News Tech: The euro rallied and the dollar fell on Monday as investors pulled capital from safe havens after US President Joe Biden and Russian President Vladimir Putin agreed in principle to meet to discuss about the Ukraine crisis. The euro gained 0.5% to $1.1376 after losing ground in early trading, while the dollar index lost 0.4% against major currencies. “The price action reflects a combination of relief that Russia did not invade Ukraine over the weekend (…) and news that Presidents Biden and Putin have accepted in principle France’s proposed assembly diplomatic summit,” wrote Lee Hardman, a currency analyst at MUFG.
While the outcome of negotiations aimed at finding a peaceful solution to the Ukraine crisis remains uncertain, more volatility is expected. “The market is likely to continue to dominate headlines without any clarity on the bottom line,” warned Barclays analysts in a note. Money market participants are also focusing on central bank policy, looking for clues about the speed and extent of interest rate hikes across major markets. Investors will be closely watching comments from US Federal Reserve policymakers this week for any hints that a rate hike is expected at the March meeting.
Most financial asset classes are hopeful that the crisis can progress towards de-escalation and European stock markets have opened positively. The risk-friendly Australian dollar rose 0.6% to $0.7218 and the British pound gained 0.24% to $1.630. On the other hand, safe-haven currencies benefiting from tensions over Russia’s military build-up on Ukraine’s border are on the defensive. The Swiss franc depreciated 0.2% against the euro while the Japanese yen gave up most of its initial gains to trade at 114.93 against the dollar.
Fed’s rate may be directed more towards 50 basis points instead of the current 25 basis point increase. Some BOE policymakers will also make public comments. Bitcoin BTC = BTSP> has recovered a bit from a bit of a bruise over the weekend. The world’s largest cryptocurrency is up 2.3% and is trading above $39,000. Early Monday, it hit a two-week low of $38,210.