- USD/CAD is ticking higher despite strong oil prices.
- Ris-off markets are hurting the commodity complex currencies as Putin addresses the nation.
The Canadian dollar weakened against its US counterpart on Friday and remains pressured at the start of the week despite the price of oil spiking on Monday. Risk-off is the theme as investors, mindful of Russia's military build-up around Ukraine, turn to the latest developments and announcements from the Kremlin.
Watch live: Putin speaks over Ukraine in contempt
At the time of writing, Russia's president, Vladimir Putin, is addressing the nation and making his opinions about Ukraine in contempt. This is hurting risk-FX and the CAD included as investors seek out safe-havens, such as gold which is breaking to the day's highs currently. The UK Prime Minister Boris Johnson says Russian recognition of Luhansk and Donetsk is in breach of international law.
Meanwhile, during his long-winded speech, Putin is expected to say that he has signed a separatist recognition decree over eastern Ukraine regions which will be another step closer to the prospects of a European war and will likely hurt risk associated assets classes in financial markets.
The price of oil, however, is getting a boost as traders anticipate sanctions on Russian exports. The market has room to run higher considering investors opted to liquidate their length in WTI crude oil recently. Conflicting reports between escalation and de-escalation have made for a volatile landscape for the energy sector.
''Until there is some clarity in either direction, the risk premium is likely to remain baked into market pricing,'' analysts at TD Securities argued. ''With non-geopolitical supply factors starting to shift toward looser markets, energy prices are particularly vulnerable to a de-escalation in Russian-Ukrainian tensions in the immediate term.''
As for domestics, Canadian Retail Sales rose 2.4% in January from December, a flash estimate from Statistics Canada showed, supporting expectations for the Bank of Canada to begin hiking interest rates at the March 2 policy announcement.
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