USD continues to strengthen
The Ukrainian crisis is of course still dominating market focus, however volatility has stabilised. Peace negotiations between Russia and Ukraine continue today but there is little evidence that these are yielding any results. Overall markets are still very much in a risk-off mode, where lower risk currencies benefit, mostly USD, CHF and JPY. Hence we see GBPUSD and GBPCHF at 1-year lows.
Fed Chair Jerome Powell speaks to US lawmakers today. He is expected to signal that ‘tightening’ (interest rate rises) are still on the cards, despite the global uncertainty.
Indicative consumer price index data for the Eurozone is due out. It was expected to be fairly high and support the case from interest rate rises in Euroland (at least a move back towards positive), however, this would be overshadowed by evidence of impact on the EU economy from the war.
Additionally, the European Central Banks (ECB) will speak at the end of the day ( pm CET) on the future for the economy, inflation, and in turn, monetary policy. This will give the market a steer on what to expect at next week’s ECB meeting.