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Markets face adding geopolitical spice to the mix


It all started with another reaction to the data yesterday, as a weaker US PPI report set the stage for further weakness in the dollar alongside a resumption of risk trading. Things then turned 180° after the media reported that a stray Russian missile had killed at least two people in Poland on the Ukrainian border.

The Dollar rallied as stocks erased gains, which were quite large on the open, but eventually that move also faded before the end of the day. Now we hear the United States and its allies trying to deflect alleged Russian aggression by saying that "based on the trajectory of the missile, it is unlikely that it was fired from Russia".

And so, the headline circus continues to entertain so far this week. Please note that we still have US retail sales later today.

The dollar found itself in a bit of a mixed spot, still slightly weaker for the most part, but at least defended its position against the euro – with fears of escalating Russian aggression hurting single currency. But in equities, the late rally continues to show that buyers are comfortable with a sense of optimism.

The S&P 500 index continues to stay on track to try to run towards its 200-day moving average (blue line):

And let’s not be too distracted to forget this particular announcement overnight:

This article was written by Justin Low at forexlive.com.


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