US Dollar Index bulls keep reins at 2022 peak as Chernobyl woes renew in Ukraine, US NFP eyed
- DXY stays firmer around 21-month top following the fresh risk-off mood.
- Russian military attacks Ukrainian nuclear power plan.
- Kyiv’s Foreign Minister Kuleba fears explosion could be 10-times Chrnobyl if the fire spreads.
- Fed’s Powell renew 0.50% rate-hike concerns, US NFP eyed.
US Dollar Index (DXY) remains on the front foot around the yearly top near 98.00 as market sentiment worsens during early Friday.
The risk-off gained major strength on the Associated Press (AP) news that Russia's military has started shelling Europe's largest nuclear power plant. Following that, Ukrainian Foreign Minister Kuleba confirmed the fire at the plant while also saying, “Fire has already erupted. if it explodes, it will be ten times the size of Chernobyl.”
Read: S&P 500 Futures, US Treasury yields fall as Russia-Ukraine fears reignite
The news confirms the market’s doubt over the Russia-Ukraine peace talks that agreed on the safe passage of Kyiv’s civilians the previous day.
Also fueling the risk-aversion wave could be escalating market probabilities of a 0.50% rate hike by the Fed in March. CME’s FedWatch Tool marked around 89% odds favoring the same at the latest.
On Thursday, Fed Chair Jerome Powell reiterated his support for a 0.25% rate hike, actually showing readiness for a 0.50% rate-lift in the March meeting amid rising inflation fears. That said, US ISM Services PMI eased for the third consecutive month in its latest release but the second-tier job data and Factory Orders came in positive. At home, UK Services PMI for February eased below 60.8 initial forecasts to 60.5.
Amid these plays, S&P 500 Futures drops more than 1.0% on a day to 4,304 whereas the US 10-year Treasury yields mark near nine pips of a downside to 1.75% by the press time.
Although risk catalysts keep the driver’s seat, monthly prints of the US jobs report for February will also be important to watch for near-term directions.
Read: US Nonfarm Payrolls February Preview: Fed policy runs through Kyiv
Technical analysis
Unless the quote drops below 97.20 support, lows marked during late March 2020 around 98.25 could return to the charts.