(Updates with early U.S. market activity)
- U.S. PPI increases in Jan
- Fed speakers in focus this week
- Guarded response from Ukraine, West on Russia news
The U.S. dollar eased and the euro strengthened on Tuesday as Russia said some of its troops were returning to base after exercises near Ukraine, reducing some investor anxiety over the crisis in the region.
Concern over the Russia-Ukraine standoff had driven gains in the safe-haven dollar recently. The U.S. dollar index =USD was down 0.2%, while the euro EUR= was up 0.3% against the dollar at $1.1343 and the U.S. dollar was up 0.2% against the yen at 115.74.
The Russian rouble strengthened 1.41% versus the greenback at 75.71 per dollar. "The big story overnight is the feeling of deescalation on the Russia-Ukraine border, so that's taking out some of the premiums that had been priced into the FX and really the macro space since Friday afternoon," said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto.
"That's one of the reasons the U.S. dollar is underperforming," he said. Investors will remain focused on developments in the region, with the news from Russia drawing a guarded response from Ukraine and its Western allies, and as NATO said it had yet to see any evidence of de-escalation.
Market participants will also remain alert to any comments this week from U.S. Federal Reserve officials on the interest rate hike outlook.
Fed officials continue to spar over how aggressively to begin raising rates at their March meeting, with St. Louis Fed President James Bullard on Monday reiterating calls for a faster pace of Fed rate hikes. Other Fed officials have been less willing to commit to a half-point hike, or were even concerned it could cause trouble.
"The key is really going to be what we hear from other Fed speakers later this week... That could be pivotal for markets this week," Rai said.
The European Central Bank has joined its central bank peers in signaling a hawkish turn in its monetary policy at a meeting this month.
Sterling was down 0.1% against the dollar at $1.3524. It had been rising amid expectations that the Bank of England was likely to raise interest rates again next month after lifting them twice since December.
Investors are also absorbing the day's economic data, which showed U.S. producer prices increased by the most in eight months in January. The data follows last week's report showing a strong rise in consumer prices in January, with the annual inflation rate posting its largest increase in 40 years.
In cryptocurrencies, bitcoin BTC=BTSP was up about 4%.
======================================================== Currency bid prices at 10:27AM (1527 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index =USD 96.1060 96.2860 -0.17% 0.463% +96.3010 +95.9650 Euro/Dollar EUR=EBS $1.1343 $1.1307 +0.33% -0.22% +$1.1360 +$1.1304 Dollar/Yen JPY=EBS 115.7350 115.5450 +0.16% +0.53% +115.8700 +115.2600 Euro/Yen EURJPY= 131.29 130.62 +0.51% +0.74% +131.4700 +130.4500 Dollar/Swiss CHF=EBS 0.9260 0.9243 +0.18% +1.52% +0.9274 +0.9227 Sterling/Dollar GBP=D3 $1.3524 $1.3532 -0.06% +0.00% +$1.3566 +$1.3488 Dollar/Canadian CAD=D3 1.2755 1.2726 +0.24% +0.89% +1.2774 +1.2702 Aussie/Dollar AUD=D3 $0.7137 $0.7128 +0.14% -1.80% +$0.7156 +$0.7103 Euro/Swiss EURCHF= 1.0501 1.0449 +0.50% +1.27% +1.0511 +1.0447 Euro/Sterling EURGBP= 0.8387 0.8357 +0.36% -0.15% +0.8399 +0.8352 NZ NZD=D3 $0.6626 $0.6609 +0.27% -3.18% +$0.6648 +$0.6604 Dollar/DollarDollar/Norway NOK=D3 8.9060 8.8960 +0.24% +1.23% +8.9380 +8.8400 Euro/Norway EURNOK= 10.1035 10.0474 +0.56% +0.90% +10.1228 +10.0190 Dollar/Sweden SEK= 9.3071 9.3771 -0.42% +3.21% +9.3997 +9.2815 Euro/Sweden EURSEK= 10.5590 10.6040 -0.42% +3.18% +10.6140 +10.5325 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates https://tmsnrt.rs/2RBWI5EFX positions https://tmsnrt.rs/3JonIQs
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