The U.S. dollar and other safe-haven currencies initially rallied yesterday as it became more clear that Russia may be gearing up to invade Ukraine.  However, the dollar has unwound its gains and equities have recovered from overnight lows.

Russian President Vladimir Putin recognized two separatist republics in eastern Ukraine and ordered troops to the region.  The move sent Western leaders into a frenzy to find a diplomatic solution instead of war.  The European Union has put out an initial proposal for sanctions against Moscow.  Geopolitical headline risk looks to be the biggest driver for currency markets again this week.

February PMI data for the U.S. is due out at 9:45 a.m., followed by consumer confidence at 10 a.m.  Atlanta Fed President Raphael Bostic will speak this afternoon.

The bulk of top-tier data will be released during the second half of the week with New Home Sales, GDP, and initial jobless claims on Thursday.  U.S. consumer income, Durable goods orders, the PCE deflator, and the University of Michigan consumer sentiment all due out on Friday.

EUR: The Euro continues to see-saw against the U.S. dollar.  EUR/USD touched a one-week low overnight before rebounding. The euro is now up 0.5% against the greenback from yesterday’s close but comfortably inside recent ranges.  The Euro’s small pop came after the German IFO report that showed German businesses are more optimistic as we move past the worst of the Omicron variant.  The gauge registered at 99.2, clocking the highest reading since July.

CAD: The Canadian dollar and other commodity-backed currencies edged higher against the U.S. dollar overnight.  Brent oil prices are over $100 a barrel as tensions intensify between Russia and the West.  WTI futures are up 3.0% and European natural gas jumped 13%.

A report yesterday showed that several key members of the OPEC+ cartel see no need to accelerate output even as oil heads towards $100 a barrel.

Traders have seemingly shrugged off political headlines in Canada.  Prime Minister Justin Trudeau said his government will continue to enact emergency powers for at least a few more days to address the ongoing threats of blockades