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EU summit continues to draw focus

EU summit continues to draw focus

Yesterday saw markets settle somewhat against the choppy trading conditions of late. Newsflow from the NATO, European Council and G7 meetings taking place throughout the day was carefully watched by traders. Overall, the Western Alliance agreed to strengthen its forces in Eastern Europe, increase military aid to Ukraine, and tighten sanctions against Russia. Crucially though, the EU has not yet moved to ban Russian energy imports – Oil moved back below $120bbl. 

The main pairs operated within relatively narrow ranges throughout the day with the euro holding a slightly firmer tone. Data-wise, the flash PMIs declined in the Eurozone, albeit not by as much as anticipated, and still remain in growth. In the UK, the manufacturing PMI was weaker than expected, while the services PMI printed ahead of the consensus. In the US, both sector surveys beat the forecasts.

As trading gets underway this morning, EUR/USD starts back above the $1.10 threshold, EUR/GBP has edged up to the midpoint of the 83-84p range and GBP/USD continues to operate near $1.32.

As we look to the day ahead, the main release of note is the German Ifo for March. Similar to the PMIs, the Ifo is forecast to move lower as the war in Ukraine and elevated inflation weigh on sentiment. Headlines from the EU summit may also impact throughout the day as the Ukraine crisis continues to be a primary market driver.

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