The safe-haven dollar looks bid despite the recent correction from fresh mid-2020 highs
Following an early sell-off, Wall Street stocks saw a massive reversal to finish higher overnight, as investors shrugged off Russia’s attack on Ukraine. President Joe Biden announced that the US will introduce a new wave of sanctions against Russia in response to its invasion of the neighbor. As such, the S&P 500 rose 1.5%, the Dow Jones Industrial Average added 0.28%, and the Nasdaq Composite ended 3.3% higher.
Following suit, Asian stocks rebounded on Friday despite uncertainty about Ukraine. Despite some improvement in risk sentiment, investors remain cautious, with US stock index futures wavering amid heightened geopolitical tensions. Japan’s benchmark Nikkei 225 surged nearly 2%, South Korea’s Kospi jumped 1.06%, while the Shanghai Composite rose 0.63%.
In Europe, equities opened higher before turning mixed as investors digested new sanctions against Russia. Elsewhere, fresh data showed that the German economy shrank less than initially reported in the fourth quarter, as the GDP declined 0.3% compared with a preliminary estimate of -0.7%. Following the release, the DAX 30 was trading just below the flat line.
As risk mood stays unstable, the safe-haven dollar looks bid despite the recent correction from fresh mid-2020 highs seen on Thursday. According to the latest developments surrounding Ukraine, Russia has closed its airspace to all airplanes registered in the UK in retaliation to Aeroflot sanctions from Britain. After peaking at 97.75, the USD index retreated but managed to hold above the 97.00 figure, retaining a bullish bias on Friday. As risk sentiment is deteriorating again, dollar demand will likely persist ahead of the weekend.
