NEW YORK, Feb 14 (Reuters) – The U.S. greenback index reached a two-week excessive on Monday on rising worries about Russia-Ukraine tensions and as St. Louis Federal Reserve President James Bullard reiterated requires sooner U.S. Federal Reserve rate of interest hikes.
The index briefly jumped additional in afternoon buying and selling after Ukraine President Volodymyr Zelenskiy urged Ukrainians to fly the nation’s flags from buildings and sing the nationwide anthem in unison on Feb. 16, a date some Western media have cited because the potential begin of a Russian invasion. learn extra
The feedback spooked traders, who’ve fled to the safe-haven greenback amid the escalating geopolitical drawback, however the greenback index rapidly got here off these highs.
Ukrainian officers mentioned Zelenskiy was not predicting an assault on that date, however as a substitute responding with skepticism to overseas media reviews.
United Nations Secretary-Common Antonio Guterres mentioned he was deeply fearful about “elevated hypothesis” a few navy battle, and urged world leaders to step up diplomacy to calm the state of affairs. learn extra
Washington had mentioned Russia might invade Ukraine “any day now,” and British Prime Minister Boris Johnson on Monday referred to as the state of affairs “very, very harmful.”
“The massive driver clearly is tensions within the Ukraine. Markets are in risk-off mode throughout the board. Implied volatilities are up,” mentioned Karl Schamotta, chief market strategist at Cambridge World Funds in Toronto.
The greenback index was final up 0.4% at 96.3090 after reaching 96.4410, its highest since Feb. 1.
The greenback was little modified in opposition to the Japanese yen at 115.57 , whereas the greenback was additionally almost flat in opposition to the Swiss franc at 0.9252 franc. .
Earlier Monday, Bullard additionally mentioned 4 robust inflation reviews in a row warranted motion and that the central financial institution wanted to “ratify” market expectations of its upcoming strikes. learn extra
Final week’s stronger-than-expected U.S. shopper worth index report has pushed hypothesis the Fed would possibly increase charges by a full 50 foundation factors in March.
“Clearly we nonetheless have the after shocks of final week’s inflation report and St. Louis Fed president Bullard’s feedback,” Schamotta mentioned. “We’ve merchants positioning for a front-loaded tightening cycle.”
The transfer into safe-haven property has overshadowed expectations for financial coverage tightening from the European Central Financial institution. ECB President Christine Lagarde additionally just lately reiterated that any coverage motion could be gradual.
In opposition to the greenback, the euro was down 0.4% at $1.1301.
The Fed will launch its January assembly minutes on Wednesday.
In cryptocurrencies, bitcoin was up 0.2% at round $42,169 .
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Forex bid costs at 4:27PM (2127 GMT)
Further reporting by Stefano Rebaudo, Enhancing by Andrew Heavens, Alexander Smith and Richard Chang
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