Tensions in Eastern Europe pushed demand for the dollar and the safe-haven yen

• The U.S dollar index reached a two-week high on growing worries about Russia-Ukraine tensions
• The euro edged up a little today but was still nursing bruises after two sessions of sharp losses
• The Canadian dollar edged lower against the greenback in yesterday’s trading session

U.S dollar index reached a two-week high yesterday on growing worries about Russia-Ukraine tensions and as St. Louis Federal Reserve President James Bullard reiterated calls for faster U.S Federal Reserve interest rate hikes.

The index briefly jumped further in afternoon trading after Ukraine President Volodymyr Zelenskiy urged Ukrainians to fly the country's flags from buildings and sing the national anthem in unison on Feb. 16, a date some Western media have cited as the possible start of a Russian invasion.

The comments spooked investors, who have fled to the safe-haven dollar amid the escalating geopolitical problem, but the dollar index quickly came off those highs. Ukrainian officials said Zelenskiy was not predicting an attack on that date but instead responding with skepticism to foreign media reports. United Nations Secretary-General Antonio Guterres said he was deeply worried about "increased speculation" about a military conflict, and urged world leaders to step up diplomacy to calm the situation. 

Economic Calendar

Washington had said Russia could invade Ukraine "any day now," and British Prime Minister Boris Johnson on Monday called the situation "very, very dangerous." The big driver clearly tensions in Ukraine. 

Markets are in risk-off mode across the board. Earlier Monday, Bullard also said four strong inflation reports in a row warranted action and that the central bank needed to "ratify" market expectations of its upcoming moves. Last week's stronger-than-expected U.S. consumer price index report has driven speculation the Fed might raise rates by a full 50 basis points in March. 

Clearly, we still have the aftershocks of last week's inflation report and St. Louis Fed president Bullard's comments. The move into safe-haven assets has overshadowed expectations for monetary policy tightening from the European Central Bank. ECB President Christine Lagarde also recently reiterated that any policy action would be gradual.

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Euro

The single currency edged up a little in Asian trading today but was still nursing bruises after two sessions of sharp losses as tensions in Eastern Europe pushed demand for the dollar and the safe-haven yen. Moves were slightly more cautious elsewhere and the overall result was that the dollar index, which tracks the greenback against six peers. Overall, the EUR/USD traded with a low of 1.1278 and a high of 1.1367 before closing the day around 1.1305 in the New York session.

Yen

The Japanese Yen traded higher on growing worries about Russia-Ukraine tensions and as St. Louis Federal Reserve President James Bullard reiterated calls for faster U.S Federal Reserve interest rate hikes. Ukraine President Volodymyr Zelenskiy urged Ukrainians to fly the country's flags from buildings and sing the national anthem in unison on Feb. 16. Overall, the USD/JPY traded with a low of 114.99 and a high of 115.73 before closing the day around 115.52 in the U.S session.

British Pound

The British Pound fell to a one-week low against a stronger dollar yesterday as the possibility of war in Ukraine, along with the prospect of a Federal Reserve rate hike, gave investors reason to turn more risk-averse. Hotter-than-expected US inflation data last week also weighed on investor sentiment, as markets bet the Federal Reserve will lift rates. Overall, the GBP/USD traded with a low of 1.3493 and a high of 1.3570 before closing the day at 1.3525 in the New York session.

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Canadian Dollar

The Canadian Dollar edged lower against the greenback yesterday, as investors weighed warnings that Russia could invade Ukraine at any time and a major trade route between Canada and the United States reopened. Hints by Ukraine at possible concessions to Russia helped cap the price of oil, one of Canada's major exports. Overall, USD/CAD traded with a low of 1.2717 and a high of 1.2781 before closing the day at 1.2727 in the New York session.

Australian Dollar

The Australian Dollar marked time today as global markets waited to see how events in Ukraine would unfold, while strength in energy and metals prices favored the Aussie over the kiwi. Hobbling the Aussie has been the dogged dovishness of the Reserve Bank of Australia (RBA), with minutes of its latest meeting confirming it was in no rush to raise rates. Overall, AUD/USD traded with a low of 0.7169 and a high of 0.7228 before closing the day at 0.7171 in the New York session.

Euro-Yen

EUR/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also issuing a bearish stance. The Relative Strength Index is above 41 and lies below the neutral zone. In general, the pair has lost 0.21%.

Sterling-Yen

Currently, GBP/JPY is trading below 14 and above 50, 100 days moving average. Fast stochastic is issuing a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 45 reading and lies below the neutral zone. On the whole, the pair has lost 0.08%.

Aussie-Yen

Currently, the cross is trading above 14, 50 and below 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 43 reading and lies below the neutral region. In general, the pair has gained 0.06%.

Euro-Sterling

This cross is currently trading below 14, 50 and below 100 days moving average. Fast stochastic is indicating a bullish tone and MACD is also issuing a bullish signal. The Relative Strength Index is above 44 and lies above the neutral region. Overall, the pair has lost 0.12%.

Sterling-Swiss

This cross is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish stance and MACD is also indicating a bearish tone. The Relative Strength Index is above 46 and lies above the neutral region. In general, the pair has lost 0.21%.

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