IFX Market Report: Monday 4th April 2022

Sterling recorded a loss on Friday, finishing the day in the red against both the Euro and US Dollar. This morning however, “there seems to be a positive shift in risk sentiment” as investors are becoming increasingly hopeful “about a diplomatic solution to the Russia-Ukraine conflict”. Reports at the weekend from Reuters claimed that Ukrainian negotiator David Arakhamia, said “peace talks with Russia are at a stage that could lead to direct contact between Zelenskyy and Putin”. Mr Arakhamia told reporters at Interfax Ukraine that Russia accepts Ukraine’s position, with the exception of Kyiv’s stance on Crimea. The venue for a meeting between Russian President Vladimir Putin and Ukrainian counterpart Volodymyr Zelenskyy would most likely be Turkey. Thus far, the talks have been a combination of face-to-face meetings in Turkey and virtual meetings. Arakhamia said Turkish President Tayyip Erdogan had called Putin and Zelenskyy on Friday “and seemed to confirm from his side that they are ready to arrange a meeting in the near future”. If these talks do indeed go ahead, investors would likely develop a more risk-on appetite, increasing the demand for currencies such as Sterling.

As market sentiment improves, the US Dollar Index is rather passive this morning near the mid-98.00s, supported by a more-than-1% rise in the benchmark 10-Year US Treasury Bond Yield.

GBPUSD opened on Friday at 1.3119 but had slipped below the 1.31 handle by the close, ending the week at 1.3097. Cable has edged higher in the European morning, trading around the 1.3125 mark.

GBPEUR recorded a minor loss on Friday the pair opened at 1.1873 and closed at 1.1867.

EURUSD also depreciated on Friday. The pair started the day at 1.1054 and finished at 1.1039.

On the data front, it's a quiet schedule. At 10:05 Bank of England Governor Andrew Bailey will be speaking. then at 15:00, the US will print February's Factory Orders MoM.

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