GBP

Having hit 3-week highs on Tuesday, sterling has opened this morning retaining most of its gains. The ongoing improvement in risk appetite in the market has allowed the pound to overpower the recent dovish comments from the Bank of England. This morning’s data published by the UK’s Office for National Statistics showed inflation extending its 30-year high, jumping to 6.2% on a yearly basis in February from 5.5% in January. Although the reading was hotter than market expectations, it did little to offer further support to sterling with BOE Governor Bailey expected to speak later today at the BIS innovation summit. His comments will be closely watched to gauge whether his stance on monetary policy has budged following the inflation report. Meanwhile, Chancellor Rishi Sunak will unveil his Spring Statement later today. Although the statement does not normally see big tax and spending decisions, the market remains alert amid his pressure to address soaring energy prices and rising household bills.

EUR

The euro posted a tepid advance against the dollar on Tuesday as risk appetite saw the greenback struggle. With conflict ongoing in Ukraine, it seems the European Union is too close and still too affected by the war for the euro to appreciate. News spread yesterday that Belarus could “soon” join the war in Ukraine, as stated by a CNN reporter, and are already getting ready to do so with combat units and thousands prepared to deploy. Elsewhere, investors are eying the European Union (EU) leaders’ summit on Thursday, which will also be attended by US President Joe Biden. The EU has announced that a boycott of Russian oil will be the major agenda of the discussions. Therefore, investors will find fresh impetus from the summit. Meanwhile, today’s release of preliminary Consumer Confidence could offer some short term direction for the shared currency.

USD

With the general risk appetite improving, demand for the dollar has been put to a halt. Echoing this shift in sentiment, the dollar index has fallen from levels close to 99.00 to around 98.50. Despite this negative move for the dollar, losses were capped as investors continue to digest the news that there could be as many as seven interest hikes in 2022. Today, focus will be on a speech from Federal Reserve Chair Jerome Powell which is likely to dictate the roadmap of imposing the additional interest rate hikes. With conflict in Ukraine raging on, “the Biden administration is preparing new sanctions on most members of Russia’s State Duma, the lower house of parliament, as the US continues its crackdown on Moscow over its ongoing war against Ukraine,” as reported by Wall Street Journal. Despite the need for more sanctions, the latest Ukraine-Russia negatives have been less effective in influencing safe-haven dollar buying.

Economic Calendar

12:00pm USD Fed Powell Speech
14:00pm USD New Home Sales (MoM)(Feb)
15:00pm EUR Consumer Confidence (Mar)
15:45pm USD Fed Daly Speech