GBP

The pound crashed against a surging dollar on Thursday , as traders rushed into safe haven currencies after Russian forces invaded Ukraine . By mid-afternoon sterling had lost 2% against the greenback before rallying in North American trading hours to close around 1% down on the day . Against the euro , the pound’s moves were not so volatile as the single currency itself fell aggressively against the dollar. UK finance minister Rishi Sunak said he had spoken to Bank of England governor on Thursday to discuss the situation and the conflict could encourage market participants to scale back expectations of interest rates hikes by the Bank of England . In this regard , Bank of England chief economist Huw Pill in an interview with a regional newspaper said the central bank will seek to bring fast-rising inflation down in a “measured way “ and one that doesn’t disturb the rest of the economy. British consumer confidence suffered its biggest month-on-month drop in February since the start of the coronavirus pandemic, as people worried about fast-rising inflation, higher taxes and interest rates going up, a survey showed on Friday. The GfK Consumer Confidence Index slumped to -26 from -19 in February to touch its lowest level since January of last year when Britain was under a tight lockdown.

EUR

The intense flight to safety weighed heavy on the euro yesterday , with the single currency losing 1.25% against the dollar , before recovering , but still down over a cent on the day . This was the euro’s biggest daily loss since November 2021 and at one stage was trading at its lowest level in 18 months .With the West refraining from targeting the SWIFT monetary system and the Russian energy sector in the first bout of sanctions against Russia , fears of a slowdown in the global economy eased , allowing the euro to pare some of its losses . European Central Bank policymakers gathered yesterday for a pre-scheduled meeting which was aimed at preparing a decision at their March meeting on ending their bond buying scheme , paving the way for the first interest rate hike in 10 years . However, Russia ‘s invasion , raising the prospect of higher energy costs and lower trade for the bloc , could delay any tightening of monetary policy . European Central Bank President Christine Lagarde is due to speak later this morning .

USD

The dollar has retreated against most currencies in early trading , after safe-haven flows dominated yesterday and the dollar index surged to its highest level since June 2020 , before retreating in New York trading hours . Although relatively quiet this morning traders are bracing themselves for further volatility dictated by the Russia -Ukraine conflict and talk of further sanctions could fuel dollar demand . Federal Reserve Governor Christopher Waller on Thursday laid out the case for a “concerted” effort to curb inflation, calling for raising interest rates a full percentage point by mid-year, starting with a half-percentage-point hike in March if data in coming weeks continues to point to an “exceedingly hot” economy.

Economic Calendar

11.15 EUR ECB Lagarde’s Speech
13.30 USD US Durable goods
13.30 Nondefense Capital goods orders