Headlines:
- DPR leader says Ukraine may launch offensive at any minute
- EU ambassadors reportedly approve sanctions on Russia
- US MBA mortgage applications w.e. 18 February -13.1% vs -5.4% prior
- Eurozone January final CPI +5.1% vs +5.1% y/y prelim
- France February business confidence 112 vs 107 prior
- Germany March GfK consumer confidence -8.1 vs -6.3 expected
- ECB's de Guindos: We will readjust asset purchases if needed, then see about rate hikes
- ECB's Vasle: Time seems right for policy to start the process of gradual normalisation
- ECB's Holzmann says rate hike could come in summer, before end of bond buying
- BOE's Bailey: The word 'transitory' for inflation was becoming overused
Markets:
- NZD leads, USD and JPY lag on the day
- European equities higher; S&P 500 futures up 0.7%
- US 10-year yields up 2.9 bps to 1.977%
- Gold down 0.2% to $1,894.30
- WTI down 0.6% to $91.33
- Bitcoin up 2.9% to $38,970
For once, there weren't any overly significant headlines coming out of the whole Russia-Ukraine situation on the session.
The current backdrop is that we're seeing sanctions hit Russia, but they're more of a slap on the wrist. Russia is proceeding with how it plans on Donbass and it really comes down to the Ukraine response and if Putin wants to push for more now.
As things stand, markets are viewing that a full-on invasion of Ukraine as being unlikely and if these are the worst of the sanctions for now, then there isn't much to be too worried about.
That is contributing to the more positive risk mood so far on the day. Equities are higher and so are bond yields, with commodity currencies racing higher and gold marked down slightly.
The kiwi is the lead gainer, bolstered by the RBNZ decision as they talked up the pace and ceiling of rate hikes and also began QT. NZD/USD came into Europe around 0.6760 but extended gains to near 0.6800 now.
As such, the aussie also benefited as AUD/USD moved up from 0.7240 to 0.7270 and AUD/JPY climbing notably from 83.10 to 83.60 on the session. The loonie also firmed with USD/CAD falling from 1.2750 to 1.2690.
Markets seem to be breathing a sigh of relief but we'll see if that can stay the course - especially for equities, in having to deal against inflation pressures and central bank tightening prospects.
