The Russian rouble suffered losses on Monday and the euro nursed losses against the U.S. currency as the West imposed additional sanctions against Russia over its actions in Ukraine.
Western coutnries are willing to take measures against the Russian Federation. They banned several Russian banks from the Swift financial network. Moreover, Western allies limited Russia’s ability to deploy its $630 billion foreign reserves. They also took measures against Russian airlines.
Nevertheless, outside of the Russian rouble the FX market reaction has been relatively stable according to market participants.
Rouble and other currencies
As stated above, the Russian rouble was unable to strengthen its positions on the last day of the month.
Meanwhile, the euro pared losses to trade 0.49% on the day at $1.1212, after earlier falling more than 1% to a four-day low of $1.1121.
Nevertheless, traders remained very skeptical of holding euro positions according to Karl Schamotta from Corpay.
One-month implied volatility on the single currency, a measure of how much traders expect the currency to move against the U.S dollar over the near term, hit a 16-month high on Monday.
On Monday, general aversion to risk kept the Swiss franc and the Japanese yen well supported. With the U.S. dollar down against the yen and 0.95% lower against the franc.
Oil prices helped to boost the Canadian dollar on Monday. However, investors’ hesitancy to take on risk kept a lid on the Canadian dollar. It was up about 0.1% at 78.75 U.S. cents.
Apart from geopolitical tensions, investors also remain focused on key economic data releases expected later this week. For example, they are waiting for U.S. nonfarm payrolls, which could help shape the U.S. Federal Reserve’s thinking as the central bank gears up to raise interest rates.