IFX Market Report: Thursday 10th March 2022

The Euro was able to make impressive gains against both the US Dollar and Sterling on Wednesday due to “renewed hopes for a de-escalation of the Russia-Ukraine conflict”. According to Reuters, Russia’s Foreign Minister Sergei Lavrov arrived in Turkey’s southern city of Antalya yesterday ahead of planned talks with his Ukrainian counterpart Dmytro Kuleba. Talks are set to start today and any news leaked is likely to heavily influence global markets. If talks are received positively, it’s likely market sentiment will improve, and investors will buy into riskier assets. On the other hand, if negotiations break down or come to a dead end, demand for safe-haven assets will likely resurge.

Today the European Central Bank have their latest monetary policy meeting in Frankfurt. Last month, the ECB governing council agreed it could speed up a “gradual normalization” of its ultra-loose monetary policy, setting the stage for it “to end net purchases under its €4.8tn bond-buying programme and to raise interest rates by the end of the year”. Now however, given the recent conflict on Europe’s borders, investors are betting “the central bank will put those plans on hold, opting to maintain as much flexibility as possible while it assesses the implications of the crisis for the 19 countries that share the Euro”. ECB President Christine Lagarde already said last month that the central bank would “take whatever action is needed” in response to the Ukraine crisis.

GBPEUR lost momentum on Wednesday as the pair marked a devastating loss. GBPEUR opened at 1.2010 and closed at 1.1888.

EURUSD in contrast made solid gains in yesterday’s session. The pair opened at 1.0915 and closed at 1.1084.

GBPUSD was also able to gain some upside on Wednesday. Cable opened at 1.3109 and closed at 1.3175.

On the data front, aside from the ECB’s latest policy meeting, US inflation and labour data will be today’s focus.

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