Is risk appetite back? With tech stocks and BTC rallying up whilst Gold slips back and Oil prices consolidate, it would seem investors are turning bullish.
UKRAINE
The next round of face-to-face negotiations between Ukraine and Russia will occur in Turkey this week. As the prolonged conflict continues, Ukrainian President Volodymyr Zelensky has said he is open to adopting neutral status as part of a peace deal with Russia. This could be the best bet for peace in Europe, and as this path becomes increasingly likely, we can expect EUR to strengthen against USD & GBP.
COVID
Covid may have taken a break from the centre stage, but increasing cases have started ringing alarm bells across the globe. China has been hit hardest, with the city of Shanghai now declared the nation’s most prominent Covid hot spot. The city is set to be split into two across the Huangpu River, with each side going into a four-day lockdown one after the other. The prospect of China closing further could repeat an identical supply chain shock the world felt during 2020.
OIL
OPEC is meeting on Thursday and will be discussing the oil supply. The pressure is on from G7 states who are calling for the producer group to boost output to offset the disruption caused by Russia’s invasion of Ukraine. Negotiations between Iran and US have stalled, dampening hopes of a much-needed supply increase to fill the Russian void. Although oil prices have stabilised, a lack of consistent supply could create further volatility.
WEEK AHEAD
Monday, the Bank of England Governor Andrew Bailey will speak and may give clues to the Banks next move. GDP for UK is out on Thursday and is expected at 6.5%, climbing closer to the expected peak of 7% this year.
ECB’s President Lagarde will be giving a speech on Wednesday whilst the German Consumer Prices docket is also set for release. Euro-area inflation is forecasted to be 6.7% – a historical high for the single currency. A higher reading could push EURO prices higher, anticipating that the ECB will be forced to act.
USA – National Employment and Gross Domestic Product Annualized(Q4) is out Wednesday. Thursday also sees Chicago PMI and Weekly Jobless Claims from the States.
Friday will have PMI for UK, Germany, Italy, Spain, and USA. The US will also have Nonfarm Payroll data out.