Volatility in commodity prices and threatening global economic growth

• The dollar rose on Friday, notching a five-year high against the safe-haven yen
• Russian President said there had been some progress in talks between Moscow and Ukraine
• Russia's Feb. 24 invasion of Ukraine, which Moscow calls a "special operation," has roiled markets

The dollar rose on Friday, notching a five-year high against the safe-haven yen, while commodity-linked currencies slumped after Russian President Vladimir Putin said there had been some progress in talks between Moscow and Ukraine. 

Putin said in a meeting with his Belarusian counterpart Alexander Lukashenko that there had been "certain positive shifts" in negotiations with Ukraine and that talks continued practically on a daily basis. Russia's Feb. 24 invasion of Ukraine, which Moscow calls a "special operation," has roiled markets, causing volatility in commodity prices and threatening global economic growth prospects. 

The dollar initially declined on the news, but then gradually firmed and was last up 0.76% against a basket of six global peers at 99.11. The index was on track for a 0.56% increase for the week, following last week's 2% rise, which was its largest weekly percentage gain since April 2020. The greenback hit a five-year high against the Japanese yen, which was down 1.03% at 117.32 yen.

Economic Calendar

When people are taking a look at which economies are poised to handle the widespread inflationary pressures, the U.S. economy is looking like it's going to be the outperformer and that's why you're seeing the dollar do well against the yen in these risk-averse times. The dollar has also been supported by expectations that the Federal Reserve will start raising interest rates at the end of its March 15-16 policy meeting, with inflation running hot. 

While the U.S. central bank is all but certain to hike rates from the COVID-19 pandemic low, the Bank of Japan, which also holds a policy meeting next week, is set to remain an outlier. The euro slid 0.69% against the dollar to $1.0912, erasing gains from the overnight session and putting it on track to end the week slightly lower for what would be its sixth-straight weekly loss. The single currency has fallen more than 2.5% against the U.S. dollar in March. 

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After hitting a nearly two-year low on Monday amid growing stagflation worries arising from the Ukraine war, the euro received some support from the European Central Bank's announcement that it will phase out its stimulus, opening the door to an interest rate hike before the end of 2022. 

Commodity-linked currencies, including the Australian dollar and the New Zealand dollar, were lower versus the greenback, with the Aussie and the kiwi both down 0.8%. Currencies that had been gainers because of the commodity chaos are starting to come down a little bit.

Euro

The single currency traded lower in Friday’s trading session. Eurozone finance ministers are likely to endorse later in today's session the European Commission's view that fiscal policy should move from supportive to neutral in 2023, but that they must be ready with more cash should the war in Ukraine make it necessary. Overall, the EUR/USD traded with a low of 1.0900 and a high of 1.1041 before closing the day around 1.0909 in the New York session.

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Yen

The Japanese Yen fell to a new 5 year low. The dollar initially declined on the news, but then gradually firmed and was last up 0.76% against a basket of six global peers at 99.11. The index was on track for a 0.56% increase for the week, following last week's 2% rise, which was its largest weekly percentage gain since April 2020.. Overall, the USD/JPY traded with a low of 116.10 and a high of 117.34 before closing the day around 117.25 in the U.S session.

British Pound

The British Pound slipped to a 16-month low on Friday against the safe-haven U.S dollar and was heading for its third consecutive weekly decline as stronger-than-expected UK economic growth did little to support the pound. The Office for National Statistics said Britain’s economy grew 0.8% in January, the strongest monthly expansion since June. Overall, the GBP/USD traded with a low of 1.3025 and a high of 1.3123 before closing the day at 1.3032 in the New York session.

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Canadian Dollar

The Canadian Dollar strengthened against its broadly stronger U.S counterpart on Friday as domestic data showed a blockbuster jobs gain in February, helping to underpin expectations for another Bank of Canada interest rate hike next month. Canada added 336,600 jobs in February, more than double the 160,000 analysts had forecast. Overall, USD/CAD traded with a low of 1.2691 and a high of 1.2791 before closing the day at 1.2744 in the New York session.

Australian Dollar

The Australian Dollar slipped today in the Asian trading session as hints of progress in Russian-Ukraine talks saw global commodity prices come off the boil, while the U.S dollar looked forward to the start of an extended cycle of rate hikes this week. Futures continue to price in a first hike of the 0.1% cash rate by June, or July at the latest. Overall, AUD/USD traded with a low of 0.7138 and a high of 0.7235 before closing the day at 0.7231 in the New York session.

Trading Signals and Trading Forecasts

Euro-Yen

EUR/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also issuing a bearish stance. The Relative Strength Index is above 40 and lies below the neutral zone. In general, the pair has gained 0.27%.

Sterling-Yen

Currently, GBP/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 42 reading and lies below the neutral zone. On the whole, the pair has gained 0.58%.

Aussie-Yen

Currently, the cross is trading above 14, 50 and below 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 54 reading and lies above the neutral region. In general, the pair has gained 0.05%.

Euro-Sterling

This cross is currently trading above 14, 50 and below 100 days moving average. Fast stochastic is indicating a bullish tone and MACD is also issuing a bullish signal. The Relative Strength Index is above 46 and lies below the neutral region. Overall, the pair has lost 0.28%.

Sterling-Swiss

This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish stance and MACD is also indicating a bearish tone. The Relative Strength Index is above 40 and lies below the neutral region. In general, the pair has gained 0.17%.

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