Tensions in the Ukraine have eased for the moment as weak sanctions against Russia that were put in place by the EU and US appear to have little bite. The outcome of events in Ukraine, coupled with strong economic data released in the US, created a rally on Wall Street. The improved sentiment has spilled over to Asia and the European markets. This should help to weaken safe haven currencies like the Swiss franc and Japanese yen, while even providing some support for the euro.

Sterling

Sterling will have to take its clues from euro/dollar developments. The Vodafone purchase of a Spanish telecoms helped to hold sterling lower against the euro as speculation surrounding that deal went through markets.

US dollar

Waning fears of military action in the Ukraine and strong industrial output figures helped lift equity markets in the US. The improved risk appetite actually weighed on the safe haven dollar as it slipped back to lows seen last week. Output grew at its fastest pace in six months, rising 0.8 per cent in February. A regional manufacturing survey also showed signs of strength despite failing to meet expectations.

Euro

The euro continues to benefit going into the FOMC policy meeting in the US. Verbal intervention from the European Central Bank’s Mario Dragi and other policymakers, as well as weak data, have failed to halt the euro’s climb. The data continues to reveal the concerns voiced by policymakers who fear price stability is at risk.