U.S. Currency Suffered Losses on Wednesday

The U.S. currency declined on Wednesday as investors became less worried about the risk of Russia invading Ukraine. They also waited for the release of minutes from the U.S. Federal Reserve’s January meeting. 

Equity markets rallied one day earlier after Russia said it would withdraw some troops from Ukraine’s border. Moreover, the risk-on tone continued through the Asian session on Wednesday, in spite of the fact that U.S. President Joe Biden stated that thousands of Russian troops were still in a “threatening position.”

Moreover, Ukraine said a cyber attack hit the online networks of its defense ministry and two banks.

U.S. currency and risk factors

In currency markets, the moves were small on Wednesday. The dollar index, which tracks the U.S. currency against a basket of currencies, dropped 0.2% to 95.846 by 08:31 GMT. 

Markets are pricing in a 59.5% chance of a 50 basis points hike at the central bank’s next meeting on March 16 and a 40.5% chance of a 25 bps hike.

The minutes from the Federal Reserve’s January meeting will be released later in the session. 

Oil prices helped to boost the Canadian dollar. It strengthened slightly against the U.S. currency, but the Norwegian crown was a touch lower on the day.

The risk-sensitive Australian dollar gained 0.3% to $0.7173, while the New Zealand dollar was also slightly higher on the day. 

The Japanese yen declined against the U.S. currency to 115.770.

The British pound gained 0.1% against the U.S. dollar to $1.35565, but steady against the euro after data showing U.K. inflation hit a nearly 30-year high of 5.5%.

The Bank of England has already raised interest rates two times since December. Furthermore, financial markets expect a further rate rise on March 17 after the central bank’s next meeting.