By Tad DeVan, Senior Currency Strategist, MTI
Week of: 02/14/22 – 02/18/22
It’s been a busy week for the Forex markets so far. And traders are now awaiting the minutes of the last FOMC meeting which will be released today.
Meanwhile, the geopolitical tension between Russia and Ukraine is easing as Russian President Vladimir Putin said he hopes for a diplomatic solution to tensions with the U.S. and its allies. Russia also announced a partial pullback of troops massed near the Ukrainian border. This news came as a welcome breather as the market saw a brief period of significant volatility on Friday last week when the US and UK issued a notice for their citizens to leave Ukraine.
Taking cues from these developments and some data releases, major currency pairs saw some big moves this week.
The U.S. Dollar edged lower for the second day today as the de-escalation of geopolitical tensions reduced the demand for safe-haven assets. Meanwhile, the euro held on to overnight gains in early Asia Pacific trade and sterling edged higher after data showed inflation in the UK hit a 30-year peak.
At the time of writing, the dollar index (DYX) stood at 95.93 (down 0.06%), while the euro (EURUSD) was trading flat at $1.1355.
The yen (USDJPY) was at 115.53 per dollar (down 0.09%). Traders are, however, tracking the effect of rising bond yields on Japanese government bonds and speculating whether the Bank of Japan might follow peers and tighten its monetary policy.
Do note that the fear of a potential invasion of Ukraine by neighboring Russia has been felt across the global markets. And while the Ukraine issue seems to be on top of everybody’s minds, it should not be forgotten that the Saudi-Yemen and China-Taiwan issues are smoldering too.
Moreover, with the Fed looking to raise interest rates next month, one could see a number of major currencies on the move.
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Have a profitable trading week 😀