The safe-haven U.S. dollar is rallying across the board this morning as Russia began what appears to be a full-scale invasion of Ukraine.
Overview
Russian President Vladimir Putin vowed to “demilitarize” its neighbor while maintaining it has no intention to occupy Ukraine. The situation is being called one of the worst security crises in Europe since the end of World War II.
Global equities are tanking, commodity prices are skyrocketing, and safe-haven currencies are on the rise. Markets will remain at the mercy of geopolitical headlines as Western countries vow to act with more aggressive sanctions.A slew of important domestic fundamental data will be released today but so far as taken a backseat to Russian news. Weekly jobless claims came in at 232K last week, almost exactly in line with estimates. A separate report showed that the second reading of fourth-quarter GDP met expectations of 7.0% growth. Personal consumption rose 3.1% in the quarter, up from 2.0% in the third quarter. New home sales are due out at 10 a.m. and there are five different Fed speakers throughout the day. Market participants continue to scale back the odds the Fed will raise rates 50 bps at its next meeting as the conflict in Europe threatens the global recovery.
What to Watch Today…
- Five Fed Speakers throughout the day
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EUR
The Euro dropped 1.3% against the U.S. dollar overnight after Russia attacked Ukraine. The move was the biggest one-day fall against the greenback since the beginning of the pandemic in March 2020.The Euro had gained earlier this month following a hawkish pivot by the European central bank and as traders pared back bets the U.S. Fed would aggressively hike rates. Those gains have now disappeared. The ECB is still expected to raise interest rates next month but Russian aggression in the region will give policymakers reason for pause.
CAD
The Canadian dollar fell 0.7%, the biggest move in three weeks. The U.S. dollar has gained favor as a safe haven so the loonie is under pressure even as the price of oil spikes. WTI crude futures jumped 7.3%.Much like in the U.S., top-tier data was released in Canada this morning but is mostly being ignored as all eyes remain on Russia. Canadian payrolls rose 122.2K in December. A separate report showed Canadian factory sales rose 1.3% month over month in January.
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