NZD/USD falls below 0.6700 as Russia-Ukraine headlines worsen market mood

• NZD/USD falls 0.04% in the American session on Friday.
• Russia/Ukraine headlines dominate the mood of market participants as uncertainty clouds investors.
• Williams, the New York Fed, favors a gradual increase in rates to the upside, pushing back the possibility of 50 bps in March.

The NZD/USD looks to end the week on a higher note, as the kiwi is up 0.72%, ahead of the Reserve Bank of New Zealand (RBNZ) monetary policy meeting the following week. At the time of writing, the NZD/USD is trading at 0.6691.

Geopolitical headlines hang over financial markets. The mood of market players is a rollercoaster of risk appetite/risk aversion as Ukraine/Russia headlines continue. Major US equity indices remain lower, while in the currency space, the NZD is the strongest while the EUR and CAD are the laggards.

Russia/Ukraine Update

In the last hours, news reported that Ukrainian forces shelled the village of Shanzharovka in LPR with 122mm caliber artillery, increasing tension in the area. Meanwhile, the US State Department, quoted by Fox, says that announcements of an evacuation of 700,000 in Donbas and reports of an explosion in Donetsk are “false flags” for Russia. Additionally, US officials cited by the WSJ expect a Russian attack on Ukraine in the coming days and it would involve tanks, planes, ballistic missiles, and cyber attacks.

New York Fed’s Williams makes remarks

NZD/USD reacted lower and broke below 0.6700 as market sentiment soured. Also, to add some more bad news, New York Fed President John Williams said he doesn’t see a compelling case for taking a big step at the start of the interest rate hike cycle. Williams added that the US central bank could steadily raise rates and reassess by adjusting the pace of rate hikes if necessary.

The US economic docket showed existing home sales in January rising by 6.5 million more than the 6.1 million forecast. At the same time, the Consumer Board’s Leading Index contracted to 0.3%, worse than the 0.2% rise estimated by analysts, below December’s reading.

Additional technical levels