Geopolitical tensions weigh on risk

<p>Weekend news reports have dominated market sentiment at the beginning of a week that is likely to be determined by inflations reading and Central Banks. […]</p>

Weekend news reports have dominated market sentiment at the beginning of a week that is likely to be determined by inflations reading and Central Banks. Markets don’t like uncertainty and with newswires reporting advancing militant Islamic insurgents committing shocking atrocities to Iraqi soldiers amid reports that Bagdad airport has been attacked it’s not surprising to see oil, precious metals and safe haven currencies trading with a bid tone. The situation in Ukraine has certainly not helped equity markets as reports suggest that the county risks its supply of natural gas from Russia if a payment deadline is not met as reports circulate that Ukrainian military aircraft have been shot down.

The market will be focusing on inflation data and central bank activity this week. The FOMC on Wednesday evening is likely to produce a further $10 billion tapering of asset purchases to $35 billion per month with the reduction as usual likely to be split evenly between treasuries and mortgage backed securities. There are some suggestions we may get a dovish tone from FOMC members following the disappointment to Q1 GDP in the US. Later in the week the market will be looking for any reaction from the SNB at their first meeting since the ECB imposed a negative rate policy measure.

Inflation data from the EU, UK and US is likely to be a mild distraction from the world cup. Today sees the release of inflation data from Europe along with industrial production figures from the US and the latest reading from the Empire manufacturing index as positioning data from the CFTC show dollar longs approaching four-year highs.




Supports 1.3530-1.3500-1.3480 | Resistance 1.3580-1.3605-1.3645




Supports 101.55-101.10-100.75 | Resistance 102.10-102.50-102.85




Supports 1.6950-1.6920-1.6885 | Resistance 1.7045-1.7100-1.7150



Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.