FTSE outperforms against US and European equities; S&P500 Falls 3% in worst session since 2020; Bank of Israel FX intervention to remain negligible.
March 8, 2022
GBP/USD 1.3118 GBP/EUR 1.2020 EUR/USD 1.0914 USD/CAD 1.2824 EUR/CHF 1.0106 EUR/SEK 10.8273 EUR/NOK 9.8269 EUR/DKK 7.4431 USD/ILS 3.2875 AUD/USD 0.7280 NZD/USD 0.6820 USD/SGD 1.3640 USD/JPY 115.57 USD/CNH 6.3191 USD/INR 76.8638 EUR/ILS 3.5880 GBP/ILS 4.3126 USD/ZAR 15.2905
UK households could reportedly face the biggest fall in living standard in over 50 years, as the conflict in Ukraine raises inflation expectations. The resolution foundation has stated that the UK may see a recession in the second half of 2022, if prices, especially energy remain at current levels.
The FTSE100 has significantly outperformed against European equities and to a lesser extent US stocks. YTD the FTSE100 trades down -5.7%, compared to the STOXX down -18.2% and the NASDAQ down -17.9%. This is mainly down to fact that the FTSE100 is supported by a successful finance sector, and commodities surges have been rejuvenating the prospects of ailing energy giants.
The pound trades up against the dollar, whilst EURGBP trades down -0.15%EUR
The euro continues to face selling pressure as conflict continues to escalate in Ukraine, downside pressure is unlikely to relent, with the ECB expected to leave rates low, until the second half of 2022.
Risk sentiment and continental growth concerns cast doubt on the euro, which has performed poorly against both the dollar and pound in 2022.
As Brent crude soars above $120, and gas futures reach $225 per megawatt-hour, this is likely to stunt European industrial growth prices, and add to cost-push inflation.USD
The House will vote today on bipartisan legislation on US import laws in response to the Russo-Ukrainian conflict, allowing tariffs to be raised on imports from Russia and Belarus. This could also be bolstered by $10 billion funding from capitol hill to response to the Ukraine crisis. Furthermore, an executive order is expected this week, to outline the White House’s policy on Crypto, calling on federal agencies to investigate potential regulatory intervention and involvement.
The DXY continues its strength, up almost 4% over the last month, bolstered by risk-off markets.ASIA/PACIFIC
Australia’s Scott Morrison has called for a revival in manufacturing, highlighting seven priority sectors, notably including semi-conductors.
Foreign investment holdings of Chinese bonds fell by $5.5 billion last month as bond markets were shook following the Ukraine conflict.
Earnings for Japanese workers climbed by 0.9% in January.ILS
USDILS approaches 3.3, currently trading at 3.294, levels not seen since April 2021, as conflict pushes investors towards the safe-haven dollar.
The Bank of Israel’s intervention in foreign currency purchases are likely to remain negligible. This change in policy is due to revaluation that decreased reserves by $1.6 billion.Data & Events
DE – Industrial Production
ES – Industrial production
EU – Q4 GDP
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