Prospect Of Biden-Putin Summit Revives Sentiment

Initial risk aversion evaporated as the Élysée Palace released a statement noting that U.S. President Biden and his Russian counterpart Putin have agreed in principle to attend a security summit proposed by French President Macron, to be held on the condition that Russia does not invade Ukraine. The news came after a flurry of weekend headlines flagging the elevated risk of escalation, raising hopes that diplomatic efforts could lower the temperature of the standoff.

• The yen lost its earlier allure and retreated along safe haven peers. The greenback landed at the bottom of the G10 pile, with U.S. markets closed in observance of a public holiday. The gauge of USD strength (DXY) gave away the bulk of its Friday gains.
• Major high-beta FX were in demand on the back of fresh risk-on flows. The Swedish krona outperformed, demonstrating its typical sensitivity to the Russia-Ukraine crisis.
• Spot USD/CNH oscillated as the sense of geopolitical threat moderated while the PBOC kept its Loan Prime Rates unchanged. The yuan reference rate was fixed at CNY6.3401, 13 pips above sell-side estimate.
• The Russian rouble caught a bid as trading in Moscow got under way. Spot USD/RUB pulled back sharply from a one-week high.
• Although geopolitical headlines are set to take centre stage, worth noting that PMI data from across Europe will be out today, while speeches are due from Fed’s Bowman, ECB's de Cos & Riksbank’s Floden.