FEARS OF ANOTHER FINANCIAL CRISIS ARE WELL-FOUNDED – NATIXIS

15 February 2022, 15:06

Financial crises occur following a period during which three types of imbalances combine. Macroeconomic imbalances, regulatory imbalances and behavioural imbalances. The three imbalances needed for the next financial crisis to take place are present today, according to analysts at Natixis.

Cause for concern 

“There are again signs today of confluent macroeconomic, regulatory and behavioural imbalances. This is cause for concern, as the simultaneous presence of these three forms of imbalance has led to financial crises in the past.”

“Central banks are increasingly being caught in the same trap: in the wake of a crisis, they do not want to use policies to prevent the occurrence of a financial crisis and prefer to wait for the crisis to break out before responding. This explains the macroeconomic imbalance and some of the regulatory imbalance, as investors rotate into risky assets and risk premia are squeezed.”

 

US DOLLAR INDEX PRICE ANALYSIS: FURTHER UPSIDE TARGETS THE 96.90 AREA

14 February 2022, 14:18

• DXY climbs to fresh tops further north of the 96.00 hurdle.
• The next target of note comes around 96.90.

DXY posts gains for the third straight session on Monday, extending the recent surpass of the 96.00 barrier.

If the recovery gains more serious traction, then the index is expected to revisit the 96.90 region, where the November and December 2021 highs are located. The surpass of this level should expose a move to the 2022 peak around 97.40 (January 28).

In the near term, the 5-month line near 95.20 is expected to hold the downside for the time being. Looking at the broader picture, the longer-term positive stance in the dollar remains unchanged above the 200-day SMA at 93.62.

DXY daily chart

EUR/JPY PRICE ANALYSIS: TEMPORARY SUPPORT COMES AT 129.65

14 February 2022, 13:45

• EUR/JPY accelerates losses below the 200-day SMA (130.45).
• The 55-day SMA emerges as the next support at 129.65.

EUR/JPY sinks further south of the key 200-day SMA in the mid-130.00s at the beginning of the week.

The sharp corrective downside appears to have further legs to go in the very near term. Against that, the cross could shed further ground and revisit the 55-day SMA at 129.65 ahead of the February low near 128.90 (February 1) and the 2022 lows in the 128.20 zone recorded in late January.

In the longer run, and while below the 200-day SMA, the outlook for the cross is expected to remain bearish.

EUR/JPY daily chart

14 February 2022, 13:45

• EUR/JPY accelerates losses below the 200-day SMA (130.45).
• The 55-day SMA emerges as the next support at 129.65.

EUR/JPY sinks further south of the key 200-day SMA in the mid-130.00s at the beginning of the week.

The sharp corrective downside appears to have further legs to go in the very near term. Against that, the cross could shed further ground and revisit the 55-day SMA at 129.65 ahead of the February low near 128.90 (February 1) and the 2022 lows in the 128.20 zone recorded in late January.

In the longer run, and while below the 200-day SMA, the outlook for the cross is expected to remain bearish.

EUR/JPY daily

USD/MYR STICKS TO ITS CONSOLIDATIVE RANGE – UOB

14 February 2022, 13:48

USD/MYR is still seen navigating within the 4.1750-4.2000 range for the time being, noted Quek Ser Leang at UOB Group’s Global Economics & Markets Research.

Key Quotes

“We highlighted last Monday (07 Feb, spot 4.1850) that daily MACD is ‘flattish’ and we held the view that USD/MYR ‘could continue to trade between 4.1620 and 4.2150 for a while more’.”

“Our view was not wrong even though USD/MYR consolidated in a quiet manner and within a narrow range of 4.1800/4.1890. The quiet price actions offer no fresh clues and USD/MYR could continue to trade sideways. Expected range for this week, 4.1750/4.2000.”

RUSSIA READY TO OPEN FIRE ON FOREIGN SHIPS THAT ILLEGALLY ENTER TERRITORIAL WATERS – IFAX

14 February 2022, 13:03

The Interfax news agency reported on Monday that a senior Russian military official said Russia was ready to open fire on foreign ships and submarines that illegally enter its territorial waters, per Reuters.

The official further added that any decisions to open fire on foreign vessels would however only be taken at the highest level.

Market reaction

Markets remain risk-averse during the European trading hours following these remarks. As of writing, US stocks futures were down between 0.8% and 1.1%, Germany's DAX 30 was losing 2.8%.