tensions, Subsequently, economist at ING expect the EUR/USD pair to slump towards the 1.09 level.
“We think downside risks should prevail today for EUR/USD, given the resurgence of Russia-related risk premium on energy prices and the longer-term policy divergence/growth story.”
“Data-wise, we’ll look at the eurozone’s PMIs, which may have weakened on the back of geopolitical events and high energy costs. While the FX impact should not be sizeable, it will likely endorse the market’s recent repricing of the eurozone’s growth expectations.”
“We still expect a move to 1.09 in EUR/USD by the end of the week, with any decision among EU countries to reduce exposure to Russian commodities that could weigh on the common currency.”
Gold
Gold (XAU/USD) pares the biggest daily gains in 12 days around $1,941 during the mid-Asian session on Thursday.
The yellow metal cheered the US Treasury yields retreat from three-year high the previous day to print notable gains. However, the bond coupons recover, underpinning the US dollar strength, amid the market’s anxiety ahead of the key data/events.
Also, the Ukraine-Russia tensions and the US readiness to slap more sanctions on Moscow emphasize President Biden’s meeting with the North Atlantic Treaty Organization (NATO) allies in Europe.
Additionally, China’s covid update and fears emanating from the Middle East also can challenge the gold prices on a key day.
Bitcoin
Honduras’ Central Bank Debunks Bitcoin as Legal Tender Rumors. The Central Bank of Honduras (BCH) has shot down social media chatter about a possible imminent announcement that bitcoin (BTC) was set to become legal tender in that Latin American country.
“Bitcoin for the moment in our country is not regulated,” said the BCH on Wednesday in a Spanish-language official statement. The BCH, the bank continued, is the only issuer of legal tender in Honduras, and that remains solely the lempira.
Today’s announcement comes following rumors on Twitter and elsewhere that Honduras President Xiomara Castro was – in similar fashion to neighboring El Salvador last summer – going to announce a plan to make bitcoin legal tender in her country.
In the BCH statement the bank recalled two communiqués – published in 2020 and 2021, respectively – clarifying the BCH "does not supervise or guarantee operations carried out with cryptocurrencies as means of payment in the national territory."
The BCH reiterated, though, that it continues with “the study and conceptual, technical and legal analysis” to determine the feasibility of issuing its own central bank digital currency (CBDC), which would be recognized as legal tender in the country.
European equities
- European stocks edged higher as investors continued to weigh developments in Ukraine and rising inflation.
- The Stoxx Europe 600 Index was 0.2% higher as of 8:03 a.m. in London, with utilities the best-performing sector and technology the worst. Shares in Russia advanced as they partially resumed tradingafter being closed for almost a month.
- European equities have already recouped the losses they had suffered since the war started a month ago.
- Investors are also assessing more hawkish central banks.
- The focus today will be on NATO’s emergency summit in Brussels and U.S. initial jobless claims and durable goods data.
Sources* ING, FXStreet, Bloomberg, CoinDesk.
