Dollar gains as Ukraine worries grow, Bullard comments

The U.S. dollar rose on increasing concerns about Russia-Ukraine tensions. James Bullard, St. Louis Federal Reserve President, repeated calls for faster U.S. Fed interest rate hikes.

On Monday, the U.S. dollar index gained a two-week high and jumped further in afternoon trading. It happened after Ukraine President Volodymyr Zelenskiy encouraged Ukrainians to sing the national anthem and fly the flags from buildings on Feb. 16. It is a date some Western media have mentioned as the possible start of a Russian invasion.

The comments shocked investors, who have moved to the safe-haven dollar in the middle of the escalating geopolitical problem. As a result, the dollar index quickly fell from those highs.

Tensions in Ukraine and its influence on currencies

Ukrainian officials said Zelenskiy did not predict an invasion on that date but instead responded skepticism to foreign media reports.

Antonio Guterres, United Nations Secretary-General, said he was apprehensive about increased speculation regarding a military conflict. He added that he urged world leaders to step up diplomacy to settle the situation.

Washington said Russia could attack Ukraine any moment now. On Monday, British Prime Minister Boris Johnson called the situation very dangerous.

Chief market strategist at Cambridge Global Payments in Toronto, Karl Schamotta, commented on the situation. He said that the big driver in Ukraine is the tension. Markets are in confused mode across the board while implied volatilities are up.

The dollar index was last up 0.5% at 96.3091 after reaching 96.4411. It marked as its highest since the beginning of February. It appeared little changed against the Japanese yen at 115.58. The currency appeared also nearly flat against the Swiss franc at 0.9253 francs. Against the dollar, the euro was down 0.5% at $1.1302.

Earlier on Monday, Bullard said a full inflation report warranted action. He added that the central bank needed to confirm market expectations of its upcoming moves.

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