Dollar, Oil Pressured By Upbeat Russia-Ukraine Talks

Photo by Delfino Barboza on Unsplash

Peace talks between Russia and Ukraine in Istanbul made some progress today, fueling peace hopes across the financial markets. The ascent in European equities accelerated after Russia called peace talks with Ukraine constructive. There is also a significant concession by Moscow as Russia’s military said it would fundamentally cut back operations near Ukraine’s capital. Adding to more upbeat headlines, the Ukraine negotiator noted that there have been enough developments to have Putin-Zelensky meeting. 

Against this backdrop, the safe-haven dollar demand abated further. An abrupt sell-off took the USD index to 1.5-week lows just above the 98.00 figure that triggered a modest bounce in recent trading. As such, the greenback turned lower on Tuesday following seven consecutive days of gains. Now, the prices need to hold above the 98.00 mark in order to refrain from deeper losses in the short term. 

In the USDRUB pair, the buck derailed the 83.00 figure for the first time since February 25 as Russian assets cheered the outcome of the latest negotiations with Ukraine. Now, it looks like the pair could target the 80.00 mark, but one should be cautious as the market optimism looks fragile, with downside risks surrounding the Russian currency persisting. 

In the oil market, Brent crude extended the decline to $102 a barrel as after constructive peace talks between Russia and Ukraine helped ease concerns over oil supplies destruction. Earlier in the week, oil prices came under pressure after new COVID lockdowns in Shanghai stoke fears of a lower energy demand in China. Now that Brent crude threatens $100 a barrel, traders will focus on further geopolitical developments surrounding Ukraine. In the immediate term, it looks like the futures will stay under pressure while a broader uptrend remains intact.