Gentium FX | Daily Report - 8th March 2022 - Euro Stages Recovery Whilst Dollar Remains Strong

The currency markets at the moment continue to be dominated by US Dollar. A combination of elevated upside volatility in energy prices, equity underperformance and liquidity concerns continue to push investors seeking safety towards the greenback. For now the Ukraine conflict is showing no signs of de-escalation the currency markets remain focused on the impact this will have on the energy market. A Reuters report suggests that the US could act alone and ban Russian oil imports. The price of oil continues to rise considerably with a barrel of West Texas Intermediate gaining 5% yesterday.

The Euro has recovered most of its losses in the last 24-48 hours on headlines that Russia would cease its military campaign if the Ukraine agreed to a host of demands. Kremlin spokesman Dimitry Peskov stated that Russia would withdraw its forces of the Ukraine ceased military action, acknowledged Crimea as Russian territory and recognise the separatist republic of Donetsk as Lugansk as independent states. So far no breakthrough in talks although these will resume in Turkey on Thursday.

Sterling continues to be influenced by events in the Ukraine and Russia as the strength in the US Dollar has continued to put pressure on the GBP/USD exchange rate. Despite the Euro making a mini recovery yesterday, it would be of no major surprise to see the Euro to weaken once again amid any potential?Russia retaliation to energy supply.