News & Analysis

Despite the relatively dense data calendar over the past week, volatility in markets has been driven primarily by media headlines on developments at the Ukrainian border and the progress of diplomatic negotiations. While incoming headlines have caused sharp adjustments in spot FX markets, the initial moves have generally been quickly reversed. This has resulted in most currencies continuing to trade within recent ranges. More aggressive price adjustments have occurred in options markets, however, as implied volatilities remain high for most currencies with direct exposure to the economic fallout should sanctions start to be imposed on Russia.

In the week ahead, headlines regarding the Russia-Ukraine crisis are likely to continue overshadowing the data calendar, however, there are a few important events still scheduled. Firstly, a flurry of Bank of England communications are set to be released over the course of the week. Policymakers are set to testify in front of the Parliamentary Treasury Committee on Wednesday before the central bank embarks on its first annual Bank of England Agenda for Research (BEAR) conference on Thursday and Friday. In addition to this, focus will be paid to when Fed Chair Powell will give his semi-annual testimony to Congress. Usually, the Fed Chair delivers the semi-annual monetary policy report in February. Fresh policy decisions are also expected out of China and New Zealand.

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Authors: 
Simon Harvey, Head of FX Analysis
Ima Sammani, FX Market Analyst
Jay Zhao-Murray, FX Market Analyst

 

 

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