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Against the greenback, the single currency climbed 0.4% to
$1.1354, and within striking distance of Monday's high of
$1.1369, as European stock markets rebounded on the news while
bond yields headed higher. [GVD/EUR]
Some troops in Russia's military districts adjacent to Ukraine
are returning to their bases after completing drills, Russia's
defence ministry said on Tuesday, a move that could de-escalate
frictions between Moscow and the West
"Russia's decision to return some troops to their bases
following the completion of some military exercises has stoked a
relief rally in equities, while weighing on the dollar, gold,
and oil," said Marc Chandler, chief market strategist at
Bannockburn Global Forex.
While the biggest beneficiary of the news was the rouble which
jumped as much as 2% on the news, investors also dumped
safe-haven currencies like the yen and the franc. The Japanese
unit registered its second biggest daily rise this year on
Friday on rising tensions.
Rising geopolitical worries had kept a lid on the euro's gains
in recent days even as the European Central Bank joined its
central bank peers in signaling a hawkish turn in its monetary
policy at a meeting this month.
The euro tumbled to a near two-week low on Monday after
Ukrainian President Volodymyr Zelenskiy called on citizens to
fly the country's flags from buildings and sing the national
anthem in unison on Feb. 16, a date some Western media have
cited as a possible start of a Russian invasion.
"While any news about a potential de-escalation is welcome, I
think the markets will want to see something more concrete
before judging the crisis to be over," said Stuart Cole, head
macro economist at Equiti Capital.
"By this I think it will require the removal from the border of
sufficient troop numbers or military hardware that makes an
invasion materially more difficult to undertake,"
Away from geopolitics, U.S. Federal Reserve officials continue
to spar over how aggressively to begin upcoming interest rate
increases at their March meeting.
But the dollar failed to get a fresh lift from the comments with
an index weakening 0.3% versus its rivals.
Elsewhere, the pound also advanced on growing expectations the
Bank of England was likely to raise interest rates again next
month after lifting them twice since December. [GBP/]
In cryptocurrencies, bitcoin was 3.4% higher, trading around
$44,000.
(Graphics:
https://fingfx.thomsonreuters.com/
gfx/mkt/egvbklxnepq/FX%20positions.JPG)
(Reporting by Saikat Chatterjee; Editing by Raissa Kasolowsky
and Krishna Chandra Eluri)
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