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Moderation In Russia Worry Saps Volatility

FOREX

Market sentiment improved at the margin as latest headlines surrounding the Russia-Ukraine standoff raised hopes about potential de-escalation. Moscow's announcement of a partial withdrawal of troops from the Ukrainian border has met with initial scepticism of both Kyiv and NATO, as they await credible evidence of the promised pullback. Still, Russia's pro-diplomacy rhetoric has taken the edge off earlier geopolitical angst.

  • Antipodean currencies eked out some gains, while the yen slipped in muted Asia-Pac trade. GBP led gains in G10 FX space, with EUR landing at the bottom of the pile. Major currency pairs generally held very tight ranges in the absence of fresh developments on the Russia crisis.
  • Chinese inflation figures failed to move the dial for offshore yuan. Both consumer and factory gate prices grew slower than forecast in January, opening up some space for China's central bank to ease policy further. PBOC Gov Yi pledged to "keep accommodative policy flexible and appropriate."
  • Inflation data from the UK and Canada will be published today, while other data highlights include U.S. retail sales & industrial output as well as Norwegian GDP.
  • On the central bank front, the Fed will publish the minutes from their most recent monetary policy meeting. In addition, comments are due from Fed's Kashkari, BoC's Lane & RBA's Bullock/Debelle.

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