What you should know on Wednesday, March 30:
The dollar tumbled along with other safe-haven assets amid renewed hopes for a diplomatic solution to the conflict between Russia and Ukraine. Risk appetite increased following headlines indicating a reduction in Russian attacks around Kyiv and Chernihiv, Russian mediator Vladimir Medinsky announced.
Ukraine has suggested a new security guarantee system, with Turkey as one of the main potential security guarantors. If the security guarantee system works, Ukraine will accept a neutral status, which includes not hosting foreign military bases on its territory. kyiv wants to hold a referendum on Ukraine’s neutrality.
Meanwhile, the US yield curve temporarily inverted as 2-year and 10-year Treasury yields hovered around 2.40%, although on the shorter note they fell back to 2.35%. An inverted yield curve is generally seen as a sign of a recession.
Wall Street rallied following its overseas counterparts by easing concerns related to the Eastern European crisis.
Central banks and possible rate hikes were once again in the spotlight. Financial markets are pricing in a 60 bps hike in Europe, while US Philadelphia Fed President Patrick Harker said rate hikes should be methodical. He said he wouldn’t rule out a 50bp hike in May, but wouldn’t commit either. Finally, he added that the balance reduction could be equivalent to a two-quarter point rate increase.
The EUR/USD pair is trading just below 1.1100, maintaining its upside potential. GBPUSD struggled to post gains, now trading around 1.3100. Commodity-linked currencies find room to advance at the end of the US session, with AUD/USD trading above 0.7500 and USD/CAD in the 1.2480 price zone. The USD/JPY pair traded around 122.90.
Commodity prices fell steadily, with WTI currently trading at $104.30 a barrel. Gold fell to $1,890.05 a troy ounce, before bouncing back to around $1,917.00.
Source: Fx Street
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