Dollar rampant as world announces tough sanctions against Russia. Russian central bank attempts to wrestle against the implications of sanctions including the removal from SWIFT.
February 28, 2022
GBP/USD 1.3371 GBP/EUR 1.1974 EUR/USD 1.1166 USD/CAD 1.2771 EUR/CHF 1.03292 EUR/SEK 10.68 EUR/NOK 9.9586 EUR/DKK 7.4412 USD/ILS 3.2468 AUD/USD 0.7196 NZD/USD 0.6712 USD/SGD 1.3589 USD/JPY 115.58 USD/CNH 6.3136 USD/INR 75.405 EUR/ILS 3.6262 GBP/ILS 4.3386 USD/ZAR 15.4394
BP bowed to government and public pressure to sell a 20% stake in Russian Oil business Rosneft. Meanwhile the FTSE 100 has seen 1% gains this year, outperforming most western equities, highly due to the index’s exposure to energy, mining, and finance, touting the market as a haven against geopolitical risk.
Politically, the conservative support has fallen to its lowest level since 2005 according to recent polling.
GBPUSD trades down -0.4%, the FTSE 100 has fell -1.41% since the London open.EUR
Germany made a revolutionary reversal on their defense outlook, following eight decades of a highly de-militarized armed forces, it announced it will send lethal aid to Ukraine, as we’ll as invest heavily in its military deterrence.
EURUSD trades down -0.9% as dollar strength and European conflict risks combine. The STOXX has fallen -2.8% as we print.USD
US equities are still seeing buying pressure, however there is weaker liquidity. This partly explains the high volatility seen over the previous few weeks.
The banning of Russia from SWIFT could pose longer term risks for the dollar, allowing rivals like China, to promote their own currencies, both digital and conventional to weaken the dollar international recognition as the standard.
Biden prepares for his first State of the Union speech tomorrow, where he will likely lead with economic recovery and a tough stance on Russia. Bidens approval rating sits near an all-time low. Meanwhile, Donald Trump who prepares for a 2024 campaign continues to be highly critical of Biden and is polling well with conservative voters.ASIA/PACIFIC
Japan’s factory output fell for a second month, slipping 1.3% from December. Retail sales also fell 1.9% in January.
Economists have brought forward forecasts on when south-east Asian central banks will raise their key rates, with expected 2022 hikes across Southeast Asia.
Asian markets attained growth during the Asian session, with the Nikkei and CSI closing 0.2% higher. The Hang Seng closed lower by 25 basis points.ILSA strengthening dollar has pushed USDILS up 0.76% back above 3.25. This comes as the Bank of Israel sold swathes of bills and bonds last week.Data & Events
Biden to speak with allies over Ukraine.
EIA releases petroleum monthly supply
ES – Feb CPI
PT – Feb CPI, Q4 GDPRussia-Ukraine
The Bank of Russia raised its key rate to 20% from 9.5% citing ‘cardinal’ changes in the economy. This comes following a wave of tougher sanctions from the west, including an impending removal of Russia from the SWIFT network, airspace restrictions and targeted sanctions against key Russian banks and influential people. Negotiations have been arranged at the Belarusian border; however, no ceasefire has been agreed and President Zelensky has voiced skepticism that the talks would yield anything.
USDRUB has risen +31% intraday, as commodity prices surge for Wheat and Oil amid supply concerns rooted in the conflict. Russia’s credit score has been cut to BB+.
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