After the U.S. warning, dollar gains as Ukraine tensions rise

By Tom Westbrook, SINGAPORE (Reuters), - Friday's dollar was stable in Asia after a surge of aggressive rate increases and higher-than-expected U.S. Inflation.

ECONIMIC CALENDER
12 February 2022 Saturday 20:26

After the U.S. warning, dollar gains as Ukraine tensions rise

However, similar pressures around the world kept gains from rising.
WASHINGTON (Reuters] - The dollar rose on Friday along with other safe-haven assets after the United States stated that Russia has enough troops close to Ukraine to launch a major invasion.

According to Jake Sullivan, White House national security advisor Jake Sullivan, a Russian attack could start any day. It would likely begin with an aerial assault.

The U.S. warning triggered a shift in the dollar's trading. The dollar index, which measures the greenback's value against six major currencies rose 0.258%.

U.S. crude oil futures rose by more than 5%, to $94.66 per barrel, which is the highest level since 2014. Gold also rose more than 22%, to an almost two-month high.

Sullivan's comments and reports that Russian President Vladimir Putin had made a decision to invade Ukraine were the reasons for the dollar's increase, according to Bipan Rai, Head of FX Strategy at CIBC Capital Markets, Toronto.

Rai said that the market is becoming more worried about an invasion because of the move in the Japanese yen and U.S. Treasuries.

He said, "It's definitely safe-haven,"

The Japanese yen gained 0.63% against the greenback at 115.29 dollars, while the Canadian dollar fell as the possibility of a Russian attack triggered a selloff in risk-sensitive assets.

Russia's currency fell even further, already falling for the day. Last night, the rouble fell 2.73% against the greenback to 77.00 USD.

Washington asked all Americans to leave Ukraine within 48 hours. The United Kingdom, Japan, Latvia and Norway also urged their citizens to flee Ukraine.

In the meantime, the euro fell as markets processed the news and was scheduled for a weekly fall after Christine Lagarde, President of the European Central Bank, stated in an interview that increasing rates would not lower record-breaking inflation in the euro zone but only harm the economy.

As investors reviewed the preliminary February consumer sentiment index from the University of Michigan, the greenback struggled to choose a direction earlier in today.

The report showed that U.S. consumer confidence fell to its lowest point in over a decade in February, amid expectation that inflation would rise further in the short term. Reuters polled economists to forecast that the index would continue rising.

According to Erik Nelson, a currency strategist at Wells Fargo Securities, the market's uncertainty about how interest rate increases might proceed has led to frenetic sessions this week as dollars remain undecided on their future.

He stated that he tends to believe we consolidate in short-term here and is still biased towards euro downside, dollar upside relative to most currencies.

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Exchange bid prices at 3:57PM (2057 GMT).

Description RIC U.S. Close Pct. Change YTD High Bid Low BID

Session

Dollar index 96.3990 95.7950 +0.27% 0.393% +96.1180+95.6380

Euro/Dollar $1.1343 $1.1427 -0.73% -0.22% +$1.1435 +$1.1330

Dollar/Yen 115.2950 116.0000 -0.59% +0.17% +116.1700 +115.0350

Euro/Yen 130.77 132.56 -1.35% +0.35% +132.6100 +130.3900

Dollar/Swiss 0.9250 0.9253 -0.03% +1.40% +0.9287 +0.9236

Sterling/Dollar $1.3554 $1.3561 -0.05% +0.23% +$1.3609 +$1.3515

Dollar/Canadian 1.2741 1.2724 +0.14% +0.78% +1.2753 +1.2670

Aussie/Dollar $0.7134 $0.7169 -0.48% -1.85% +$0.7185 +$0.7109