Market Volatility Eases Ahead of Peace Talks

AUDUSD gave up the 0.7200 support level once more but still gained against all of the major currencies. Despite the sanctions imposed, including exclusion from the SWIFT network, the response has been less than had anticipated in the lead-up. Other supporting factors to the Aussie have been lower volatility and the continued elevation of energy and grain prices.

US economic data remained strong. Personal spending growth accelerated to a ten month high. Orders for durable goods increased by more than the forecast. Price growth remained at a forty year high. As a result consumer confidence has slumped as the spectre of interest rate hikes remains in spite of the geopolitical uncertainties and likelihood of sustained higher energy costs.

Euro weakened due to the geographical proximity to the conflict. Adding to the Euro area’s woes was the greater than expected increase in German import prices and French inflation. This comes against the backdrop of sluggish economic growth. The European Central Bank finds itself in the most difficult position of the major central banks dealing with stagflation, slow growth / high inflation.

THIS WEEK’S AGENDA: The conflict will dominate proceedings but there is a raft of economic data and central bank announcements too. The RBA and BOC announce interest rate policy, the latter is tipped to hike by 0.25%. Several Federal Reserve members speak ahead of March’s anticipated rate hike. There is also Australian GDP and US employment data releases to absorb.