Rising risk sentime has prompted the strengthening of the Euro and the depreciation of the US dollar where the strengthening of the US dollar gradually faded on Monday after the Kremlin stated that there were no concrete plans for a summit on Ukraine between the Presidents of Russia and the United States.
Reports that Vladimir Putin and Joe Biden have agreed on the principle of mutually finding a possible way out of the crisis have prompted investors to withdraw capital from safe havens. Despite that the tension however remains worrisome.
Russia's FSB Security Service said there had been several shootings from Ukrainian territory that destroyed security huts. Meanwhile, Ukrainian authorities warned that hackers were preparing to launch major attacks on government agencies, banks and the defense sector on Tuesday.
According to Jeremy Stretch, head of FX strategy at CIBC that market optimism has faded based on some headlines reporting tensions could worsen.
The Euro strengthened by 0.14% against the US dollar which traded at 1.1338. The strengthening was also driven by economic data showing that the eurozone’s economic recovery is gaining momentum with the easing of Covid-19 sanctions.
The US dollar index, which measures the US currency against six major currencies, was down 0.09% at 95.935.
Following the still vague geopolitical sentiment, market players are starting to pay attention to the safe haven. The Swiss Fran currency rose 0.54% to a trading level of 0.9164. While the outcome of negotiations to find a peaceful way out of the Ukrainian crisis remains uncertain, it is expected that more volatility is expected to develop.
In addition, market players also focused on central bank policy to obtain indications of interest rate hikes in key markets.
