IFX Market Report: Friday 4th March 2022

Demand for the US Dollar picked up on Thursday as war in Eastern Europe persists. Investors flocked to safe-haven assets when reports Vladimir Putin said to Emmanuel Macron that “worse is to come” during the conflict as Russia looks to seize all of Ukraine. Putin spoke with the French President for 90 minutes yesterday and a source described the tone of the phone call as “pessimistic”. Putin maintains his stance that Russia’s aim is to demilitarise and “denazify” Ukraine – to which Macron reportedly replied that “Ukraine was not the Nazi regime and that his vision of Ukraine was not confronting reality".

The European Central Bank released the accounts of its latest meeting yesterday, showing that “members believed a scaling-back of monetary accommodation should commence, adding that members believe that inflation was likely to continue higher than predicted for longer”. Additionally, ECB policymakers “noted that the greatest risk was no longer tightening monetary policy too soon but too late”. Despite the Euro suffering losses against most of its peers yesterday, this news helped underpin the Euro on a day of harsh trading conditions.

EURUSD dropped to multi-month lows on Thursday as investors favoured the safe-haven Greenback. The pair opened at 1.1096 and closed at 1.1048.

Cable also made a loss yesterday. GBPUSD started the session at 1.3390 and finished at 1.3339.

GBPEUR traded in a narrow range on Thursday – opening at 1.2066 and closing at 1.2073

This morning Germany released January’s Balance of Trade, coming in at €3.5B. At 09:30 the UK releases its latest Construction PMI, forecasted at 56.3. 30 minutes later the Eurozone is due to release its latest Retail Sales. Across the pond, February’s Non-Farm Payrolls are scheduled for 13:30.

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