Rouble sell

2/2© Reuters. Chinese yuan banknote is displayed on U.S. Dollar banknotes in this illustration taken, February 14, 2022. REUTERS/Dado Ruvic/Illustration2/2

LONDON (Reuters) - The rouble recovered some ground on Tuesday while broader currency markets were relatively calm amid the fast-moving Ukraine crisis, pushing the dollar modestly lower.

Financial markets have been rocked in recent days by Russia's invasion of Ukraine, the biggest assault on a European state since World War Two, and the resulting Western sanctions which include cutting off some Russian banks from the SWIFT financial network and limiting Moscow's ability to deploy its $630 billion of foreign reserves.

Global stock markets showed signs of regaining their composure on Tuesday, with Wall Street futures slightly higher.

Some analysts attributed the calmer backdrop to the ceasefire talks held between Russian and Ukraine on Monday, even though they failed to reach a breakthrough.

The rouble was trading at 93.4 per dollar by 0842 GMT, having recovered nearly all of Monday's losses helped by an emergency rate hike by Russia's central bank after the currency collapsed to a record low of 120 per dollar.

Still, the rouble was down almost 30% from its best levels this year.

The U.S. dollar, which surged last week on safe-haven flows, eased slightly, leaving the dollar index at 96.707.

The euro also stabilised, down less than 0.1% on the day at $1.12145.

The safe-haven yen pulled back after its biggest rally in almost seven weeks against the dollar on Monday.

But, reflecting still elevated risk aversion, the euro fell to its lowest versus the safe-haven Swiss franc since 2015, with the pair trading at 1.0267.

The Swiss National Bank's sight deposits were little changed in February, suggesting the central bank may have given up its attempts to slow the franc's appreciation.

Currency volatility was at its highest since late 2020, as measured by a Deutsche Bank (DE:DBKGn) index.

"Today, the focus will be on whether sanctions/retaliation will start impacting the commodity flows from Russia, and whether (Russia's central bank) will step in with more measures to support the rouble," ING FX analysts wrote in a note to clients.

Among the G10 currencies, Sweden's crown, the euro and Britain's pound could suffer the most if sanctions affect the flow of Russian gas into Europe, they said, while Norway's crown may keep benefiting from high gas prices.

Investors will also be watching German inflation data.

The Australian dollar hit its highest since mid-January in early trading, and was last up 0.2% on the day at $0.7276, its third consecutive day of gains.

Australia's central bank on Tuesday held interest rates at a record low and cited the war in Ukraine as a major new source of uncertainty as it stressed patience on tightening policy.

The New Zealand dollar was also gained for a third day, up 0.1% at $0.6787.

RBC's global head of FX strategy Elsa Lignos said the recent outperformance of the currencies can not be explained by factors such as interest rate differentials or risk appetite.

"We see it as our January reversal effect in action...a build-up of over-extended positioning at the start of the year that then gets squeezed out in Feb/March. The likely surge in future demand for LNG also helps AUD," she said in a note.

Some of the demand for Australian and New Zealand dollars may also be due to geography, with the countries far away from the troubles in Europe and little exposed to Russian trade.

Bitcoin jumped sharply late on Monday to briefly hit a 12-day high above $44,000.

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