Dollar dips on talk of Biden/Putin meet

US/Russia summit lifts FX risk sentiment

Most of the major currencies appear to be around their year-end levels as the end of the month approaches, having weathered a US dollar storm over the first five weeks of 2022. The prospect of interest rate rises outside of the US, and a stubborn long end of the US curve has seen the US dollar retreat in the past two weeks, as the kitchen sink buy-US dollar-trade was slowly squeezed out.


Currency markets seem very much in no man’s land now leaving them vulnerable to intraday swings in sentiment creating much noise, but little direction. The noisiest corner is the Ukraine situation right now, and the in-principal summit agreement between the US and Russia today has lifted most currencies at the expense of the US dollar. The dollar index gas slipped 0.30% to 95.80 and dollar losses could continue if 95.50 fails.


Euro and sterling have risen 0.40% and 0.25% to 1.1370 and 1.3620 with resistance at 1.1400 and 1.3650. AUD/USD and NZD/USD both rode the sentiment wave higher this morning, climbing 0.50% and 0.40% higher to 0.7215 and 0.6720. 0.7250 and 0.6750 form near-term barriers.


Similarly, Asian currencies have rallied today, although more cautiously. The SGD, THB, PHP, KRW, IDR and MYR rose between 0.10% and 0.20% with the Indian Rupee set to do the same this afternoon. USD/CNY is unchanged at 6.3300 after China left the LPRs unchanged and with chat of safe-haven status doing the rounds. Fair play with a managed currency and the firepower of the Bank of China.


I will form more cohesive thoughts on currency markets in the days ahead, but nothing I am seeing today is screaming momentum and breakout. With US markets away and reducing liquidity, traders are unlikely to risk much pain on the short US dollar trade, and the threat of Ukraine headlines means choppy range-trading is likely to dominate the session.

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Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific, from 2016 to August 2022
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley was OANDA’s Senior Market Analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV and Channel News Asia as well as in leading print publications such as The New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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