UAE and Ukraine sign new CEPA deal

The UAE signed a new Comprehensive Economic Partnership Agreement (CEPA) with Ukraine yesterday, with Ukrainian President Volodymyr Zelenskyy on an official visit to the UAE where he met with His Highness Sheikh Mohamed bin Zayed Al Nahyan. The two leaders pledged to deepen their economic and investment relations and to advance bilateral trade with the CEPA meaning that 99% of Ukrainian imports of UAE goods and 97% of UAE imports of Ukrainian goods will be tariff free. Over the first nine months of 2024 the UAE’s exports to Ukraine came to the value of AED 157mn, while imports were at AED 854mn according to FCSC data. The Wam press statement said that bilateral trade totaled USD 372.4mn (AED 1.37bn) last year.

The Reserve Bank of Australia cut its benchmark interest rate by 25bps this morning, taking it down to 4.10%. The bank communicated that inflation was softening but that there remained risks of it picking up once again, pointing towards a cautious approach to further monetary easing from here.

Bank of England Governor Andrew Bailey gave a media interview yesterday, in which he warned that economic growth in the UK had been largely ‘static’ over the past year, despite the upside surprise in the Q4 GDP figures published last week. While he acknowledged that headline CPI inflation would accelerate this year, he asserted that this was down to regulated price increases around utilities and would not feed into an inflationary trend while economic growth remained sluggish.

Today’s Economic Data and Events

11:00 UK unemployment rate 3mths, %, December. Forecast: 4.5%

14:00 Germany ZEW survey expectations, February. Forecast: 20.0

14:00 Germany ZEW survey current situation, February. Forecast: -89.4

17:30 Canada CPI inflation, % y/y, January. Forecast: 1.9%

Fixed Income

• US treasuries were unmoved on Monday due to the President’s Day holiday. Christopher Waller cautioned that recent data supported rates staying on hold for now, but expects that rate cutting can resume later in the year.
• Sharjah Islamic Bank has mandated banks for a 5yr USD benchmark sukuk. Damac has also mandated banks for a 3.5yr USD sukuk.
• Saudi Real Estate Refinance Company has mandated banks for a dual tranche USD sukuk with maturities of 3yr and 10yr.

FX

• The dollar index closed down by 0.1% yesterday, its fifth consecutive day of losses against its basket of peers.
• JPY was a notable gainer as it received a 0.5% boost by an upside surprise on GDP figures, taking the currency to 151.51.
• GBP also had a strong day as it added 0.3% to 1.1625, while EUR dropped 0.1% to 1.0484.

Equities

• European equity markets were boosted by mooted defence spending increases, with the CAC, the FTSE 100, and the DAX adding 0.1%, 0.4%, and 1.3% respectively. US markets were closed.
• Locally the DFM closed up 0.4% while the ADX dropped 0.7% and Saudi Arabia’s Tadawul closed 0.9% lower.

Commodities

• Brent crude prices settled higher yesterday amid reports that OPEC+ was considering pushing back its increase in oil production once again. Brent futures ended the day at USD 75.2/b, up 0.6%. WTI did not trade owing to the US national holiday.