The dollar was broadly stronger for the day, as were the safe-haven Japanese yen and Swiss franc. EUR/USD fell back below the 1.13 level, while sterling briefly edged below the 1.35 mark on the dollar for the first time in around a week. Levels of implied volatility also increased in both FX and equity markets, although certainly not yet to levels that would denote all out panic – indeed emerging market currencies continue to hold up rather well. The next few days are, however, likely to be key, and market participants will be watching developments closely. Ukraine has called for a meeting with Russian authorities in the coming day or so in an apparent attempt to de-escalate matters. Should goodness and decency prevail, then we would likely see a bit of a relief rally in currencies, although until then, volatility in markets should remain elevated.

Macroeconomic data may come into sharper focus today, with the release of the monthly UK labour report for December expected to be closely monitored this morning. Euro Area Q4 GDP data may garner some attention if we get any notable revision to the preliminary estimate in either direction. This afternoon’s US producer price data, usually largely overlooked by investors, may be the most noteworthy release on the calendar today. Another surprise to the upside here seems likely, and that would further raise expectations in favour of an aggressive pace of interest rate hikes from the Federal Reserve this year – a 50 basis point hike at the FOMC’s March meeting is now our base case scenario.

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