The U.S. Dollar is trading in similar volatile swings this week as we start off with equities rising from reports that Russia and Ukraine will be conducting a fresh round of talks.
Overview
Over the past week, the fighting and invasive aggression have escalated with maternity wards and other civilians being targeted in Ukrainian territory. China’s markets are in turmoil, experiencing their worst performance since the global financial crisis as a result of regulatory risks by being closely tied with Russia. Top U.S. and Chinese diplomats are to engage in high-level talks this week to address the concerns over a rogue Russia. Greenback is playing safe-haven except to Euro and Pound, while a few others, like MXN and SEK, rise against it on commodities and potential for a cease-fire if talks lead somewhere good.We will get the much-awaited Fed decision on Wednesday when officials are expected to go ahead and hike interest rates by 25 basis points. We see no surprises on that front and consider the Fed’s tough position as they want to both keep the financial flows easygoing while reining in inflation on the real economy. Either way, adding to the interest rates is somewhat recessionary..
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The Euro is climbing a bit this morning as a little positivity has been sparked by improvement in talks between Russia and Ukraine. Last week’s flows were all over the place as the situation unfolds and gets closer to the N.A.T.O. border. An attack over the weekend was very close to the frontier with Poland.
The European Union is willing to go further in isolating Russia by prohibiting exports of automobiles, starting with those valued at €50K. We will see inflationary data in the form of Consumer Price Index figures on Thursday and shall see the effects of the Fed talk Wednesday.
JPY
The Japanese Yen is trading at its weakest level against the buck since the beginning of 2016. The surge in commodity prices is seriously putting at risk Japan’s trade account balance. Being a net importer, everything sky-rocketing in price brings tremendous pain to the Japanese economy, one truly affected by the instability brought onto the easy flow of a globalized world. We shall see if the Yen sell-off continues, but there seems to be room for the currency to dip.
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