Ruble stabilises, safe-haven currencies steady

328
3
Ruble stabilises, safe-haven currencies steady

After its crash to an all time low, the ruble stabilised somewhat on Tuesday, while the safe-haven yen and Swiss franc were steady after their biggest rallies in almost seven weeks with traders focused on the developing crisis in Ukraine.

After Russia and Ukraine held an initial round of ceasefire talks four days after Russia invaded their neighbour, the euro bounced back to around $1.12 after tumbling as low as $1.11210 at one point on Monday.

The Australian dollar was trading at a near one-week high after losses as steep as 1.2% in the previous session. The Reserve Bank of Australia will hold the key rate at a record low on Tuesday, and is widely expected to hold the key rate at a record low.

The leading criptocurrency was close to a two-week high above $44,000 reached late overnight.

The ruble plunged 30% to a new record 120 per dollar after Western countries and allies slapped Russia with new sanctions, including cutting off some banks from the SWIFT financial network. The currency recovered a bit after an emergency rate hike and other urgent measures adopted by the Russian central bank, and last traded at 102.

The yen gained 0.48% on Monday, easing it slightly to 115.07 per dollar. After a 0.95% rally overnight, the Swiss franc edged lower to 0.91775 per dollar.

The dollar's volatility was at its highest level in 14 months on Monday, as measured by a Deutsche Bank index.

Rodrigo Catril, senior foreign-exchange strategist at National Australia Bank, wrote in a note that Ukraine's negotiations with Russia-Ukraine don't yield a resolution.

The West is trying to isolate Russia, but the fighting continues as the West tries to increase its efforts to isolate Russia. The instability will keep safe-haven currencies bid and euro under pressure, while the Aussie has held up due to higher commodity prices and Australia's geographic distance from the conflict, Catril said.

The dollar index, which measures the dollar against six major rivals, was stuck at around 96.75 after paring gains of 0.89% on Monday to end the session 0.18% higher.

Weighing on the currency was a retreat in the U.S. benchmark 10 year yields to an almost one-month low overnight as investors sought the safety of Treasuries, even though the Federal Reserve is expected to raise interest rates at its policy meeting next month.

The Ukrainian crisis has spurred traders to reduce bets on March 16 for a 50 basis-point rate hike to just 8.5%, according to CME's Fedwatch tool.

According to the first comments by a Fed official since the conflict, Atlanta Fed President Raphael Bostic said on Monday that he is not ruling out a half point move.

In a client note, Joseph Capurso, Commonwealth Bank of Australia strategist, said market pricing had gotten too low, so the bottom line is: do not write off a 50 bp increase.

The economic data will determine the near-term trends in the USD, but the medium-term trends in the USD will be determined by the war.