The Dollar weakens markedly, the Dollar Index fell -0.6% to 96.6 (but maintained a gain of +0.6% over the week as a whole).
This recovery of the Euro (the war is however ‘on our soil’ according to E.Macron) marks the return of the ‘risk-on’, confirmed by the second session of rise of Wall Street, with a Dow Jones which resumes +2 5% and signs its best session since the first decade of November 2020 and the announcement of the availability of a “95% effective” RNA vaccine by Pfizer.
The Nasdaq gained +1.6% to 13,700 and posted a gain of +8.7% in a straight line in 24 hours, as if the heavy geopolitical clouds were going to dissipate over the weekend.
And yet, Kiev and Donetsk are under attack, Russian military operations continue on several fronts in Ukraine, Russia prohibits overflights of its territory and announces that relations with the West and Washington are ‘on the brink of the point of no return’.
Statement made after the European decision that the assets in Europe of Vladimir Putin and Sergei Lavrov were going to be frozen… and that V. Putin could even ‘be denied access to American territory’.
Joe Biden had confirmed Thursday evening the adoption of “devastating” sanctions, while assuring that US soldiers would not set foot in Ukraine.
Ursula von der Leyen, the president of the European Commission, detailed the set of “massive and targeted” sanctions approved by European leaders, sanctions “which will have maximum repercussions on the Russian economy and the political elite”, assures she.
First, this package of measures includes financial sanctions that prohibit Russia’s access to the main capital markets, impacting nearly 70% of the Russian banking market.
Russia could be hit with a ban on exports in the oil sector (a double-edged sword, it would cause the price of a barrel to explode); another measure -adopted on Thursday evening- plans to prohibit the sale of all aircraft, spare parts and equipment to Russian airlines when 3/4 of the country’s fleet was manufactured in Europe or North America.
Finally, ‘we will hinder Russia’s access to important technologies such as semiconductors or advanced technologies and we will also act on visas so that businessmen and women no longer have privileged access to ‘European Union’, she added in substance.
Observers were able to note that access to the SWIFT banking network had not been banned in Russia, leaving the Western camp with additional leeway in terms of sanctions.
International tensions therefore remain very ‘high in the towers’ but the Dollar has not benefited from this.
No more than the rise in the yield of the ’10 years’ which was moving towards 2,000%, or +2.3 Pts on Friday evening.
A US figure (but there were many on Friday) could explain the greenback’s decline in other circumstances, but neither the timing nor the behavior of the FOREX agree: the monthly survey by the University of Michigan shows that household confidence fell from 67.2 to 62.8, with a clear deterioration for the component measuring their outlook, by more than 5 Pts to 59.4 against 64.1 in January.
These poor figures are partly offset by the +2.1% increase in household spending, according to the Department of Commerce, which also indicates that incomes have stagnated.
Finally, the rate of increase of the PCE price index increased by 0.3 point +6.1% in total data, and also by 0.3 point +5.2% excluding energy and food.
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