Dollar advances; Ukrainian president’s comments add to investor anxiety

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  • The dollar appreciates on fears over Ukraine
  • The euro considered vulnerable to a possible escalation
  • Dollar index hits two-week high

NEW YORK, Feb 14 (Reuters) – The U.S. dollar index hit a two-week high on Monday, with the index briefly jumping after Ukrainian President Volodymyr Zelenskiy commented on Russia and a possible invasion, adding to recent concerns about tensions in the country.

Zelenskiy said he had heard that Wednesday could be the day of a Russian invasion and that he would instead proclaim it Ukrainian National Unity Day. The leader has tended to downplay suggestions that an attack is imminent. Read more

The comment spooked investors, who fled to the dollar and other safe-haven currencies amid the growing geopolitical turmoil, but the dollar index appeared to quickly return to previous levels.

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Washington said earlier that Russia could invade Ukraine “any day”, and British Prime Minister Boris Johnson on Monday called the situation “very, very dangerous”.

“The big driver is clearly the tensions in Ukraine. Markets are in risk aversion mode across the board. Implied volatilities are on the rise,” said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto.

The dollar index was last up 0.4% at 96.3430 after hitting 96.4410, its highest since Feb. 1.

The dollar was up slightly against the yen at 115.56, while the dollar was stable against the Swiss franc at 0.9256 francs. .

The dollar index was also boosted by comments earlier Monday from St. Louis Federal Reserve Chairman James Bullard, who reiterated his calls for an acceleration in the pace of Federal Reserve interest rate hikes. American.

Bullard also said four consecutive reports of high inflation warranted action. Read more

Last week’s stronger-than-expected US consumer price index report fueled speculation that the Fed could raise rates by 50 basis points in March.

“Obviously we still have the shocks after last week’s inflation report and comments from St. Louis Fed Chairman Bullard,” Schamotta said. “We have traders positioning themselves for a frontal tightening cycle.”

The shift to safe-haven assets eclipsed expectations of monetary policy tightening from the European Central Bank. ECB President Christine Lagarde also recently reiterated that any political action will be gradual.

Against the dollar, the euro fell 0.4% to $1.1296.

The Fed will release the minutes of its January meeting on Wednesday.

In cryptocurrencies, bitcoin was stable at around $42,080.

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Currency rates at 3:17 p.m. (2017 GMT)

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Additional reporting by Stefano Rebaudo, editing by Andrew Heavens and Alexander Smith

Our standards: The Thomson Reuters Trust Principles.

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