Market sentiment improved fairly as, earlier Ukraine confirmed humanitarian corridor, which allowed the evacuation of civilians.
The sentiment improved further after news agencies reported Ukraine would no longer seek NATO membership, in a nod to Russia. The next round of peace talks is scheduled for next Thursday in Turkey.
Economic Data:
Data released on Tuesday, showed the US trade deficit widened in January to a new record high. Analysts at Wells Fargo point out it reflects the relative out-performance of the US economy during a pandemic era characterized by volatile swings but generally an environment of faster growing imports and slower growing exports.
“The $7.7 million widening in the U.S. trade balance in January pushed the deficit to a record-large $89.7 billion. The widening can be traced to weak export growth at the start of the year. Total exports slid 1.7% during the month with the level of goods down about 1.5% and services exports slipping 2.3%. Consumer goods exports were the main driver of weakness with a $3.2 million decline in pharmaceutical preparation products specifically more than driving the overall decline”.
Other Developments:
US’s Joe Biden and UK’s Boris Johnson announced sanctions on Russia amid its latest invasion of Ukraine. Biden announced they are banning all crude oil imports from Moscow, including gas and energy, “after consulting with allies.”
The ban on Russian energy applies to all new purchases. Market participants have already anticipated this move, as it has been making the rounds since Monday.
As for the UK government, they announced that they would phase out the import of Russian oil and oil products by the end of 2022.
Meanwhile, Russian President Vladimir Putin decided to ban the export of products and raw materials out of the Russian federation until December 31.
The EUR/USD pair peaked at 1.0957 but settled a handful of pips above the 1.0900 figure. GBP/USD ended the day struggling to retain the 1.3100 threshold.
Commodity-linked currencies ended the day lower against the greenback. The AUD/USD pair trades around 0.7270, while USD/CAD flirts with 1.2900.
Gold soared to around $2,070.50 per ounce, retreating sharply afterwards and ending the day around $2,031. Crude oil prices posted are little changed at the close, with the barrel of WTI changing hands at $123.60. US indexes managed to recover some ground, ending Tuesday with modest gains.
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