Slow progress in Ukraine talks is pushing safe-haven flows


Last week saw the Federal Reserve (Fed) and the Bank of England’s (BoE) policy meetings. Both central banks increased interest rates by 25 basis points. With the BoE, markets bet heavily that Bank Rate would rise to 2% or more later in 2022. The emerging uncertainty about the outlook for interest rates is something that could continue to have a stifling effect on the pound during the weeks ahead.


The European Central Bank (ECB) on the other hand remained slightly dovish. President Christine Lagarde stated last week that the ECB will be in no hurry to raise interest rates, and any move will be gradual. Lagarde also said the decision gives the ECB “extra space” between the planned end of its money-printing programme this summer and the first interest rate hike in more than a decade. Investors have now shifted their focus back to the Russia-Ukraine conflict. A Ukrainian presidential aide said on Friday that talks with Russia was progressing slowly and reiterated that they will not negotiate an inch of the Ukrainian territory.


On a concerning note, US Secretary of State Antony Blinken claimed that Russia might be contemplating a chemical weapon attack after it released hypersonic missiles. With the risks of further escalation of the conflict over the weekend going into this week, we may start to see more safe-haven flow for the dollar until any significant improvement is made during the ongoing peace talks.

Key announcements

7:30 – EUR – ECB President Lagarde’s speech
16:00 – USD – Fed Chair Powell’s speech