Morning Report

February 25, 2022

“The US dollar soared to near two-year highs while the ruble dived to a record low following the Russian invasion of Ukraine. Nervous investors retreated as global markets are reacting to the impact of sky-high inflation.”

Tim Hallinan – Trading Director

Main Headlines

President Joe Biden hit Russia with a wave of sanctions on Thursday after Moscow invaded Ukraine, measures that impede Russia’s ability to do business in major currencies along with sanctions against banks and state-owned enterprises. Biden described Russian President Vladimir Putin as an aggressor with a “sinister vision of the world” and a misguided dream of recreating the Soviet Union. But he held back from imposing sanctions on Putin himself and from disconnecting Russia from the SWIFT international banking system, amid differences with Western allies over how far to go at this juncture and criticism from Republicans that he should have done more. Biden said the sanctions were designed to have a long-term impact on Russia and to minimize the impact on the United States and its allies. And he said Washington was prepared to do more. The sanctions are aimed at limiting Russia’s ability to do business in dollars, euros, pounds, and yen. Among the targets were five major banks, as well as members of the Russian elite and their families.

Boris Johnson has outlined what he claimed was “the largest and most severe package of economic sanctions that Russia has ever seen.” In a statement to MPs in the House of Commons, the UK prime minister described Russia’s president as a “bloodstained aggressor who believes in imperial conquest”. Russia’s biggest banks will be hit, Russian citizens will face limits on the deposits they can hold in UK bank accounts, high-tech exports to Russia will be curbed and Aeroflot will be banned from UK airspace. Johnson announced the package, which is part of a synchronised set of reprisals by the west over the invasion of Ukraine, shortly after talks with G7 leaders. The measures include an asset freeze on all major Russian banks, with immediate action against Kremlin-controlled VTB, Russia’s second-biggest lender, which accounts for 16.4 per cent of the country’s bank assets. It has limited operations in the UK through its investment banking arm, VTB Capital.


Sterling is well bid against most major currencies overnight. The government and NHS England must prepare a sustainable, long-term plan to deliver Covid vaccines without adversely affecting day-to-day health services, the UK spending watchdog has warned. The National Audit Office report praised England’s vaccine rollout for meeting “stretching and unprecedented targets.” A £1.9bn scheme intended to avert mass youth unemployment at the height of the pandemic has failed to deliver for young people, employers or taxpayers, MPs have found. Rishi Sunak, the UK chancellor of the exchequer, has been dragged into the “party gate” scandal after it emerged that he is among the people facing a police inquiry into lockdown-breaking events in Whitehall. UK consumer confidence plunged in February and many measures of spending remained below pre-pandemic levels as surging living costs hit morale even before Russia invaded Ukraine.


Euro is stronger against the dollar and weaker against sterling this morning. Air raid sirens wailed over Kyiv amid unconfirmed reports that a Russian plane had been shot down and crashed into a building a day after Russian President Vladimir Putin launched an invasion that has shocked the world. Ukrainian President Volodymyr Zelenskiy vowed to stay in Kyiv as his troops battled Russian invaders advancing toward the capital in the biggest attack on a European state since World War Two. Meanwhile, Ukraine’s military has suspended commercial shipping at its ports after Russian forces invaded the country, an adviser to the Ukrainian president’s chief of staff said, stoking fear of supply disruption from leading grain and oilseeds exporters. Ukraine’s central bank has banned payments to entities in Russia and Belarus as well as operations involving both nations’ currencies.


The dollar is weaker than most major currencies in the early morning trade. Biden denounced Vladimir Putin’s decision to move forward with the invasion. The US will send 7,000 troops to Germany to help reassure NATO allies who are part of a larger contingent that had already been put on alert earlier this year. Biden’s administration is holding off for now on levies that could disrupt global aluminium supplies, people familiar said, as the market grapples with already severe shortages. Meanwhile, The White House has said the US is ready to accept Ukrainian refugees fleeing the invasion by Russia. As reports suggested as many as 100,000 Ukrainians had already left their homes in the wake of the invasion by Russian forces, the White House said it was prepared to accept refugees and to assist countries in Europe where people may head. Billionaire activist investor, Carl Icahn, has warned the US has too many “terrible CEOs”, whose performance is harming the economy by driving high inflation and income inequality.


Stocks climbed Friday, crude oil advanced and US equity futures slipped as the Ukraine conflict and Western sanctions on Russia muddied the outlook for markets and the global economic recovery. An Asia-Pacific share gauge rose 1%, aided by the technology sector as well as China, where the central bank boosted liquidity. European contracts signalled a brighter session compared with Thursday’s turmoil. Wall Street rebounded overnight in wild trading that saw the Nasdaq 100 close up 3.4% after flirting with a bear market. But US futures are lower in a sign of lingering caution over the implications of Russia’s invasion of Ukraine. Brent oil scaled $100 a barrel again. Treasuries were mixed, while Australian and New Zealand bonds slid. The dollar dipped. Gold topped $1,915 an ounce. Biden imposed stiffer sanctions on Russia, promising to inflict a “severe cost on the Russian economy” that will hamper its ability to do business in foreign currencies.

Main Economic Data/Central Banks/Government (All Times CET)

8:00 a.m.: Germany 4Q GDP; Jan. import price index
8:00 a.m.: Sweden Jan. PPI
8:00 a.m.: Denmark Jan. retail sales
8:00 a.m.: Turkey Feb. economic confidence
8:45 a.m.: France Feb. CPI, 4Q GDP
9:00 a.m.: Sweden Feb. economic tendency survey
10:00 a.m.: Euro-area Jan. M3
10:00 a.m.: Italy Feb. consumer confidence, economic sentiment
11:00 a.m.: Belgium 4Q GDP
11:00 a.m.: Euro-area 4Q economic confidence
11:00 a.m.: Italy sells bonds
2:30 p.m.: U.S. Jan. PCE deflator, durable goods orders, personal spending
3:00 p.m.: ECB’s Lagarde speaks
7:00 p.m.: Baker Hughes U.S. rig count

Corporate Events

Earnings include Sempra Energy, Li Auto, New World Development


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