Weekly Report – 4th April to 8th April 2022

Friday 8th April – The Pound lost ground during the session as it looked as though the economy would suffer as a result of ongoing travel chaos. With staff shortages causing issues, airlines cancelled flights and there were traffic problems at Dover, all of which placed pressure on the currency. Along with this, the latest household finance survey from YouGov dropped to a ten-year low for a second consecutive month as confidence has been dented by the Ukraine war and the cost-of-living crisis.

 

The Euro made up ground against many of its weaker rivals following news from Ukraine that suggested that Russian forces were pulling back from Kyiv. However, experts hinted that Russia would intensify its approach to Ukraine with a Russian missile strike killing 52 civilians at a train station.

The US Dollar was fairly muted as it consolidated the gains seen throughout the week. The Federal Reserve set out hawkish expectations while the risk-off mood helped to support the Greenback. However, these factors had already been priced in and that means that the US dollar moved in a narrow range.

Thursday 7th April

A lack of data meant that the Pound saw very little movement while a change in the market mood, which was negative, meant that the Pound had no impetus or drive.

The Euro started the day on a downward trend, following the Ukraine crisis and central bank policy divergence placed pressure on the single currency. Despite this, it made a recovery later in the day following the release of positive data. There was an improvement in  German industrial production and Eurozone retail sales grew during February. Along with this, the European Central Bank set a hawkish tone in the latest meeting minutes which helped to boost the currency.

The US Dollar wavered during the session as it nudged higher against many of its rivals while investors looked to take haven in the Greenback. The Federal Open Market Committee meeting minutes set a hawkish tone and this also helped to support the safe-haven currency. However, the upside was limited as there are concerns that a recession will be triggered by the Fed.

Wednesday 6th April

The Pound managed to recover some of the losses it has seen recently, making ground on many of its peers. This movement might have been down to a technical correction after the currency dropped to multi-year lows against many of its rivals as there was no clear driver for the movement.

Much like the Pound, the Euro also recovered from multi-year lows. However, a strong recovery was held back as German factory orders dropped by 2.2% in February while the mood around the Russia-Ukraine conflict also weighed heavily on the single currency.

It was a mixed day for the US Dollar as the stance taken by the Federal Reserve around tightening left investors concerned. Even though a rise in Fed rates would give the Greenback a boost, if it is done too quickly then it could push the US economy into a recession. What this meant was that the outcome from the Federal Open Market Committee had no impact on USD.

Tuesday 5th April

It was a mixed day for the Pound as it made different movements against a number of its rivals. The ongoing Russia-Ukraine crisis placed pressure on the currency although the strong growth in the UK services PMI helped to support the Pound and that helped to prevent significant losses.

The Euro continued to lose ground as the Eurozone planned to implement further sanctions against Russia. However, these new measures will not cause problems for Moscow but they will also damage the economy across Europe and that could cause problems for the single currency.

It was a day of ups and downs for the US Dollar, even though there was no clear reason as to why this was happening. However, there were two possible reasons and this might have been a change in the US Treasury yield curve across several trading sessions as well as the US stopping Russia from servicing Dollar bond payments from US banks.

Monday 4th April

As tensions continued to rise between Ukraine and Russia, the Pound lost ground against a number of its peers. Western leaders indicated their horror after it became apparent of a civilian massacre in Bucha. However, European stock markets managed to nudge upwards while an improvement in market mood helped to support the pound and cap any losses.

Following reports of torture and murder in Ukraine, the Euro moved downwards while the Ukrainian president called the killings genocide. This weighed heavily on the single currency and that left it vulnerable to losses, causing it to lose further ground.

It was a difficult day for the US Dollar as a risk-on mood and a drop in US factory orders placed pressure on the Greenback. Despite this, the Federal Reserve made some bullish expectations and that provided support for the safe-haven currency, preventing more losses.

Currency Ranges for the week:

GBP/USD: Low: 1.29867 High: 1.31649

GBP/EUR: Low: 1.19017  High: 1.20346

EUR/USD: Low: 1.0839  High: 1.10074

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