Rising geopolitical risk, a dampened outlook for Europe, strong data from the U.S. and building expectations for an increasingly hawkish Fed have proven a powerful combination for the USD, driving several currencies to their recent lows and the DXY USD index to an 11‐month high of 81.72. Today, risk aversion is carrying over from yesterday’s reports of building Russian troops on the Ukraine border helping to drive the US 10‐year yield back to 2.43% while the German 10‐year yield has dropped to a new record low of 1.10%. Today’s trade data is an important release but for currency markets the tone of tomorrow’s ECB meeting will prove crucial.
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