Concerns over the potential knock on effects of sanctions on Russia
The euro tumbled on Monday as EUR investors expressed concerns over the potential knock on effects from new Western sanctions on Russia.
Meanwhile trade in the pound is subdued so far this morning, with GBP/EUR muted at €1.1955 and GBP/USD flat at $1.3421. GBP/CAD is rangebound at C$1.6990, while GBP/AUD and GBP/NZD slip to AU$1.8422 and NZ$1.9767, respectively.
As Russia’s war with Ukraine rages on, will we witness more currency volatility today?
What’s been happening?
The euro slumped at the start of this week as market raised concerns about the possible economic impact of the West’s sanctions on Russia, especially if it prompts Moscow to disrupt European energy supplies.
Further weighing on EUR sentiment was speculation that the next interest rate hike from the European Central Bank (ECB) could be delayed beyond 2022.
The US dollar exploded out of the gates this week, with investors initially flocking to the safe-haven currency as they reacted to the sanctions imposed by the West over the weekend.
However, a subsequent recovery in risk appetite as Russia and Ukraine held peace talks reversed a good portion of these gains through the second half of the European trading session.
Finally, the pound mostly trading sideways on Monday as the currency lacked any strong directional bias of its own.
What’s coming up?
Looking ahead, it seems safe to assume the situation in Ukraine will continue to drive currency markets volatility today, with the euro likely to remain vulnerable to any escalation of violence.
The euro may also be influenced by the publication of Germany’s consumer price index. February’s preliminary figures are expected to report inflation in the Eurozone’s largest economy continued to climb.
In terms of data the focus for USD investors will be on the latest ISM manufacturing PMI, where an expected expansion of the US factory sector this month may reflect positively on the US dollar.
Finally GBP investors will be keeping a close eye on a couple of speeches from Bank of England (BoE) policymakers later this evening. A more cautious outlook from the BoE’s Michael Saunders and Catherine L. Mann might undermine the pound.
Need a chat about moving your money around? Contact Alastair on alastair.archbold@currenciesdirect.com to find out more about the latest news or how it could impact your currency transfers or your local agent Fiona on fiona.warren_agent@currenciesdirect.com.
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Kate, I understand you are running a fantastic publication and they are just trying to sell their products.. It’s perhaps when news and advertising getting intertwined that things get portrayed with bias..
Keep up the great work… love your publication
Thank You Phil. Sadly, with the price of paper printing up 45% on last year, news will always be influenced by advertising. One day, when I win the lottery 🙂 …….
Clickbate reporting to create shock with wording such as ‘tumbled’… DISGRACEFUL reporting!!
Only for some Phil. Most people read and take in the bits they find useful and ignore the rest. If you’re going to get angry about a single word, I would say DISGRACEFUL in capitals is pretty emotive. We just publish what they send.