RUB Round Trips From 15-Month Low As Geopolitical Musings Dominate

Initial risk-off moves related to Russia-Ukraine standoff were unwound, before G10 FX space moved into a waiting mode and consolidated in familiar ranges. Headline flow failed to offer much in the way of substantial news that could move the dial on geopolitical risk but a degree of reassurance may have been provided by speculation that the deployment of Russian troops into the breakaway regions in eastern Ukraine could mark a pause in the escalation of conflict. Source reports suggesting that the most severe sanctions prepared by the White House will be contingent on Russian incursion deeper into Ukraine's territory lent support to this theory, with a measured speech from President Zelensky pointing to Kyiv's continued willingness to utilise diplomatic channels. It also appeared that U.S. chief diplomat Blinken was still poised to meet his Russian counterpart Lavrov this Thursday, even as Western leaders continued to warn against potential for a broader Russian military intervention and rushed to compile fresh packages of sanctions.

• The Antipodeans found some poise as initial risk aversion moderated, with participants looking ahead to the monetary policy decision from the RBNZ. Governor Orr will announce the outcome of the MPC meeting on Wednesday, with policymakers widely expected to raise the OCR.
• The yen gave away its initial gains and wavered thereafter, as participants assessed geopolitical goings-on. The Swedish krona (eyed due to its sensitivity to the crisis in eastern Europe) briefly caught a bid but then eased off.
• Spot USD/RUB surged past RUB80.00 to its best levels since November 2020 in the U.S./Asia crossover but the rouble stabilised later on. Implied USD/RUB vols remain elevated across the maturity curve.
• While Russia/Ukraine headlines are poised to remain front & centre, the global data docket features German Ifo survey as well as U.S. Conf. Board Consumer Confidence & PMI figures. Speeches are due from Fed's Bostic, BoE's Ramsden & Norges Bank's Olsen.