The recent negotiations over the situation in Ukraine led to a sharp increase in optimism. That resulted in a sharp rally in stocks, yesterday in Europe and the US, and this morning in Asia. It seems that many believe that the conflict is on its way to being resolved, however, it was debunked by the media today. In any case, hopes for an end to the military conflict provided support to US government bonds, so yields on 2-year notes and 10-year treasuries corrected down after reaching local highs. The ICE dollar index, on the other hand, fell sharply, failing to overcome the mark of 100 points. At the time of writing, the indicator remains under pressure and is around 98.19 points.
Today, in addition to the conflict in Ukraine, the focus will be on the publication of US GDP data for the 4th quarter of last year. It is assumed that the indicator will rise significantly to 7.1%, against 2.3% a quarter earlier. If the numbers do not let down, the markets will see a signal for an energetic recovery process of the US economy.
Focus will also be on employment figures from ADP, which traditionally precede the Friday figures from the US Department of Labor.
According to forecasts, the US economy was supposed to receive 450,000 new jobs in March, against 475,000 a month earlier. Again, if the data turns out to be higher than expected, demand for dollar will increase.
As for commodities, oil prices rose again because of another stalled peace talks over Ukraine. The decline of dollar halted as well because there is a possibility that the stock rally in Europe will end soon.
ECB President Christine Lagarde will speak today, and she is likely to talk about the central bank's plan on the persistently rising inflation. As such, there is a high chance of a correction in the stock markets, as well as a local rise in dollar.
Forecasts for today:
EUR/USD is trading above 1.1080. Deteriorating market sentiment could lead to the pair dipping towards 1.0950.
USD/JPY is above 121.25. Its decline below will lead to a fall to 119.40.