Forex - GBP/USD, EUR/USD Flows: Independent: Russia launches construction of gas pipeline to China in $400 billion deal; EUR 1-year lows; GBP sold; eye BoE/ECB, Ukraine

Published at 03:30 (GMT) 02 Sep

Independent: Russian president Vladimir Putin today launched the construction of what will be one of the largest gas pipelines in the world, stretching from China to the Russian Far East, in the village of Us Khatyn in Yakutia.

China's CNPC agreed to a huge $400bn (£237bn) contract with Gazprom in May. Russia will deliver 38 billion cubic meters of natural gas to China for a period of 30 years, through the 2,485 mile long pipeline.

The deal will lessen Russia's reliance on European buyers, who have imposed economic sanctions because of the situation in Ukraine.

On FX, some focus on the huge Russian-China gas deal, in the midst of the Ukraine crisis and sanctions against Russia. Good to watch for the flow of gas from Russia, given rising tensions with the west.

USD/CNY level at 6.1437, after PBoC Fix of 6.1684. Range of 6.1423 to 6.1450. USD/RUB level up at 37.32-33 - given concerns over impact on Russia on current EU/US sanctions.

GBP/USD at 1.6585-88, hit lows of 1.6579 from 1.6615. Offers at 1.6610-20, bids at 1.6550. Interest to sell on rallies, given concerns over Ukraine/ Russia. Though GBP supported on EUR/GBP sales, now at 0.7908-10. EUR/USD under pressure, at 1-year lows of 1.3118, low since 6 Sep. Option barriers 1.3100.

USD/JPY extends gains to fresh 7-month highs of 104.76, as stoploss, speculation of option barriers hit at 104.75. Big ones at key 105.00. WL