Ukraine peace manoeuvres in focus.
Underlying US inflation concerns have continued to increase, especially with global supply-chain issues and there are expectations that the Fed will have to sanction a further a series of interest rate increases.
US yields have continued to increase with the 10-year yield above 2.50% and the highest level since May 2019. Shorter-term yields have also moved higher, although there has been a further net flattening of the yield curve.
In Asian trading on Monday the Bank of Japan announced that it would buy unlimited bonds in the market to cap domestic yields.
Following the move there was further aggressive yen selling in markets with the increase in US yields also a key element in undermining the Japanese currency. USD/JPY surged to fresh 6-year highs above 123.20.
The German IFO business confidence index declined sharply to 90.8 for March from 98.6 previously and well below consensus forecasts of 94.2. The current conditions component retreated to 97.0 from 98.6 while there was a sharp decline in the expectations component to 85.1 from 98.4 and the weakest reading since May 2020.
The IFO stated that the economy faces uncertain times while supply-chain issues have intensified. It also noted that expectations of price increases have continued to increase while 80% of companies are facing problems associated with the surge in costs.
There have been no major military developments in Ukraine. Russia has suggested that it will focus the military battles on the East of Ukraine and also suggested that some form of partition could be a longer-term solution.
Ukraine has rejected this notion strongly, but indicated that some form of guaranteed neutrality could be a solution, although there would need to be a referendum and guarantees.
At this stage, both sides are attempting to exert pressure before serious negotiations start.
The unscripted remarks from US President Bien have also caused a significant element of concern over the risk of the conflict widening.
In comments over the weekend, Swiss National Bank (SNB) Chair Jordan stated that franc gains through the parity level against the Euro would not be of greater importance in economic terms.
His comments reinforced speculation that the SNB could tolerate medium-term franc gains and EUR/CHF losses.
The dip in German business confidence data reinforced concerns over Euro-zone outlook which hampered the Euro. EUR/USD edged lower to trade below the 1.1000 level.
US bond yields moved sharply higher during Friday and the trend continued to Monday with the 10-year yield around 2.53%.
EUR/USD dipped to near 1.0950 on Monday amid underlying reservations over the Euro-zone outlook.
USD/JPY consolidated around the 122.0 level on Friday, but then surged to fresh 6-year highs above 123.20 on Monday as the Bank of Japan capped domestic yields.
Sterling was unable to make headway amid concerns over the UK economic outlook. GBP/USD retreated further to below 1.3150 on Monday as the dollar posted net gains. GBP/EUR edged higher to 1.2000.
The Swiss franc maintained a firm tone amid expectation that the SNB would tolerate medium-term gains. EUR/CHF settled around 1.0225 with net USD/CHF gains to 0.9340.
Commodity currencies drifted lower as the US dollar posted net gains. AUD/USD found strong support on dips and traded at 0.7515 on Monday and not far from 4-month highs. USD/CAD settled just below 1.2500 as oil prices retreated.
|12:00||BOE Governor A. Bailey speaks|
|12:30||USD Goods Trade Balance(FEB)||-107.57B|
|23:30||JPY Unemployment Rate(FEB)||2.70%||2.80%|