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Russia and Ukraine tension continues to weigh on markets

Tuesday 22 February, 2022

Daily Currency Update

Safe haven currencies US dollar and Japanese Yen have benefited overnight as Russia ordered troops into breakaway parts of eastern Ukraine and the West has now vowed sanctions in response. Russian President Vladimir Putin has ordered the deployment of troops to two breakaway regions in eastern Ukraine after recognising them as independent states. A senior U.S. official said the move did not yet constitute a “further invasion” that would trigger the harshest sanctions, but that a wider campaign could come at any time. Britain, France and Germany agreed to respond to Russia’s recognition of the breakaway regions with sanctions and the White House said it would announce further measures. The EU will hold an emergency council meeting today during which the group may decide on any potential sanctions and Prime Minister Boris Johnson will also be making his statement today at 12.30 GMT. The markets could experience volatility throughout the day, whilst we wait on potential sanctions against Russia.

Key Movers

The UK reported better than estimated market PMIs for February yesterday, with Services PMI rising to 60.8, higher than the 55.5 expected. Along with Manufacturing PMI rising to 57.3, a tenth better than estimations, and the Composite rose to 60.2, higher than the 55 expected. The likes of GBP/USD reacted positively to the data releases and rose to just below the 1.3640 levels. However, a shift in market mood put a lid on the move, retreating most of the gains, as Russian/Ukraine headlines continue to grab investors’ attention.

Expected Ranges

  • GBP/USD: 1.3515 - 1.3615 ▼
  • GBP/EUR: 1.1965 - 1.2035 ▲
  • GBP/AUD: 1.8795 - 1.9015 ▼
  • EUR/USD: 1.1285 - 1.1365 ▼