What you should take care of on Tuesday, February 22:
Risk aversion gripped financial markets earlier in the week amid rising geopolitical tensions in Eastern Europe. The USD managed to gain against its high yield rivals, but lost ground against the safe havens.
In the US mid-afternoon, Russian President Vladimir Putin recognized Donetsk and Luhansk in eastern Ukraine as independent states that signed a decree “on friendship and cooperation.” The world sees this decision as the first step towards an invasion, which also invalidates talks with Western nations.
Earlier in the day, Josep Borrel, High Representative of the Union for Foreign Affairs and Security Policy of the EU, said that the EU is ready to “react strongly” if Russia recognizes the independence of Donbass, which Putin did in the end. American afternoon. Borrel tweeted: “The recognition of the two breakaway territories in #Ukraine is a flagrant violation of international law, the territorial integrity of Ukraine and the #Minsk agreements.”
Markit released preliminary estimates of its February PMIs for the EU. The services sector posted a good recovery with the German index up to 56.6 and the EU print index at 55.8. The manufacturing PMI in both economies was lower than expected, but well above the 50 level that separates contraction from economic expansion.
EUR/USD is nearing 1.1300 while GBP/USD is struggling around 1.3600. Commodity-linked currencies fell against the dollar, despite gold trading above $1,903 a troy ounce amid safety demand, while crude oil prices rose on disruption fears, with WTI it is now trading at $92.75 per barrel.
US markets were closed for President’s Day, but stock futures were down sharply on the Russia/Ukraine news. European and Asian futures are also lower, suggesting an upcoming risk-off Tuesday.
Source: Fx Street
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