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US TSY FUTURES

TUU2 Blocked

AUSSIE BONDS

Modest Pressure As Evans Changes RBA Call

GOLD

Lower In Asia; Little Changed In June

US TSY FUTURES

TUU2 Blocked

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FOREX

Crude oil prices surged after U.S. chief diplomat Blinken said that the White House is in talks with European allies over a proposal to ban Russian oil imports, with later reports flagging potential for unilateral action by the Biden administration. Soaring oil prices inspired stagflationary angst, despite reports of U.S.-led diplomatic efforts to court alternative suppliers. The implications of a firmer commodity complex were weighed against lingering worry about Russia's unfolding incursion into the Ukrainian territory, which discouraged participants from taking risk.

  • G10 FX space was effectively split into two halves, with Europe spooked by the potential aggravation of military/humanitarian fallout from the Russo-Ukrainian war and the rest of the world prioritising the impact of soaring commodity prices.
  • Nordic FX currencies went offered alongside the Eurozone's single currency on the back of regional contagion risk, with NOK struggling to find consolation in firmer oil prices. EUR/USD hit its worst levels since mid-2020, while EUR/CHF probed the water below parity for the first time since 2015, the immediate aftermath of the abrupt removal of the franc's peg to the euro. Despite a sharp sell-off in EUR/CHF, Russia jitters have spread into Swiss franc, which underperforms all of its major peers from outside of continental Europe.
  • Commodity market dynamics have taken precedence in the Asia-Pacific, inspiring notable rallies in Antipodean currencies while generating some headwinds for the yen. AUD/USD crossed above the $0.7400 figure and NZD/USD punched through the $0.6900 mark. The Aussie dollar printed its best levels against the euro since mid-2017.
  • The greenback (as measured by the DXY index) extended its recent gains and printed best levels since mid-2020 before easing off. Only the commodity-tied trio of AUD, NZD & CAD fared better than the U.S. dollar.
  • The Russian rouble crumbled in offshore trade, falling to a new historic low. Rapid erosion in Russia's creditworthiness amplified pressure from the potential oil embargo, as Moody's cut the nation's credit rating to Ca from B3, with negative outlook.
  • German factory orders & retail sales, Norwegian industrial output & comments from BoE Dep Gov Cunliffe take focus from here.
MNI London Bureau | +44 203-865-3806 | krzysztof.kruk@marketnews.com
MNI London Bureau | +44 203-865-3806 | krzysztof.kruk@marketnews.com

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