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  • richard evans

Too early to know Russia's intentions

Good morning

The Euro took advantage of some hopeful comments from Ukraine/Russia talks, EURUSD trading up from a low yesterday of 1.0975 to reach 1.1135, dragging EURJPY up to 137.30 at one point. GPUSD was less affected, gaining a little against the US dollar to 1.3155 but losing ground against the Euro. Both EURUSD and GBPUSD did slip from lower in late afternoon and remain below those highs but it is GBP that comes off worse, EURGBP now up at 0.8480 (GBPEUR 1.1790). Equities were up, FTSE 100 up nearly 1% but its European counterparts were up nearer 3%.

Some of the initial optimism has worn off though, with warnings already that Russia’s suggested withdrawal around the Ukrainian capital could be either to reorgainse their military, to concentrate on the South East areas, or to open the door for an increase in missile strikes. Even Russia’s own negotiator made it clear de-escalation was not a ceasr fire. I’m sure Russia will up holding the Eastern Donbas area, but they really want a land opening from Russia to Crimea, hence the destruction of Mariupol. I can’t see them leaving without that.

Yen is stronger this morning, perhaps the BoJ announcement that it will buy Japanese bonds in unlimited amounts if necessary has been enough to draw some funds into JGBs. USDJPY is down to 122.00 having been above 125.00 earlier in the week, while EURJPY is now back at 135.65, some 200 points off the recent highs.

Economic experts in Germany have lowered 2022 growth forecasts from 4.2% to 1.8%, citing the Ukraine war. BoEs Bailey was recently a little pessimistic on the UK economy, I wonder other nations are starting to be fearful of lower than expected growth. Low growth and high inflation, just what we need!

German inflation numbers come out this afternoon, with US GDP following close behind. UK GDP is out early tomorrow morning, will be interesting to see whether they can offer any support to GBP, which has had a pretty difficult time recently.

Who remembers Handforth Parish Council, the surprise online sensation back in Feb 2021. It turns out that Mrs Weaver did indeed have no right to remove councillors from the meeting but did so given the unusual circumstance and limited formal guidance available. Do we really care? Not really, just disappointed that it took over one year, a 145 page reported and no doubt many thousands of pounds to work that all out.

- 09.00 ECBs Lagarde speaks

- 09.10 BoEs Broadbent speaks

- 10.00 EU confidence data

- 13.00 German CPI, HICP

- 13.15 US ADP employment

- 13.30 US GDP

- 00.50 Japan industrial production

- 01.30 AUS building permits

- 02.00 China PMIs

- 07.00 UK GDP

- 07.00 German retail sales

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