Markets Optimistically Await Wednesday’s Ukraine, Russian Talks

Mykhailo Podoliyak, one of the representatives of Ukraine at Russian-Ukrainian negotiations, has said, ”We’ll continue tomorrow. A very difficult and vicious negotiation process. There are fundamental contradictions. But there is certainly room for compromise. During the break, work in subgroups will be continued”.

Russia lobbed more missiles into Kyiv, amid heightened fighting in the city’s outskirts as a delegation of European leaders headed to the embattled Ukrainian capital to meet with President Volodymyr Zelensky.

Earlier on Tuesday, the euro rose on hopes of progress in peace talks between Ukraine and Russia, while the US dollar fell ahead of the Federal Reserve policy meeting.

One of Ukrainian President Volodymyr Zelenskiy’s top aides said the war would be over by May, and could even end within weeks – as Russia had effectively run out of fresh troops to keep fighting.

Brent futures dropped to their lowest in almost three weeks as Russia indicated it is in favour of the Iran nuclear deal resuming as soon as possible, while ceasefire talks over Ukraine further eased fears of supply disruptions.

The drop in oil price reflects the hope that the talks between the Russian and Ukrainian negotiators might lead to an imminent and peaceful solution after all.

Some analysts also flagged that a negative correlation between oil prices and the single currency increased recently. The euro was up 0.5% to 1.0999 against the dollar.

The single currency lost ground briefly after a survey showed on Tuesday German investor sentiment suffered a record slide in March, due to the war in Ukraine and economic sanctions on Russia, making a recession in Europe’s largest economy “more and more likely. The eurozone is far more dependent than other areas on Russian energy.
However, the euro today is mainly driven by sentiment around the Russia-Ukraine conflict and markets’ approach to peace talks was optimistic.

The US Federal Reserve is set to raise rates for the first time since the COVID-19 pandemic at its meeting which concludes on Wednesday, with traders looking for indications about the pace of future monetary tightening.