Weekly Market Report: 28th February – 4th March 2022

Friday 4th March -As the Pound remained sensitive to risk, it meant that it dropped to new multi-month lows as markets were impacted by the ongoing Russian-Ukraine war. As the war escalated, markets were rattled and this meant that the Pound suffered.

 

It was a similar day for the Euro as it dropped in reaction to the war between Russia and Ukraine becoming worse in the coming weeks. Disappointing retail sales also added to its woes, as sales stalled in January. Along with this, the negative correlation with a stronger US Dollar also meant that the single currency faced further pressure.

The US Dollar made up some ground as markets reacted to the Russian invasion which meant that the currency was in demand. Employment data was also better-than-expected as non-farm payrolls came in way above forecasts as unemployment continued to drop further than predictions had suggested, all of which gave the USD a boost.

Thursday 3rd March 

The Pound suffered during trading as it slipped to nearly new monthly lows against a number of its peers. This came as the economic sanctions against Russia intensified, weighing heavily on the currency. There was little support from the final services PMI as the score came in under preliminary figures.

The Euro also continued to see losses as it reached new multi-year lows as the crisis in Ukraine continued to cause concern. The strong correlation with the US Dollar also placed pressure on the single currency while concerns that the European Central Bank will put a hold on raising interest rates also did nothing to help.

The US Dollar started the day relatively subdued as the volatile market mood meant that demand had dropped for the safe-haven currency. Despite this, the afternoon saw the USD receive support from a change in sentiment. Along with this, a Hawkish tone from the Federal Reserve and signals that it was willing to take an aggressive stance to rate hikes helped to boost the US Dollar.

Wednesday 2nd March

The Pound managed to make up some ground after a number of monthly lows after the currency attracted investors who were looking to take advantage of some dip-buying. Furthermore, risk appetite in the EU helped to create a solid recovery and that helped to provide support to the risk-sensitive Pound.

The Euro continued to slip, as it dropped to multi-year lows against many of its peers, as the tensions between Russia and Ukraine continued to place pressure on the single currency. The refugee crisis and the economic fallout has resulted in hopes of the European Central Bank tightening monetary policy fading. Even a CPI of 5.8%, which was better than expected, was not enough to lift investors.

The US Dollar edged lower as a risk-on mood left the Greenback lacking in demand. ADP employment was stronger-than-expected although this didn’t give the currency a boost while comments around a rate hike this month from the Federal Reserve were hawkish still had little effect on the safe-haven currency.

Tuesday 1st March

As Russian forces placed more pressure on Ukrainian cities, the Pound trended lower against many of its rivals. As investors remained concerned, it meant that the currency struggled although an upward change to the UK’s final manufacturing PMI helped to limit any losses, as the report hit a seven-month high.

The Euro dropped during trading as it reacted to the fading hope that peace would be found in Ukraine. As Russia continued to launch missiles and artillery strikes, aimed at civilians, it meant that there were real concerns around the next steps that Putin would take.

It was a stronger day for the US Dollar as it strengthened thanks to a risk-off mood. With Russia increasing attacks and warnings of economic fallout from the result of the attacks, it meant that investors turned their attention to the safe-haven currency. Furthermore, the ISM manufacturing PMI was also better than expected and that helped to give the Greenback the boost it required.

Monday 28th February

A lack of economic data meant that the Pound was exposed to potential losses and that meant that it experienced a relatively quiet day of trading. Markets relaxed as talks took place between Ukrainian and Russian diplomats with the aim of negotiating a ceasefire and this might have helped to limit any losses.

The Euro nudged higher against the Pound and the US Dollar as talks took place between Ukraine and Russia, causing it to experience a mixed day. Despite this, the single currency did manage to make up for the heavy losses it experienced when the markets opened on Sunday.

The US Dollar weakened after risk appetite mounted a small recovery. The peace talks between Russia and Ukraine were welcomed by markets and although a ceasefire is believed to be unlikely, the opening of talks has helped to create a positive development during the war.

Currency Ranges for the week:

GBP/USD: Low: 1.32115 High: 1.34327

GBP/EUR: Low: 1.19311  High: 1.21428

EUR/USD: Low: 1.09034  High: 1.112413

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