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Oil's Gap Higher Unsettles Currencies, Regional FX Sharply Lower

  • Oil's notable gap higher at the open has led risk notably lower across equities, currencies and bond markets early Monday, with the risk of a full embargo on Russian oil and gas products looking more likely over the weekend. Regional currencies have been the hardest hit in G10, putting SEK and NOK at the bottom of the pile.
  • The single currency is coming under further pressure from lofty inflation expectations, as the EUR 5y5y inflation swap forward soars north of 2.2%, a new 10-year high. EUR/USD has already posted a notable intraday range, dropping from north of 1.0950 to just above 1.0820 at pixel time.
  • Extending the recent streak of outperformance, commodity-tied antipodean FX is notably strong, with AUD and NZD at the top of the pile.
  • The data schedule is typically light for a Monday, with no real releases on the docket. Instead, focus remains on the ongoing Ukraine crisis, with furtive commitments to humanitarian corridors and regional civilian ceasefires continuing to fall through. BoE's Cunliffe is also due to speak.

MNI London Bureau | +44 203-865-3809 |
MNI London Bureau | +44 203-865-3809 |

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