Market Update 1st April 2022

Good morning, all. As the weekend approaches, here’s what you need to know on Friday 1st April.

?A negative risk sentiment shift instigated by the lack of progress on Ukraine and Russia peace talks has supported a greenback recovery through close of play Thursday and into the Friday European trading session. Key pairs jumped on the positive tone of peace talks early in the week, but those gains have now been erased as the US Dollar Index pushes higher again today drawing on the risk-averse mood. Investors were quick to seek safe-haven assets after Russian President Vladimir Putin announced on Thursday that buyers of Russian gas "must open rouble accounts in Russian banks" to activate purchases from April 1.?"If such payments are not made, we will consider this a default on the part of buyers, with all the ensuing consequences,". It seems USD bulls have shrugged off weak inflation print yesterday, and it will now require a shift in market sentiment and a NFP driven downturn for the dollar to lose any ground before the weekend.

The cable trades in a narrow range between 1.311-1.314 today as the pound fails to gain attention. Safe-haven asset demand always weighs heavily on the pound in this pair, with hope strong GDP data would have supported a resurgence. Instead concern about commodity importation, most strikingly oil, especially with the new stipulations, has prevented pound purchase.

EURUSD has retreated following the resurgent dollar. The pair trade at the mid territory of 1.10 today after lofty heights above 1.11 in early week trading sessions. No advances on geopolitical de-escalation with the ongoing peace talks has been the big roadblock for the euro despite posting good inflation data. This alongside a steady economic recovery could aid the currency within the pair but for the moment the risk-averse market seeks dollar insurance.?

GBPEUR has risen with renewed pound interest. Strong UK inflation data this week compiled by the risk complex has weighed on the euro in this pair. The ask is currently on the cusp of 1.19 and is likely to remain pound dominant unless there are resoundingly positive headlines contributing to sentiment. Eurozone data being positive supports the ECBs less dovish attitude to rate hikes compared to the BoE and that could be considered once the market is dug out of the geopolitical rut.?

With a new month comes new hope that there could be a resolution in Ukraine, yet it currently seems a long way away, reflected in the market. A volatile time, and with it brings uncertainty.

That’s all this week, let’s see what next week brings when we return on Monday.