GBP

Sterling remained steady overnight and opened around the same levels as it closed in London yesterday , against both the dollar and euro . After being under pressure in yesterday’s morning session , the pound found some relief when although the Moscow -Kiev peace talks ended without resolution , both parties agreed to hold further talks in the coming days . The British public’s expectations for inflation over the next five to 10 years hit a joint record high in February, according to a survey that is likely to strengthen the Bank of England’s intention to raise interest rates further in the coming months. Citibank and polling company YouGov said their gauge for inflation in 5- 10 years’ time rose to 4.1% from 3.8% in January , equalling a record struck in June 2011 . Financial markets expect the BoE to increase rates to 0.75% from 0.5% this month, and for rates to reach 1.5% by August, but before Russia’s invasion of Ukraine investors saw a strong chance of a half-point rate rise in March. The Purchasing Managers Index for the manufacturing sector will be released later today .

EUR

The euro has opened close to yesterday’s close against the dollar, with Russia -Ukraine conflict headlines likely to give fresh impulse to the currency pairings . A preliminary reading of inflation data for Germany in the form of Harmonised Index of Consumer prices will also be important to watch for additional moves . Russia’s invasion of Ukraine and EU sanctions on Moscow will prove painful for farmers, consumers, fertilizer makers and exporters of farm products, the European Commission warned on Monday. Michael Scannell, deputy director-general of the Commission’s agriculture division, said grain buyers should brace for higher prices given that Russia and Ukraine made up more than 30% of global trade in wheat, 32% for barley, 17% for corn and more than 50% for sunflower oils, seeds, and meals. Yesterday ECB President Christine Lagarde tweeted: “I reiterate that the ECB will implement sanctions decided by the EU, and we are ready to do all that is needed within our mandate to ensure price stability and financial stability.” . Lagarde is due to speak following a meeting with German Chancellor Olaf Scholz in Berlin later today .

USD

A modicum of calm has returned to currency markets since officials from Russia and Ukraine held an initial round of peace talks yesterday . After the announcement that further talks will take place , the market witnessed a change in risk sentiment and the dollar lost some demand with the dollar index , which measures the greenback against 6 major rivals falling below the 97.00 yardstick . Traders remain cautious in early trading and Russia -Ukraine will be the key driver for the dollar’s fortunes today . Federal Reserve Bank of Atlanta President Raphael Bostic said he favors raising interest rates by 25 basis points at the Federal Open Market Committee’s March meeting and would consider a larger half-point move if monthly inflation readings fail to decline from elevated levels. Manufacturing data is due from the U.S later data .

Economic Calendar

09.30 GBP UK PMI Manufacturing sector
13.00 EUR ECB’s Lagarde Speech
13.30 EUR GER Harmonized Index of Consumer Prices
14.45 USD US Markit Manufacturing PMI