Forex

The US dollar had a strong February as geopolitical risks pushed investors to safe-havens. During the month, there were risks that Russia would invade Ukraine and cause the biggest conflict in the region in decades. These fears were actualized in the final week of February. The dollar also rose after strong economic data from the US. The data showed that the housing market continued to strengthen while the labor market tightened, and inflation jumped to the highest level in over 40 years.

The euro retreated and reached the lowest level since 2020 as concerns about the crisis in Ukraine pushed traders to believe that the ECB will delay its tightening process. The EUR/USD pair dropped by 3.70% from its highest level in February to the lowest point in the first week of March. The GBP/USD also retreated by about 2.30% even after the Bank of England implemented the first interest rate of the year. Meanwhile, the USD/CAD pair rose to a multi-month high of 1.2877 and then crashed by as much as 2.2% as crude oil prices jumped.

Commodities

February was a good month for commodities. Gold jumped to a seven-month high as demand for safe-haven assets jumped. February was its best month since May 2021. Silver also rose by over 13% as it continued to track the performance of gold. Crude oil prices also went vertical as western countries applied maximum pressure on Russia for its invasion of Ukraine.

Brent and West Texas Intermediate jumped to over $115 in the first week of the month as the OPEC+ cartel decided to stick with its strategy. Natural gas prices jumped to an all-time high as Germany sanctioned the Nordstream 2 pipeline. In total, the Bloomberg Commodity index has risen by 18% from the first day of February and is sitting at the highest level since 2008.

Indices

Global equity indices tumbled to a bear market in February as investors tackled multiple risks like the Federal Reserve, inflation, geopolitics, and corporate earnings. On earnings, while most companies had a strong quarter, they expressed worries as the cost of doing business jumped. Investors were also concerned that the Fed will embrace a more hawkish tone. Analysts at JP Morgan predicted that the bank will implement at least nine rate hikes this year.

The Nasdaq 100 index dropped by as much as 12% while the Dow Jones fell by 8.7%. The same trend happened in Asia and Europe, where key indices like the DAX, CAC 40, and Hang Seng fell by at least 5% in February.

Economic Events

The BOE, RBA, BOC, and ECB delivered their interest rate decisions in February. The RBA decided to end its Quantitative Easing (QE) while the BOE decided to implement its second hike in three months. It decided to act as economic data showed that the economy was doing well. The ECB delivered a mild decision and hinted that it will start hiking rates later this year.

Meanwhile, data from most countries showed that inflation was soaring. In Europe, consumer prices soared to a record high while in the US, they rose to the highest level in over 40 years. The labor market continued to strengthen, with the unemployment rate in Europe falling to an all-time low.