Ukraine remains under bombardment.

Russian forces have continued to pound targets in Ukraine but have not been able to take control of any significant cities during the weekend. Following peace talks late last week, there were further efforts to secure humanitarian corridors to allow civilians to leave cities, but causalities remained high as heavy shelling continues.

Ukraine has continued to ask for a no-fly zone to be imposed over the country. Western countries have again rejected this, but the US is considering the potential for Russian-built fighters based in Poland to be supplied to the country.

Ukraine has also warned that an all-out assault on Kyiv is being prepared. Global companies have continued their pull-out from trading in Russia and fears over the wider economic impact have increased.

The main economic focus has been a further surge in oil prices in global markets. There has been strong pressure for imports of Russian oil to be stopped with the US Administration increasing pressure for a ban on shipments.

Talks between the US and European officials will continue with the US also looking to increase supplies from other countries including Saudi Arabia and Venezuela.

There were, however, major fears over a tightening of global supplies and international benchmarks surged to 13-year highs with Brent peaking above $135 p/b.

Global equity markets have remained under pressure with the UK FTSE 100 index for example at 5-month lows. The slide in equities and fears over the impact of the jump in energy prices has triggered fresh demand for safe-haven assets with further demand for precious metals.

The surge in energy prices has triggered further fears over the Euro-zone outlook with an important threat of stagflation. Markets are assuming that the ECB will not be in any position to tighten monetary policy and the Euro has been subjected to further sharp selling pressure with a slide to 22-month lows against the dollar.  The Euro has also been under sustained pressure on the major crosses with EUR/AUD for example at 4-year lows.

US non-farm payrolls increased 678,000 for February after a revised 481,000 increase the previous month and well above consensus forecasts of 400,000. Manufacturing jobs increased 36,000 on the month with a 60,000 increase for construction. There were solid increases in most categories with a 179,000 gain for the leisure sector.

The unemployment rate declined to 3.8% for the month from 4.0% and below expectations of 3.9% and the household survey recorded an increase of close to 550,000 in the number of employed while the participation rate edged higher.

Average hourly earnings were unchanged on the month, well below expectations of a 0.5% increase, with the annual increase slowing to 5.1% from 5.5%.

The overall market impact was limited as Ukraine considerations dominated.

The Swiss franc gained further strong support on Friday with renewed safe-haven demand as Ukraine fears intensified and unease over the global economic outlook also increased.

EUR/CHF dipped to 7-year lows just below parity before a slight correction.  Reaction from the National Bank will be monitored closely during the day.

The Euro continued to be undermined by fears that the Ukraine crisis would have an important negative impact on the Euro-zone economy. EUR/USD slumped to 22-month lows around 1.0825 on Monday before a recovery to 1.0880.

US bond yields retreated despite the stronger than expected jobs data with the 10-year yield at 1.70%. USD/JPY dipped to lows around 114.65 and traded close to 115.00 on Monday.

Sterling was hurt by a further slide in UK equities and deteriorating global risk conditions. GBP/USD dipped to 2-month lows below 1.3200 before a slight recovery. GBP/EUR rallied to a fresh 5-year highs near 1.2150.

The Swiss franc maintained a strong tone on defensive demand. EUR/CHF slumped to 7-year lows just below parity. USD/CHF was unable to make significant headway. There was strong demand for commodity currencies, especially with strong prices and an element of safe-haven demand.

AUD/USD posted net gains to 4-month highs just above the 0.7400 level. The Canadian dollar was resilient on Monday as oil prices surged with USD/CAD just above 1.2700.

The Norwegian krone posted net gains with EUR/NOK at 4-month lows near 9.75. The Swedish krona remained vulnerable with EUR/SEK trading at fresh 22-month highs above 10.80 before a slight correction.

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