Global geo-political developments in focus.

There has been further heavy fighting in Ukraine as Russian forces attack target cities with a wider focus of bombing.

The focus tended to shift towards global implications with Ukraine attacking a military base very close to the Polish border which increased concerns over a wider conflict and potential NATO intervention.

US officials stated that Russia ahead asked for military help form China. The US warned China against any involvement or a move to break sanctions while China called for an escalation in the conflict to be avoided. Talks between the US and China are due on Monday. There were some hopes that talks between the Ukraine and Russia were making headway.

The market focus has  tended to move towards inflation, central bank action and yield trends. US bond yields have continued to increase with the 10-year yield increasing to 4-week highs near 2.05% and close to 2-year highs. The impact of higher bond yields was clearly illustrated on Friday with the yen remaining under pressure and the trend continued on Monday.

USD/JPY secured further strong gains and posted a fresh 5-year high at 117.85 despite fragile global risk appetite. There were also net losses for the Euro and Swiss franc on yield grounds.

The Federal Reserve will announce its latest policy decision on Wednesday with very strong expectations that there will be a 0.25% rate hike. The Bank of England will release its interest rate decision on Thursday with another 0.25% rate increase expected and the Bank of Japan meeting is due on Friday.

Canada reported a very strong employment increase of 337,000 for February following a 200,000 decline the previous month and substantially above consensus forecasts of 160,000 with full-time jobs increasing 120,000. The unemployment rate also declined sharply to 5.5% from 6.5% and well below expectations of 6.2%.

China has continued to report an increase in coronavirus cases to a 2-year high and partial lockdowns have been imposed in Shanghai and Shenzhen. Chinese equity markets dipped sharply on Monday and there were increased concerns over the economic impact, especially with the threat of further damage to global supply chains.

The Euro was undermined by fears over the Euro-zone economic outlook and expectations of widening yield spreads. The Euro lost ground late in the European session on Friday with EUR/USD sliding to lows near 1.0900 and was just above this level on Monday.

The increase in US yields continued to underpin the dollar. USD/JPY posted strong net gains with a fresh 5-year high at 117.80 on Monday. USD/CHF also posted 3-month highs around 0.9360.

Sterling was unable to make any headway with sentiment sapped by unease over the economy. GBP/USD dipped to fresh 16-month lows near 1.3000 before stabilising. GBP/EUR edged lower on Monday to 1.1930.

The Australian dollar was undermined by weaker risk appetite, a stronger US dollar and concerns over the Chinese outlook with AUD/USD dipping to 0.7240 on Monday. The Canadian dollar was boosted by the very strong Canadian jobs data, but USD/CAD recovered to 1.2780 on Monday.

Economic Calendar

07:00GBP Average Earning Including Bonus(JAN)4.30%
07:00GBP Claimant Count Change(M/M)(FEB)-28.0K-31.9K
07:00GBP Unemployment Rate(JAN)4.10%4.10%
07:30CHF PPI (Y/Y)(FEB)5.40%
07:30CHF PPI (M/M)(FEB)0.60%
07:45France CPI (M/M)(FEB)0.30%
10:00German ZEW Survey (Current Situation) (MAR)-6.00-8.1
10:00German ZEW Survey (Economic Sentiment)(M/M)(MAR)5554.3
10:00Euro-Zone Industrial Production (M/M)(JAN)1.20%
10:00Euro-Zone Industrial Production (Y/Y)(JAN)-0.50%1.60%
10:00EUR Euro-Zone ZEW Survey (Economic Sentiment)(MAR)48.6
11:00OPEC Monthly report
12:15CAD Housing Starts(FEB)245.0K230.8K
13:30USD PPI Ex Food & Energy (M/M)(FEB)0.50%0.80%
13:30USD PPI Ex Food & Energy (Y/Y)(FEB)7.90%8.30%
13:30NY Empire State Manufacturing Index(MAR)3.1
13:30USD PPI (Y/Y)(FEB)9.10%9.70%
13:30USD PPI (M/M)(FEB)0.50%1.00%
21:00USD TIC Net Long-Term(JAN)114.5B
21:45NZD Current Account (Q/Q)7.91B-8.30B
23:50JPY Exports (Y/Y)(FEB)9.6
23:50JPY Merchandise Trade Balance Total(FEB)-1607.0B-2193.5B

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.