GBP

Sterling gained over half a cent on Thursday against a broadly weaker euro, which tumbled on rising EU-Russian economic tensions after Russian President Vladmir Putin once again demanded that European Nations pay for gas in roubles. The dollar made moderate gains against the pound. A surge in demand for workers shows signs of stabilising, according to a survey published on Friday that might provide some comfort to Bank of England concerns about the risk of long-term inflation pressures. In the report, the Recruitment and Employment Confederation (REC) said new job postings fell by 25% in the last week of March from a week earlier, returning to the kind of increase seen in mid-January. Staff shortages, which raise wages, are a worry to the central bank as it bids to combat the recent jump in inflation to a 30-year high.

EUR

The euro plunged sharply on Thursday, when Russian President Putin signed a decree that “non-friendly” countries pay for Russian gas in roubles from today and if any country defaults, it will stop supplying gas. Reacting to Putin’s statement, German Economy Minister Robert Habeck said that Germany will not be blackmailed by Russia and reiterated that gas payments will be made in euros. Speaking alongside Habeck in Berlin, French Finance Minister Bruno La Maire said that France and Germany are preparing for a possible scenario that gas flows are halted. The German government has already declared an early warning of an energy emergency, the first step toward authorising government-imposed gas rationing. Europe is heavily dependent on Russian gas exports and any disruption to supplies raises fears of recession in the bloc.

USD

The negative shift in risk sentiment amid escalating geopolitical tensions helped the dollar gather strength on Thursday. This morning the dollar index continues to push higher having earlier this week fallen to a four-week low. Later today the all-important Non-Farm Payroll jobs report will be released, which could help decide if the Federal Reserve Bank raises by 50 basis points at next month’s meeting. Economists are forecasting close to half a million jobs were created last month and see wage growth accelerating. At present, CME Group’s FedWatch tool shows a 71% chance that the Fed will raise by 0.5% following on from the 0.25% hike made in March when they embarked on their tightening cycle.

Economic Calendar

13:30pm USD US Nonfarm Payroll
13:30pm USD US Average Hourly Earnings
15:00pm USD ISM Manufacturing PMI