GBP

Sterling has been weighted over the weekend by gloom over Europe’s economic outlook following increased tensions in Ukraine. As a result, the pound fell to a fresh 2-month low against the dollar. Meanwhile, with the euro continuing to weaken, sterling climbed to its highest level since June 2016 against the common currency as Russian forces intensified attacks on Ukraine and increasing Western sanctions also did little to deter Russia’s aggression. Russian President Vladimir Putin warned that the war in Ukraine would continue as the second round of the Russia-Ukraine peace talks failed to provide an outcome of a ceasefire. Tonight, the release of The British Retail Consortium (BRC) Like-For-Like Retail Sales will show the performance of the retail sector. It is expected to show an increase to 15.2% in February from 8.1% posted in January.

EUR

The euro has tumbled to a fresh 22-month low against the dollar whilst commodity currencies reached multi-month peaks as war in Ukraine sent oil prices surging and stoked fears of stagflation which could hammer Europe’s economy. The common currency is down almost 4% now since Russia began its “special military operation” in Ukraine. The euro also hit its lowest level against the Swiss franc since the Swiss quit their euro peg in 2015. This morning’s German Factory Orders increased by more than expected in January whilst their annual Retail Sales came in at 10.3% versus 9.5% expected. However, this did little to sway the euro’s trajectory as it remains pressured by the resurgent US dollar demand amid the Ukraine crisis-driven risk-off mood and rallying oil prices.

USD

The US dollar index hit 22-month highs of 99.220 at the weekend, as the dollar rallied against a basket of currencies as investors sought safe havens. Friday’s release of Nonfarm Payrolls showed unemployment falling to a two-year low of just 3.8%, raising optimism that the US economy is set to withstand pressures from geopolitical tensions and rising inflation. The survey showed that 678,000 jobs were created in February, leaving employment 2.1 million jobs below its pre-pandemic level. Economists now expect that all the lost jobs will be recouped by the third quarter of this year which has boosted hoped of another rate hike this month. With a quiet day of data ahead, the market will continue to monitor the Russia-Ukraine crisis for direction. The US and NATO are considering a ban on Russian oil imports, which would cripple Moscow and leave Russia isolated from the rest of the world.

Economic Calendar

No major data releases today