What you should know on Wednesday, March 2:
Events in Eastern Europe continue to drive financial markets. Safe-haven assets surged in mid-morning Europe as Russia stepped up its attacks on Ukraine, while President Vladimir Putin said the invasion would continue until it reached its goal.
Neutral countries usually join global efforts to stop Russia. Switzerland and Finland, among others, send armor to Ukraine or join in Moscow’s financial blackout.
Meanwhile, the next round of talks between Russia and Ukraine will take place on Wednesday. In the first round of talks on Monday, Russia reportedly demanded that Ukraine commit to documenting its status outside the bloc at the parliamentary level and holding a referendum on the matter. Furthermore, Moscow wants Kiev to recognize the Donetsk and Lugansk People’s Republics and drop its demand that Crimea be returned to Ukraine. Ukraine, for its part, demanded a ceasefire and the withdrawal of Russian troops from its territory.
At the end of the day, Putin issued a directive that prohibits shipments of foreign currency from Russia in amounts greater than $10,000 from March 2.
The US dollar faces most of its main rivals, in particular the European ones. EUR/USD fell to its lowest level since June 2020 and is currently trading around 1.1130 while GBP/USD hovers around 1.3320.
The AUD/USD pair flirted with 0.7300 before paring intraday gains, ending the day little changed around 0.7250. The USD/CAD pair rose amid falling stocks and ignored record crude oil prices, settling around 1.2735.
Black gold soared to its highest level in seven years amid fears the Russian war would hit supply. WTI traded as high as $106.76 a barrel before falling back to $103.60.
Gold prices benefited from the risk-off environment and rose above $1,940 a troy ounce, holding most of their gains at the US close.
Asian stocks rose, but European indices fell, while US ones tumbled. Demand for government bonds soared, with the 10-year US Treasury yield falling below 1.70%.
One of the most interesting developments is that money markets are shedding bets on aggressive rate hikes amid new uncertainty coming from the war front.
US Federal Reserve Chairman Jerome Powell will testify on the Semiannual Monetary Policy Report before the House Financial Services Committee.
Source: Fx Street
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