Caution ahead of more talks

European stocks are treading water on Monday and Wall Street is eyeing a similar open amid another cautious start to the week.

Virtual talks are set to resume as Europe prepares fresh sanctions against Russia following the release of disturbing images over the weekend. Pressure is ramping up on Brussels to enforce a total ban on Russian energy imports in order to enforce real damage and punishment against the Kremlin for the invasion. Of course, it’s easier for some to make such demands than others.

We will likely continue to see resistance from Germany and a select few others as they’re simply far more reliant on Russian imports of oil, gas and coal. Forecasts for the impact of an embargo vary but it would almost certainly tip the country into recession.

But few disagree that harsher measures are needed as Putin has clearly not been deterred despite the economic hardship he’s about to drag his country through. Some of the cracks have been papered over in the near term, as we’ve seen with the rouble recovery and discounted exports to friendlier nations but this won’t be enough to protect them in the event of a blanket ban.

We’re left hoping that talks continue to make progress towards a ceasefire and exit of Russian troops but if the process so far is anything to go by, that may not happen soon. While progress has been positive for risk assets so far, they remain vulnerable to setbacks in talks which continue to take place against the backdrop of ongoing attacks.

Bitcoin grinding higher

Speaking of choppy, bitcoin has been just that over the last week or so since breaking through a key resistance level. It’s recovered over the last few days after finding some support around USD 44,000 but continues to struggle to find much momentum as it approaches last week’s peak. It could still build on that breakout but it may be more of a grind than we’ve seen in the past, given the current environment.

For a look at all of today’s economic events, check out our economic calendar:

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.