- Ukraina’s Hryvnia mildly lower against the Euro
- Germany opposes Russia’s energy imports ban
- ECB expected to lean towards the dovish side
- Euro zone GDP and unemployment change data eyed
The Hryvnia Euro (UAH/EUR) exchange rate pared losses to post first weekly gains in two weeks. The pair gained +1.31% last week, settling at €0.02992, towards the high of the week. At 08:07 UTC AM, UAH/EUR trades slightly down -0.03% at €0.0308.
Risk sentiment has improved after Germany opposed sanctions to block oil and gas imports from Russia. Germany’s Chancellor Olaf Scholz comments on Russia’s energy imports have lifted up demand for Euro.
Industrial sales and retail sales from Germany improved in January but couldn’t improve the sentiment around a depressed Euro. Retail sales increased to 10.3% YoY versus the 0.8% previous reading while at the same time factory orders notched higher 7.3% YoY compared to 5.9% previous reading.
Given heightened uncertainty, the European central bank is expected to lean more towards the dovish side. The ECB is expected to end the PEPP program in the third quarter but at the same time, to wait for hiking rates until the end of the year.
Despite rampant inflation, the Russia – Ukraine conflict will weigh in on ECB’s flexibility to raise rates sooner.
Looking forward, Euro zone GDP growth is expected to slow down at 4.6% in the last quarter of 2021. Another data eyed by investors will be the employment change figures which are expected to increase by 2.1% in Q4 of 2021.
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