Markets cope as geopolitical spice added into the mix | Forexlive

It all started with another reaction to the data yesterday, as a softer US PPI report paved the way for another drop in the dollar alongside a rally in risk trades. Things then turned 180° after media reports that a stray Russian missile have killed at least two persons in Poland at the Ukraine border.

The dollar recovered while stocks erased gains, which were rather sizable at the open, but ultimately that move was faded as well before the end of the day. Now, we’re hearing US and their allies try to deflect the supposed Russian aggression by saying that “based on the missile trajectory, it is unlikely that it was fired from Russia”.

And so, the headlines circus continues to entertain so far this week. Mind you, we still have US retail sales later today.

The dollar ended up in a bit of a mixed spot, still slightly weaker for the most part but defended its position against the euro at least – with fears of a step up in Russia’s aggression hurting the single currency. But in the equities space, the late recovery continues to point to buyers getting comfortable with a sense of optimism.

The S&P 500 index continues to stay on track to try and run towards its 200-day moving average (blue line) next: