Retracing some of Friday’s gains, the United States Dollar starts this week’s trading slightly on the back foot, but still within familiar ranges, as markets attempt to digest geopolitical risks out of Russia.
Overview
Over the weekend, the head of the Wagner Group of mercenaries mutinied against Vladimir Putin. By Sunday, however, the ill-fated coup attempt had ended, and Wagner Group leader Yevgeny Progozhin had left the Federation for Belarus. More perplexed than anything, markets opened the week fairly muted. The real impact on FX trading from this wild weekend will come as the implications of what this means for the Ukraine/Russia war play out. Putin has relied heavily on manpower from the Wagner Group, and it remains to be seen whether Russia will continue to employ the services of the mercenary army. Western leaders, by and large, just watched this saga play out without intervention. Progozhin’s efforts did expose some substantial weaknesses in Putin’s leadership and style, and Russia’s future, both domestically and abroad, remains very much in flux.
Elsewhere around the world, it was a relatively calm weekend as traders geared up for the European Central Bank’s conference in Sintra. Dismal PMI numbers out of several Eurozone nations will no doubt be quite the driver of conversation while the ECB attempts to reconcile a continuing inflation crisis with poor economic performance, driven at least somewhat by the ECB’s hiking cycle. Several speakers from the Federal Reserve are also on the docket today, with EU CPI and US GDP due out later this week.
What to Watch Today…
- No major economic events are scheduled for today
- Monex USA Online is always open
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YEN ⇑
The Japanese Yen finally caught a break over the weekend over days of continuing losses, gaining more than a third of a percent against the Buck this morning. Japan’s top currency official Masato Kanda this weekend stated that the Bank of Japan “won’t rule out” any options for handling currency matters, leaving the door open for an intervention similar to the one they instituted last fall as JPY rocketed through its record weakness level against USD.
CAD ⇑
The Loonie continues last week’s strong performance this morning, trading mostly on interest rate bets rather than its traditional driver of oil prices. Though oil prices remain depressed, the Bank of Canada’s decision to resume hiking interest rates at its meeting earlier this month has substantially strengthened the currency, especially in the face of a pause from the Federal Reserve. Differential pricing is the name of the game for CAD right now and as the BoC toys with the idea of further hikes, the currency still has a bit of upside.
