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Mariupol refuses Russia deadline, risk-off mode

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What’s new?

The EUR took a pause on Friday after rallying the whole week from last week due to a technical rebound after sinking the previous weeks due to the conflict. Ukraine rejected Russian demand to renounce the city of Mariupol and the fight intensified in the area over the weekend. The market is monitoring diplomatic efforts to bring the month-old war to the end.

Talks between the two nations continue on Monday with a cease-fire and a peace agreement could be in sight.

Commodities' prices remain very high which will weigh on EUR and GBP. Globally the risk-off mode due to the Ukraine war is favoring the USD and putting pressure on E.U currencies. JPY fell to a 5 year low after J.Powell (FED’s President) hiked FED’s fund 25 bps last Thursday and gave a hawkish speech to the audience that will bring additional USD rate hikes in the coming month. While H.Kuroda (BOJ’s President) keeps a dovish monetary stance.AUD reached a multiple-month high as the currency benefited from high commodities prices due to the Ukraine war. Australia also moves to ban aluminum exports to Russia giving even more momentum to the AUD.

What’s in the pipe?

J.Powell will give a speech later on today after his meeting last Thursday when he emphasized the FEB mandate is to fight 40-year high inflation. As a reminder USD interest rate will be 2% at the end of this year from market expectation. The key thing for the FED is to manage high inflation expectations and the risk of the U.S recession induced by rate hikes.

Eurozone Markit PMIs and U.S initial jobless claims are majors indicators to be released this week due on Thursday.

FX rates

USD/JPY @ 119.22 - multiple year high
EUR/USD @ 1.1048 - Bearish trend
GBP/USD @ 1.3151 - Bearish trend
USD/CNH @ 6.3746 - Breach of the bearish trend

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