Dollar retreats but risk-sensitive currencies shine on geopolitics
The latest geopolitical developments seem to be the main market-moving factor in today’s trading session. Specifically, Russia announced that several military drills near the Ukrainian border have ended and some troops have already returned to their military bases on the mainland. This headline relieved investors’ fears about a severe military confrontation and triggered a solid rebound in risky assets while causing a sell-off in traditional safe havens.
Following that news, the dollar started losing ground versus more risk-sensitive currencies but surging US Treasury yields are limiting its downside. Moreover, the Japanese yen and the Swiss franc are also trading lower in the current trading session.
On the other hand, the euro and pound are stronger on the day, benefiting from the risk-on sentiment in the markets. Furthermore, the commodity-linked currencies are also appreciating despite the retreating oil prices.
Nevertheless, NATO secretary-general Jens Stoltenberg stated that although there are grounds for cautious optimism, Russia remains in the position to launch an attack. Therefore, volatility is expected to remain elevated as the rebound in investors’ sentiment could prove to be short-lived.
US stocks head north as war fears fade
Wall Street is set to open higher today despite the rallying Treasury yields as investors are starting to downplay the possibility of a large-scale Russian invasion in Ukraine. More specifically, the Nasdaq, S&P 500 and Dow Jones futures are up 2%,1.5% and 1.1% in pre-market trade, respectively. In addition, most major European indices are in the green today capitalizing on the increasing risk appetite.
In individual stock news, problems seem to pile up for Facebook as the Texas attorney-general sued its parent company Meta over claims that it violated state privacy protections with facial-recognition technology and exploited the biometric data of millions of Texans without their consent. This scandal could both inflict financial and reputational damage on the company.
Oil and gold suffer from easing tensions but for different reasons
WTI futures are down almost 3% in the current trading session as the positive news from the Ukraine-Russia front have relieved worries over further supply disruptions. Additionally, soaring Treasury yields, alongside the improving risk sentiment in the markets are significantly weighing on gold’s safe haven demand.
In the cryptocurrency space, Bitcoin is gaining 5% on the day, currently trading at $44.3k, while Ethereum is up 7%.
