Forex Today: Renewed inflation-related concerns boost the US Dollar

What you need to take care of on Wednesday, February 22:

The US Dollar stands victorious across the FX board as risk aversion led the way. The market focus remained on geopolitical tensions as the conflict between the US and Russia escalated in the last 24 hours. The latest on the matter came from Secretary of State Antony Blinken, who said the United States suspects China is considering providing military support to Russia. Moscow responded by suspending its nuclear arms treaty with the US and pledging to maintain its military actions in Ukraine.

Wall Street returned from the long weekend and followed the negative lead of their overseas counterparts. US indexes are sharply down, losing roughly 2% each. The slump was exacerbated by renewed price pressure concerns after the release of the US S&P Global PMIs. The Manufacturing and Services index came in better than anticipated. Still, the official report noted that "firms continued to seek to pass on greater input costs to customers through hikes in output charges. The rise in selling prices was the quickest for four months and strong overall." Continued inflationary pressures mean the US Federal Reserve will remain on the tightening path for longer.

Annual inflation in Canada rose by 5.9% in January, down from 6.3% in December. Also, the Bank of Canada's Core CPI,  which excludes volatile food and energy prices,  was up by 5% on a yearly basis from 5.4% in December.

United Kingdom Prime Minister Rishi Sunak Spokesperson said the prime minister had stated unequivocally that there are still substantive issues to be resolved with the EU, bringing back to the table Brexit woes.

Beyond US S&P Global PMIs, European ones were mixed, with the services sector expanding but the manufacturing one still in contraction mode. UK figures, on the other hand, were quite encouraging.

EUR/USD trades at around 1.0650, not far from an early low at 1.0636. GBP/USD hovers around 1.2110, with the Pound supported by upbeat local data.

Commodity-linked currencies are sharply down, with AUD/USD trading at 0.6855 and USD/CAD up to 1.3520.

The USD/JPY flirts with 135.00, while USD/CHF trades at around 0.9270.  

Spot gold trades at $1,833 a troy ounce, maintaining its bearish route, while crude oil prices also eased, and WTI stands at $76.60 a barrel.

The Reserve Bank of New Zealand will announce its monetary policy decision early on Wednesday.