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Title: Dollar Edges Lower; Russia/U.S. Meeting Boosts Sentiment

Feb 18, 2022 02:50AM ET

By: AnalysisWatch

The US dollar edged lower on Friday, with risk sentiment fuelled by news that the US and Russia will talk about the Ukraine crisis next week, raising hopes of a diplomatic solution.

At 2:50 AM ET, the dollar index, which tracks the greenback against a basket of six other currencies, was trading 0.1% lower at 95.740.

The Russian Foreign Minister, Sergei Lavrov, has agreed to meet with US Secretary of State Antony Blinken for talks in Europe next week, the State Department said on Thursday evening.

The news that the two key players will meet next week was met with some optimism, although the situation remains very tense, especially after Ukrainian government forces and Moscow-backed rebels accused each other of breaking ceasefire rules on Thursday.

EUR/USD rose 0.1% to 1.1372, USD/JPY rose 0.2% to 115.11 after hitting a two-week low of 114.78 in early Friday trade, and risk-sensitive AUD/USD rose 0.4% to 0.7214.

The Russian rouble, sensitive to the prospect of war in the face of looming sanctions, gained, with USD/RUB down 0.7% at 75.7917.

In the US, the debate continues over how aggressively the Federal Reserve needs to raise interest rates this year to combat consumer inflation, which is at its highest in 40 years.

More Fed speakers are expected later on Friday, including Chicago Fed President Charles Evans, FOMC member John Williams, and Fed Vice Chair Lael Brainard, while economic data will focus on the housing sector.

Elsewhere, GBP/USD rose 0.1% to 1.3624 on the back of a faster-than-expected 1.9% rise in UK retail sales in January, following a 4.0% decline in December. Sales were 9.1% higher than a year earlier when non-essential shops were closed due to lockdown measures.

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