Ukraine tensions and FOMC minutes in focus; dollar rises
As the United States fears that an invasion may be approaching, tensions over Russian forces stationed near Ukraine are entering what might be a pivotal week. The United States is warning of an imminent invasion, while President Vladimir Putin has accused America of failing to satisfy his demands. Russia has denied it is preparing to invade Ukraine, and Chancellor Olaf Scholz of Germany is travelling to Kyiv today, a day before visiting Moscow to calm the issue.
This week’s focus is on the minutes of the FOMC meeting. As of the time of writing, the markets are pricing in a 50-basis-point rate increase for March. A more aggressive tightening cycle may be discussed in the minutes. The Federal Reserve’s remarks on the topic will be keenly monitored as well.
As long as tensions with Russia persist, the dollar is likely to remain strong. The US dollar index is flying around 96.30, surpassing successfully the short-term simple moving averages (SMAs). Dollar/yen is moving slightly higher, while US stock futures are paring losses after a negative trade, suggesting a slight easing in risk aversion.
Euro and pound find support at $1.13 and $1.35
A Russian invasion of Ukraine would have the greatest impact on Europe. The euro is still under pressure and is currently seeking support near $1.1300. The pound is diving to around $1.3500 after finding support near $1.3500.
Commodities retreat after aggressive gains; aussie and kiwi fall
In other markets, the commodity currencies are heading south. Aussie/dollar is declining below the 0.7100 round number, while kiwi/dollar is plunging below 0.6600 after the pullback off the medium-term descending trend line. Dollar/loonie is gaining ground near 1.2780.
Oil prices are on the verge of hitting $100 per barrel, which could lead to increased inflation, stifling the global economy. Many countries’ central banks are taking action to rein in increasing prices by implementing stricter monetary policies. WTI crude oil futures are currently falling after the climb to $94.91/per barrel. Moreover, gold prices surpassed the previous high of $1,853/per ounce, shifting the short-term outlook to positive. However, today, the price started in a negative mode.
