The U.S. Dollar is stronger this morning as markets tumble ahead of a busy last week of the month featuring the Fed meeting and announcement on Wednesday.
Overview
Expectations at the moment are leaning towards a hawkish Fed that will not hesitate in telegraphing a move to increase rates starting in March. Naturally, anything that leads to believe the opposite in that the Fed will delay such measures will subsequently sink the dollar. These are indeed the strongest levels for the buck in three weeks. Contracts for the Nasdaq 100 started dimming after having advanced 1.0% earlier.
Furthermore, the greenback is also being perceived as a safe haven in the midst of a tense situation between Washington and Moscow. Talks between the two parties have failed to reach much of a retreat from Russian forces arming the Ukraine border. The concern is such that the U.S. ordered families of diplomats out of Ukraine. Stocks in Russia fell 6.8% as the U.S. perceives a risk of invasion or conflict in the middle of trying to establish a pro-Russia administration in Kiev. Also, COVID should receive a mention in this report as it continues making havoc in Asia, particularly Hong Kong.
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The Euro slipped this morning following the disturbance in U.S.-Russia relations and related to other idiosyncratic items. Italy is going through elections to determine a new Prime Minister as Mario Draghi would like to replace Sergio Mattarella as President. Although Euro weakened, there was a higher risk of deeper losses associated with the candidacy of Silvio Berlusconi, who ended up bowing out of the race. On the economic front, the release of January Purchasing Managers Index numbers showed a little lower than expected. As far as geopolitics go, energy costs and instability could affect the Euro-zone as Russia and the U.S. handle Ukraine’s questions.
GBP
Sterling is also coming in weaker to begin the week as the economic indicator of the day in PMI also failed to impress. The PMI Composite came in lower than estimated and data from the Confederation of British Industry tomorrow are scheduled for tomorrow. Domestically, the U.K. is still led by Prime Minister Boris Johnson, a man still facing pressure from various fronts to resign. We shall see where the excitement takes Pound.
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