Inflation in Britain shot up faster than expected to hit a new 30-year high

• The dollar climbed in yesterday’s session while the euro weakened as oil prices shot higher
• Biden is due to arrive in Brussels later today on his first foreign trip since the war in Ukraine
• The yen has been weak against the dollar recently, slipping to a new six-year low of 121.40

Forex market

The dollar climbed yesterday while the euro weakened as oil prices shot higher again with U.S President Joe Biden poised to announce, alongside European leaders, new sanctions against Russia during his trip to Europe. 

Biden is due to arrive in Brussels later on Wednesday on his first foreign trip since the war in Ukraine began and will meet NATO and European leaders in an emergency summit at the Western military alliance's headquarters. Sources said the U.S package would include measures targeting Russian members of parliament. 

Economic Calendar

Prices for commodities such as oil and wheat have climbed as tensions in Ukraine have escalated, putting additional upward pressure on already high inflation due to supply chain bottlenecks. Rising inflation has led many central banks, including the U.S. Federal Reserve, to take measures to rein in prices, such as by raising interest rates. 

The capital flow is going to be I don’t want to be in Europe, it is closer to Ukraine literally in the geographical sense, but also it is the fallout from the sanctions, there is a lot of money rotating back out of Europe and back towards the States. If we get another round of sanctions, then people, therefore, say the blowback on the West is going to fall on Europe disproportionately.

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Crude prices were up more than 5% yesterday, supported by disruption to Russian and Kazakh crude exports. Federal Reserve Chair Jerome Powell raised the possibility of raising interest rates by more than 25 basis points at upcoming meetings, a more aggressive stance echoed by other policymakers, which has supported the greenback and helped boost the yield on the benchmark 10-year U.S. Treasury note to more than 2.4%. On Wednesday, San Francisco Fed President Mary Daly and Cleveland Fed President Loretta Mester became the latest Fed policymakers to indicate a bigger hike was in the offing at the central bank's May meeting.

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Euro-EUR

The single currency traded lower as Eurozone consumer confidence fell by 9.9 points in March from the February number, figures released yesterday showed. The European Commission said a flash estimate showed euro zone consumer morale decreased to -18.7 this month from -8.8 in February. Economists polled by Reuters had expected a fall to -12.9. Overall, the EUR/USD traded with a low of 1.1001 and a high of 1.1117 before closing the day around 1.1049 in the New York session.

Yen-JPY

The Japanese Yen ended yesterday’s session lower. Bank of Japan (BOJ) board member Goushi Kataoka said on Thursday a weak yen was positive for the economy, with the damage due to rising import costs likely very small. While Japan may see consumer inflation exceed 1.5% for a prolonged period due to technical factors. Overall, the USD/JPY traded with a low of 118.45 and a high of 119.38 before closing the day around 119.13 in the U.S session.

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British Pound-GBP

The British Pound held at a two-week high against the euro and softened against the dollar after British finance minister Rishi Sunak announced measures to ease the UK’s cost-of-living squeeze and inflation hit a 30-year high. Sunak cut taxes for workers and reduced duty on fuel against the backdrop of slowing economic growth and fast-rising inflation. Overall, the GBP/USD traded with a low of 1.3108 and a high of 1.3195 before closing the day at 1.3177 in the New York session.

Canadian Dollar-CAD

The Canadian Dollar was little changed with the currency holding near a two-month high as recent dialing back of financial market volatility led to investors focusing more on the upswing in commodity prices. Canada today will outline plans to increase oil exports to help alleviate the tight global market following Russia's invasion of Ukraine. Overall, USD/CAD traded with a low of 1.2586 and a high of 1.2644 before closing the day at 1.2597 in the New York session.

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Australian Dollar-AUD

The Australian Dollar stood tall while the yen slumped further as higher energy prices continued to drive moves in foreign exchange markets yesterday. Against the Japanese currency, the Australian dollar edged up to hit its highest level since December 2015 and has gained 8% in March so far. Versus the dollar, it touched a four-and a- half month high. Overall, AUD/USD traded with a low of 0.7358 and a high of 0.7416 before closing the day at 0.7410 in the New York session.

Euro-Yen EUR/JPY

EUR/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is also issuing a bullish stance. The Relative Strength Index is above 61 and lies above the neutral zone. In general, the pair has gained 0.10%.

Sterling-Yen GBP/JPY

Currently, GBP/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing a bullish tone and MACD is also indicating a bullish stance. The Relative Strength Index is above 60 reading and lies above the neutral zone. On the whole, the pair has gained 0.72%.

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Aussie-Yen AUD/JPY

Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is also indicating a bullish stance. The Relative Strength Index is above 76 reading and lies above the neutral region. In general, the pair has gained 0.97%.

Euro-Sterling EUR/GBP

This cross is currently trading above 14, 50 and below 100 days moving average. Fast stochastic is indicating a bullish tone and MACD is also issuing a bullish signal. The Relative Strength Index is above 53 and lies below the neutral region. Overall, the pair has lost 0.60%.

Sterling-Swiss GBP/CHF

This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish stance and MACD is also indicating a bearish tone. The Relative Strength Index is above 45 and lies below the neutral region. In general, the pair has lost 0.28%.

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