Optimistic sounds from Russia-Ukraine talks helps mood
The Russian invasion of Ukraine started two weeks ago, and even though the conflict is still ongoing, we heard some slightly optimistic sounds from Putin today. The Russian President announced there are “certain positive shifts in talks with Ukraine”. Even though it is a far cry from suggesting the war could end soon, it injected some much-needed optimism into a bleak situation. European stock markets jumped when the update hit the wires as traders interpreted that as a sign that negotiations are moving in the right direction. Indices like the DAX and the CAC have suffered brutal losses in the past two weeks, but buying appetite was low. Today’s news acted as a green light for the bulls. The S&P 500 was showing a small gain but now it is slightly offside.
The euro was initially pushed higher by the commentary from Putin, but now EUR/USD, EUR/CHF and EUR/GBP are all down again. Countries such as Germany, Italy and the Netherlands are major importers of Russian natural gas, so there are concerns that Moscow might intentionally reduce supply should the war take an even uglier turn. It says a lot about the euro that it couldn’t hang onto a sustained rally.
USD/CAD is down 0.5% thanks to a stellar jobs report from Canada. The unemployment rate came in at 5.5%, which was a big drop from the 6.5% seen in January. In addition to that, the employment change showed that 336,600 jobs were added, and that smashed the 132,000 consensus estimate. The very impressive labour report is driving up the Canadian dollar.
Gold and silver are coming under pressure as traders are reversing the flight to quality play. Following the news that positive sounds were coming from the Russia-Ukraine talks, the metals sold-off as lower risk assets have fallen out of favour. There is an augment to be made that the metals were overstretched amid the war, and now a correction is underway. Dealers are deploying their cash to riskier assets such as stocks. WTI and Brent crude have handed back much of their earlier gains as some of the fear surrounding supply concerns has faded.