European markets opened the week on a positive note, as hopes of a ceasefire in the Ukraine grew, with another meeting of negotiators taking pace. The hot commodity market saw some cooling, as prices settled and bond yields headed north. The US 10 Year Bond surged to 2.12%, ahead of the key FOMC meeting, this week. The Fed are expected to raise rates by 25 basis points, which should be the first step of many to come, considering the rampant inflation savaging the US economy. The Japanese Yen is suffering badly, trading up to 118.00, as the Bank of Japan are way behind on the yield curve moves. The Japanese Central Bank is unlikely to move on interest rates this year, as inflation remains under control, thus driving interest rate differentials wider.
Commodity prices were settling and this pulled the carpet on the associated currencies, with the AUD crashing to 0.7200, while the NZD fell back to 0.6750. Extreme volatility remains a feature of global markets, while raging inflation forces Central Banks to raise the cost of borrowing. The sanctions will devastate European and US markets, due to the impact of energy and agriculture supply to Europe and the World. These will become more evident as the war continues on.
Markets will closely watch the Fed and the Bank of England for any surprises.