Dollar near flat as investors assess Russia-Ukraine talks, US rate hike outlook

Euro, Hong Kong dollar, US dollar, Japanese yen, pound and Chinese 100 yuan banknotes are seen in this illustration, January 21, 2016. REUTERS/Jason Lee/Illustration/File Photo

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  • Investors are still evaluating Wednesday’s Fed minutes
  • The ruble weakens against the dollar
  • Biden: “everything indicates” that Russia plans to enter Ukraine

NEW YORK, Feb 17 (Reuters) – The U.S. dollar index was little changed on Thursday as investors weighed U.S. President Joe Biden’s comments that war seemed imminent after the bombing of the Ukrainian front line, as ‘they were reassessing the likelihood of a 50 basis point cut. hike at the March meeting of the Federal Reserve.

Biden said there was now “every indication” that Russia was planning to enter Ukraine. Ukraine and pro-Russian separatists in Ukraine exchanged fire Thursday on a frontline that divides them. Read more

Concerns over the crisis in Ukraine kept the US dollar bid on as well as other safe-haven currencies.

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Meanwhile, investors were still trying to assess the minutes of the Fed’s January meeting released Wednesday afternoon. The minutes showed policymakers agreed it was time to tighten monetary policy, but also that decisions would hinge on a meeting-by-meeting data analysis.

Against a basket of rivals, the dollar held steady at 95.8330 after rising above 96 earlier in the day. It fell to its lowest since Friday in the previous session.

The Russian ruble weakened 1.22% against the greenback to 76.20 to the dollar.

“The market was clearly nervous when it came to Ukraine, and we saw some of that volatility in reports of bombings in Ukraine,” said Adam Button, chief currency analyst at ForexLive in Toronto.

But the effect on the market appears to be fading, he said, noting, “The harsh talk and warnings are having a waning effect, and the market is now waiting to see action or move on.”

Investors also continue to read Thursday’s Fed minutes, Button said.

“There is nothing in the minutes to indicate that a 50 basis point hike is coming in March,” he said, so “the market is rethinking the chances of a 50 basis point hike” .

“And that’s negative for the US dollar,” Button said. “The Fed … will want to move gradually, deliberately.”

Money markets were pricing in a 72% chance of a 50 basis point rate hike next month, up from 80% at the start of the week.

The dollar was down 0.4% against the Japanese yen at 114.98, while it was down 0.2% against the Swiss franc. The euro was down 0.1% against the dollar at $1.1358.

Bitcoin last fell 4.62% to $42,050.81.

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Currency rates at 10:33 a.m. (3:33 p.m. GMT)

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Additional reporting by Saikat Chatterjee in London and Tom Westbrook in Singapore Editing by Kim Coghill, Will Dunham and Mark Potter

Our standards: The Thomson Reuters Trust Principles.

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