The game is still in the air, and the markets know it

• The U.S dollar dipped slightly against a basket of major currencies yesterday
• Russian President Vladimir Putin recognized two breakaway regions in the country
• The Kremlin said it remained open to diplomacy with the United States and other countries
• U.S President Joe Biden announced the first wave of sanctions against Russia

The U.S dollar dipped slightly against a basket of major currencies on Tuesday amid choppy trade spurred by developments in Ukraine after Russian President Vladimir Putin recognized two breakaway regions in the country and ordered troops to the area. 

The Kremlin said it remained open to diplomacy with the United States and other countries as it faced actions from a slew of countries. Britain published a list of sanctions and Germany froze the Nord Stream 2 Baltic Sea gas pipeline project, which would have significantly increased the flow of Russian gas.

The dollar weakened somewhat as U.S. President Joe Biden announced the first wave of sanctions against Russia while saying he hoped diplomacy was still available. The euro rose versus the greenback after earlier touching its lowest level since Feb. 14, buoyed in part by the hope for talks and economic data that showed business morale in Germany improved in February across all sectors to its highest since August. The dollar index fell 0.1%, with the euro up 0.2% to $1.1333. The greenback swung between gains of as much as 0.1% and a decline of 0.35% on the day. 

Economic Calendar

Putin is running the show here, but the markets are not responding as if they are really fearful that what happened is an irredeemable escalation that is going to end up with the kind of sanctions that wreck economies, or at least will wreck the global recovery. The game is still in the air, and the markets know it; they don’t see it as a great change in the situation. Russia's rouble strengthened 2.07% versus the dollar at 78.76 after weakening to 80.9275 per greenback, a level last seen in November 2020. Sterling was last trading at $1.359, down 0.06% on the day. The dollar earlier gained some ground after data from IHS Markit showed U.S. business activity in February regained speed as the drag from a surge in COVID-19 cases during the winter ebbed Other data, however, showed U.S. consumer confidence fell for a second straight month in February. 

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After initially strengthening against the dollar, safe havens such as the Swiss franc and Japanese yen gave back gains against the greenback. The dollar was up 0.6% against the Swiss franc while the yen weakened 0.29%. The New Zealand dollar jumped to five-week highs on Wednesday as the country's central bank hiked rates as expected and signaled a more aggressive path forward than even the most hawkish investor had wagered. The Reserve Bank of New Zealand (RBNZ) raised rates 25 basis points to 1.0% but revealed it came close to moving by 50 basis points to head off a further pickup in inflation expectations.

Euro

The single currency one-month volatility level jumped yesterday to its highest in 15 months, as the single currency was hit by rising risk aversion amid a gas price surge and escalation of tensions in Ukraine. Russian President ordered troops to two breakaway regions in Ukraine, sending the euro one-month volatility to its highest level since Nov 2020. Overall, the EUR/USD traded with a low of 1.1343 and a high of 1.1394 before closing the day around 1.1371 in the New York session.

Yen

The Japanese Yen steadied amid choppy trade spurred by developments in Ukraine after Russian President Vladimir Putin recognized two breakaway regions in the country and ordered troops to the area. The Kremlin said it remained open to diplomacy with the United States and other countries as it faced actions from a slew of countries. Overall, the USD/JPY traded with a low of 115.33 and a high of 115.77 before closing the day around 115.47 in the U.S session.

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British Pound

The British Pound fell to a six-day low against the dollar and euro yesterday with investors cautious on the British currency amid the Russia-West stand-off over Ukraine. Also weighing on the pound, BoE Deputy Governor Dave Ramsden yesterday signaled more monetary tightening, but said he now sees a "modest" rate hike over the coming months. Overall, the GBP/USD traded with a low of 1.3529 and a high of 1.3599 before closing the day at 1.3583 in the New York session.

Canadian Dollar

The Canadian Dollar was little changed against its U.S counterpart yesterday as investors weighed the economic impact of Russia-Ukraine tensions, and the price of oil, one of Canada's major exports, gave back some of its earlier gains. The Canadian dollar has largely been at the mercy of oil markets yesterday. Overall, USD/CAD traded with a low of 1.2661 and a high of 1.2723 before closing the day at 1.2684 in the New York session.

Australian Dollar

The Australian Dollar was on the rise as global markets steadied in the wake of Russia's latest moves in Ukraine. It stumbled a little when local data showed annual wage growth only edged up to 2.3% in the December quarter when bulls had hoped for 2.4% or more. Futures responded by slightly lengthening the odds on a Reserve Bank of Australia (RBA) rate hike as early as June. 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.

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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 gained 0.03%.

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 gained 0.25%.

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 0.55%.

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 0.22%.

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 gained 0.04%.

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