IFX Market Report: Friday 13th May 2022

The US dollar remained close to 20-year highs in the Asian session this morning after yesterday's advance, buoyed by demand for safe-havens, as Russia raged over Finland's draft to apply for NATO membership and that Sweden could follow. Moscow called Finland's announcement hostile and threatened to retaliate, including with unspecified "military-technical" measures.

Federal Reserve Chairman Jerome Powell warned on Thursday that getting inflation under control could lead to economic hardship, but remained his top priority. The euro broke psychological support at 1.0500 and directly joined major monthly support corresponding to the December 2016/January 2017 low at 1.0340. Mr Powell said he could not promise a soft landing for the economy, as the Federal Reserve raises interest rates to rein in rising prices, which are close to their fastest pace in over 40 years old.

The European Commission is looking for solutions to allow Ukraine to export its goods. The country is the leading grain producer in Europe and one of the main suppliers to the Middle East and Africa. But the blockade organized by the Russian forces of the Black Sea makes deliveries by sea almost impossible. To deal with this situation, the Commission is asking market players to urgently send transport trucks and trains to reduce the waiting time at the border. It is currently 16 days on average and can extend up to 30 days.

The North Atlantic Treaty Organization (NATO) could soon welcome two new members, Finland and Sweden, which are in the process of announcing their application. "Being a member of NATO would strengthen Finland's security," said the Finnish executive on Thursday, who had assured the day before that this candidacy "would not be against anyone". Despite this, Russia has renewed its warnings, describing this possible NATO membership as a "certain" threat.
Cable’s downfall finally showed signs of stabilisation yesterday.

GBPUSD was able to open at 1.2191 and close slightly under 1.2202.

GBPEUR gained back what it had lost over the past few days. The pair opened at 1.1667 and closed at 1.1741.

EURUSD continued on losses as the pair opened at 1.0398 and closed at 1.0380.

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