Soaring oil prices yesterday reignited the safe-haven demand for the US Dollar. The Greenback kept the pressure on Sterling and the Euro on Monday, pressing Cable to the low 1.31’s and keeping EURUSD depressed in the 1.08 range. Demand for the US Dollar may increase further with Russia claiming “it may close its main gas pipeline to Germany if the West goes ahead with a ban on Russian oil”. Alexander Novak, Russian Deputy Prime Minister, said a "rejection of Russian oil would lead to catastrophic consequences for the global market" and cause prices to more than double to $300 a barrel. While the US is keen to punish Russia for its invasion of Ukraine, Germany and the Netherlands yesterday rejected the plan to ban Russian oil. The EU gets 30% of its oil and over 40% of its gas directly from Russia and “has no easy substitutes if supplies are disrupted”. Novak noted yesterday in a state television address that it would be “impossible to quickly find a replacement for Russian oil on the European market”, claiming it “will take years, and it will still be much more expensive for European consumers”.
Looking ahead it’s likely to be a tough week for an already damaged EURUSD. The pair opened Monday at 1.0874 and closed at 1.0861.
GBPEUR also depreciated yesterday as risk-sentiment damped appetite in the British Pound. GBPEUR opened the session at 1.2142 and closed at 1.2075.
GBPUSD recorded a loss on Monday. Cable started at 1.3202 and finished at 1.3115.
At 10:00 Eurozone Q4 GDP Growth Rate estimates are scheduled. The QoQ figure is forecasted at 0.3%, while YoY is due at 4.6%. In the afternoon from the US, Balance of Trade is released at 13:30, followed by Wholesale Inventories at 15:00.
