GBP

Risk aversion dominated yesterday afternoon trading and sterling fell aggressively against the safe haven currencies losing around a cent against the dollar. Against the euro , the pound remained within a tight range . Russia -Ukraine headlines are likely to dominant the market once again today . Speaking yesterday Bank of England policymaker Michael Saunders said Russia’s invasion of Ukraine is likely to push Britain’s soaring inflation higher, but that it is too soon to determine the impact on monetary policy. Also speaking yesterday, fellow policymaker Catherine Mann said The Bank of England needs to ensure the current surge in energy prices does not feed into companies longer-term pricing decisions. British shoppers were hit last month by the biggest price rises from major retailers since 2011, according to a survey that adds to signs of fast-rising inflation which the Bank of England is trying to tackle with higher interest rates. The British Retail Consortium said on Wednesday that shop prices rose by 1.8% in February compared with a year earlier, the fastest annual increase since November 2011 and speeding up from 1.5% in January. UK house prices surged again in February . The monthly survey by mortgage lender Nationwide showed house prices rising 1.7% month on month after a 0.8% increase in January.

EUR

The euro hit its lowest level in level in over 21 months against the dollar overnight as Russia intensified its bombardment of Ukraine cities and surging oil prices raised traders concerns about economic growth in the European Union . With the bloc importing 40% of its of its natural gas and more that 25% of its oil supply from Russia , the single currency has been affected most of all the majors by the Russia -Ukraine conflict . European Union finance ministers are scheduled to discuss the economic impact of the war on a video call this afternoon . According to an official , the ministers will look at the impact of EU sanctions and Russia’s response, including the overall effect on energy prices and inflation . European inflation data is due at 1000 GMT. A speech at 1600 GMT from the European Central Bank chief economist, Philip Lane, will also be closely watched for insight into policymakers thinking about the economic damage from the Ukraine crisis.

USD

Russia’s ongoing aggression against Ukraine despite harsh sanctions imposed by western nations forced traders to seek into safe haven currencies yesterday afternoon and as the greenback outperformed its rivals, the dollar index gained 0.7% . Market participants are increasingly worried about the potential negative impact of a prolonged Russia-Ukraine war on global economic activity. The conflict’s headlines will continue to dictate the dollar’s movements . Although market were largely unmoved by U.S. President Joe Biden’s State of the Union address they will be keenly focused on Federal Reserve Bank Chairman Jerome Powell ‘s testimony before house financial services committee this afternoon to see if rate expectations have changed since last week’s invasion .

Economic Calendar

11.00 EUR ECB De Guindos speech
13.15 USD ADP Employment report
14.00 EUR ECB finance minister’s conference
15.00 USD Fed’s Powell testimony