Forex Today: Safe-haven assets in demand ahead of Russia-Ukraine talks, Powell testimony

Here is what you need to know on Tuesday, March 2:

Safe-haven flows took control of markets in the second half of the day on Tuesday as Russia's ongoing aggression against Ukraine despite harsh sanctions imposed by western nations forced investors to seek refuge. Market participants are increasingly worried about the potential negative impact of a prolonged Russia-Ukraine war on global economic activity. Inflation data from the euro area and the ADP's private sector employment for the US will be featured in Wednesday's economic calendar. More importantly, delegations from Russia and Ukraine are set to meet for the second round of peace talks. Finally, FOMC Chairman Jerome Powell will testify before the House Committee on Financial Services at 1500 GMT.

Powell Preview: Rethink because of the war? Not so fast, Fed set to remain on track, dollar to rise

The greenback outperformed its rivals on Tuesday and the US Dollar Index gained 0.7% before settling near 97.50 early Wednesday. The 10-year US Treasury bond yield lost nearly 6% and touched its lowest level since early January below 1.7%. The barrel of West Texas Intermediate rose more than 10% and was last seen trading at its highest level since September 2013 at $109.30. The S&P 500 erased 1.5% on Tuesday and S&P 500 futures are trading flat so far on the day.

EUR/USD fell below 1.1100 for the first time since June 2020 on Tuesday. Following a technical correction during the Asian trading hours on Wednesday, the pair started to edge lower toward 1.1100 heading into the European session.

GBP/USD came under heavy bearish pressure during the American session on Tuesday and extended its slide early Wednesday. The pair is trading in the negative territory below 1.3300.

USD/CAD registered gains on Tuesday but stays on the back foot Wednesday morning. Rising crude oil prices seem to be helping the commodity-related loonie stay relatively resilient against the dollar. 

The data from Australia showed earlier in the day that the economy grew by 4.2% on a yearly basis in the fourth quarter. This print beat the market expectation of 3.7% and allowed the AUD to find demand. Despite the broad-based dollar strength, AUD/USD is posting small daily gains above 0.7250.

Gold continued to attract investors and skyrocketed toward $1,950 on Tuesday. XAU/USD is staying relatively quiet below $1,940.

Bitcoin ignored the negative shift witnessed in risk sentiment and managed to push higher on Tuesday. BTC/USD is trading in a relatively tight range near $44,000 early Wednesday. Ethereum registered gains for the second straight on Tuesday but seems to have gone into a consolidation phase after testing $3,000.