As we look towards European trading, the mood is certainly apprehensive but the market isn't turning dour just yet.
The dollar and yen were big beneficiaries amid the risk selloff earlier but have seen gains trimmed a little for now. EUR/USD has moved up from a low of 1.1325 to 1.1357 while GBP/USD is up from 1.3557 to 1.3580 at the moment.
It's still too early to say how this will all play out and we could get some follow through plays in European trading later, so just be wary. In case you missed the headlines from earlier, you can check them out here. I summed up my thoughts earlier below:
"There's talk that such open fire in the region is not uncommon but the thing is, the situation now is rather delicate and sensitive - hence, the market reaction. Also, there are some suggestions this could be the false flag that Russia is trying to put out in order to set a pretext for an imminent invasion. Only time will tell how this all plays out. There might be scope for Ukraine to defend themselves and deny the headlines but we'll see."
Elsewhere, the kiwi has actually even climbed back up to turn positive against the dollar on the day:
NZD/USD is still seeing some modest resistance at 0.6700 so that is likely to keep a lid on gains, depending on the market mood. Meanwhile, NZD/JPY is also back up to above 77.00 from a low of 76.70 earlier as buyers defended the drop at the key hourly moving averages and short-term trendline support:
Looking at other commodity currencies, AUD/USD is also up to 0.7180 from 0.7150 earlier and USD/CAD down to 1.2710 from 1.2735 when the headlines hit earlier. Both the aussie and loonie are still down on the day but at least there is some light relief for now.
That said, equities are still pinned lower with S&P 500 futures down 0.4% and bonds are still bid for the most part. 10-year Treasury yields are down 5.6 bps to 1.989% currently.
That continues to point to a slightly more defensive risk mood as we get to European morning trade.
