NZD/USD drops below 0.6700 as Russia-Ukraine headlines worsen the market mood

• The NZD/USD slides 0.04% in the North American session on Friday.
• Russia/Ukraine headlines dominate market participants' mood as uncertainty clouds investors.
• New York Fed Williams favors a gradual increase of hiking rates, pushing back the chance of a 50bps in March.

The NZD/USD appears to finish the week on a higher note, as the kiwi climbs 0.72%, ahead of the Reserve Bank of New Zealand (RBNZ) monetary policy meeting the following week. At the time of writing, the NZD/USD is trading at 0.6691.

Geopolitical headlines loom the financial markets. Market players’ mood is a rollercoaster, between risk-on/off, as Ukraine/Russia headlines cross the wires. Major US equity indices remain in the red, while in the FX space, the NZD is the strongest, while the EUR and the CAD are the laggards.

Russia/Ukraine update

In the last couple of hours, wires reported that Ukrainian forces shell Shanzharovka village in LPR using 122 mm caliber artillery, increasing the tension in the zone. Meanwhile, the  US State Department, cited by Fox,  says that evacuation announcements of 700K in Donbas and reports of an explosion in Donetsk are “false flags” from Russia. Further, US officials cited by the WSJ expect a Russian attack on Ukraine in the next few days and would involve tanks, jets, ballistic missiles, and cyberattacks.

New York Fed Williams crosses news wires

The NZD/USD reacted to the downside and broke under the 0.6700 figure, as the market sentiment turned sour. Moreover, to add a mix to the news, New York’s Fed President John Williams said that he does not see a compelling argument for taking a big step at the start of the interest rate liftoff cycle. Williams added that the US central bank could steadily increase rates and reassess by adjusting the pace of rate hikes if required.

IThe US economic docket featured the Existing Home Sales for January increasing by 6.5M more than the 6.1M foreseen. At the same time, the Consumer Board Leading Index contracted to 0.3%, worse than the 0.2% increase estimated by analysts, trailing December’s reading.