S&P500
Western nations now face economic pressure from Russia, which now demands payments in rubles for its natural gas.
US stock indexes closed in negative territory on Wednesday, as hopes for a quick resolution to the war in Ukraine faded. The Dow Jones slipped by 0.2%, the NASDAQ lost -1.2%, and the S&P 500 decreased by 0.6%.
Oil prices retreated early on Thursday, with Brent falling to $108 per barrel.
The Biden administration is considering a release of 1 million barrels of oil per day from the Strategic Petroleum Reserve to lower oil and gasoline prices. Such a release would significantly affect not only the US, but the international oil market as well.
The S&P 500 is trading at 4,602 and is expected to be in the 4,560-4,640 range.
Russia is regrouping forces for an offensive in south-eastern Ukraine, aiming to take Donbass and the city of Mariupol. The Kremlin is not in a hurry to accept a ceasefire, and the Russian Ministry of Defense has announced the "second phase of the special military operation". Russian missile strikes in Ukraine continue.
In the meantime, the Kremlin retaliated against Western economic sanctions by demanding payments for its energy exports in rubles. Western countries have refused Russia's demands, calling them a violation of established contracts. Russian legislators are drafting a law that would require all contracts signed by Russian citizens and businesses to use only RUB. These measures could lead to further isolation of Russia from the global market. It also indicates that Russia is unwilling to make any compromises on Ukraine, as an escalation of tensions between Moscow and the West would jeopardize such efforts. A renewed Russian offensive is likely to begin in the upcoming weeks.
According to UN data, more than 60% of Ukrainian children were forced to leave their homes since the beginning of the war on February 24.
The Russian army has notably redeployed some of its forces near Kyiv, while Ukrainian forces have retaken the town of Irpin. Fighting remains static in other areas of the country.
US oil stockpiles have fallen by 3.5 million barrels over the past week. According to the latest ADP payroll data, 455,000 new jobs were created by private employers in March, largely matching previous projections. US non-farm payroll report is likely to be released tomorrow. A key inflation report will be released today.
USDX is trading at 97.70 and is expected to be in the 97.40-98.00 range.
The US dollar is now at long-term lows, as the threat of the war escalating into a wider Russia-NATO armed conflict has eased. The quick collapse of Ukraine also did not occur. The ongoing war has become increasingly localized, resembling the Donbass War in 2014-2015 and posing fewer risks to the world at large.
USD/CAD is trading at 1.2510 and is expected to be in the 1.2450-1.2600 range. The pair is moving near the lower boundary of the price range.
The US market could go into a strong downward correction after inflation data is released. However, equities are likely to go up in the long term.
