Monday February 28th Morning Update

The US$ up, oil prices higher, equity markets lower and US yields lower. Russian forces seized two small cities in southeastern Ukraine and the area around a nuclear power plant but ran into stiff resistance elsewhere as Moscow’s diplomatic and economic isolation deepened. Putin put Russia’s deterrence force (including nuclear arms) on high alert. Cease fire talks begin. Russia’s access to the SWIFT payment systems has been limited. Rouble rebounded after the Central Bank raised interest rate from 9.95% to 20% but remains down 20%. Russia introduces capital control to defend against sanctions.

In other news. Toyota suspends all domestic factory operation after cyberattack. Moldova vows to seek closer ties with Europe despite fears of provoking Russia. North Korea claims latest missile launch was spy satellite test. COVID. South Korea will no longer require people to show proof of vaccination or negative tests to enter any indoor space. Travelers to New Zealand will no longer need to isolate. New York City to lift vaccination mandate for businesses. In currency markets. Despite the turmoil in the market, the Asian currencies have been stable with $yen, NZD$ and CNY flat while the AUD is down 0.2%.

USD/CAD continued with its struggle to build on the momentum or find acceptance above 1.2800. Retreating crude oil prices undermined the Loonie and continued lending some support to the pair. The support area lowers to the 1.2715 area while resistance moves to 1.2825.

ECB’s Panetta: Russian invasion of Ukraine intensifying uncertainty as such the ECB should take moderate and careful steps in adjusting policy. The 1.1100 area remains an area of importance for the pair and expect to offer support while resistance resets at 1.1215.

EUR/GBP continues to be range bound. Failing to make new 2022 lows last week, we continue to view the .8300 area as a crucial support area while .8400 remains our topside resistance.

Ukraine crisis continues to weigh on the GBP. Risk-off is the theme with US futures and Asian share prices in a sea of red as the Ukraine tensions mount. BoE’s Bailey informed lawmakers he saw clear risks that inflation could overshoot their own forecasts but urged investors not to get too carried away. Support remains at 1.3350 while resistance adjusts to 1.3425.