NZD/USD falls back to 0.6700 level as Ukraine crisis escalates, but kiwi remains underpinned pre-RBNZ

• NZD/USD has fallen back to the 0.6700 area in recent trade as the US dollar enjoy a modest intra-day recovery.
• The buck has been underpinned in recent trade as geopolitical tensions regarding the Ukraine crisis rise.
• Ahead, aside from geopolitics, the main event of the week will be the RBNZ rate decision.

NZD/USD has fallen back to 0.6700 in recent trade after hitting fresh monthly highs in the 0.6730s earlier in the session, as the US dollar enjoys a modest intra-day recovery amid heightened geopolitical tensions. Russian President Vladimir Putin has been delivering a long, inflammatory speech where he practically criticised everything about the existence of the state of Ukraine and will soon announce a decision to recognise the independence of two breakaway Ukrainian regions. Investors have been buying safe-haven dollars in recent trade and selling other G10 currencies, including the kiwi, out of fear that this recognition will lead to an escalation of tensions between the militaries of Ukraine and Russia.

At current levels, NZD/USD is still trading with gains of about 01% on the day, with traders seemingly reluctant to short the kiwi/unload long positions ahead of this Wednesday’s RBNZ meeting. Analysts are split over whether the bank will hike by 25bps or 50bps and that hawkish risk seems to be underpinning NZD/USD in 0.6700 area. Otherwise, Fed speak and US data this week including flash February PMIs, the second estimate of Q4 GDP growth and January Core PCE data will be worth watching, but will likely play fiddle to the RBNZ meeting and geopolitical developments.