The U.S. dollar is on the back foot to start the morning as global risk sentiment is on the rise on signs that tensions on the Russian/Ukrainian border may be easing.
Overview
Early this morning, Russia announced the start of a pullback of some forces after completing drills. Stocks are rallying on the news of the possible de-escalation, but the situation remains tense. Russian President Vladimir Putin is set to meet with German Chancellor Olaf Scholz in Moscow as the West continues its diplomatic push. Traders were eagerly awaiting this morning producer inflation data which surprised the upside. January Producer Prices rose 9.7% year-over-year, higher than the 9.1% estimated by economists. Inflation pressures rose 1.0% on a month-over-month basis in January. The dollar has had a muted response in early trading as markets appear to be more focused on the Russian/Ukrainian crisis.A separate report showed that February New York Fed Empire Index disappointed and only rose to 3.1.
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The Euro popped higher versus the U.S. dollar as rising risk sentiment and following strong European jobs data. Data this morning showed that euro-area employment topped pre-covid levels, despite the challenges of Omicron. The number of employed people rose 2.1% from a year ago in the final quarter of last year.
The uptick represents the third straight increase. The jobless rate hit a record low in December according to Eurostat. A separate report showed that Eurozone gross domestic product expanded by 0.3% in the last quarter of 2021.
CAD
The Canadian dollar is mostly flat against the greenback today, unable to take advantage of widespread U.S. dollar weakness. The commodity-based currency is under pressure against most of its G10 counterparts as the price of oil fell as much as 4.0% following the news that some Russian forces will return to their regular bases. The drop is the biggest one-day drop since January 21. WTI reached its highest level since 2014 yesterday. Housing starts and existing home sales will cross the wire later this morning.
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