Asian Session – Gold hits 6-month high as Crimea votes to join Russia
March 17, 2014 7:34 am
Risk aversion was back in the markets after news over the weekend that Crimea chose to secede from the Ukraine and voted in a referndum on Sunday to join the Russian Federation. The EU and the US threatened to impose sanctions if Russian President Putin goes ahead with annexing Crimea. Official results early on Monday showed that 96.7% of Crimeans were in favour of joining Russia.
While the result was widely expected, the West overwhelmingly rejected the results of the vote. Markets are focused now on what economic sanctions the US and Europe will carry out and how Russia will respond to them. If Russia responds with counter-sanctions or even with military force, then the markets will react negatively.
The geopolitical tensions led to safe haven plays, with gold touching a six-month high of 1392.07 and the yen being supported near the highs of the month.
The dollar came under pressure early in the Asian session, dipping to lows of 101.27 before bouncing to 101.65 yen but still far off a 1 1/2-month high of 103.75 yen hit in on March 7.
The euro was steady against the yen to trade at 141.32 yen but remained off its March 7 high of 143.77 yen, which was its highest since January 2.
The euro slipped against the dollar to 1.3896. The single currency remains fairly resilient though, as it hovers near the key 1.39 handle. Comments from European Central Bank President Mario Draghi on Thursday regarding concerns about the euro’s strength knocked it off a 2-1/2-year high of 1.3966 touched on Thursday.
Sterling traded around a 20-pip range in against the dollar after opening in Asia at 1.6639.
Another major development over the weekend was the People’s Bank of China announcing that it doubled the yuan trading band from 1.0% to 2.0% but the fix was within market expectations.
On the economic calendar today, Euro zone inflation data are scheduled for release. This will be a final CPI reading and does not tend to have much impact as the preliminary reading. The main event of the week will be the Federal Reserve policy announcement on Wednesday, following a two-day policy meeting.
Risk aversion was back in the markets after news over the weekend that Crimea chose to secede from the Ukraine and voted in a referndum on Sunday to join the Russian Federation. The EU and the US threatened to impose sanctions if Russian President Putin goes ahead with annexing Crimea. Official results early on Monday showed that 96.7% of Crimeans were in favour of joining Russia.
While the result was widely expected, the West overwhelmingly rejected the results of the vote. Markets are focused now on what economic sanctions the US and Europe will carry out and how Russia will respond to them. If Russia responds with counter-sanctions or even with military force, then the markets will react negatively.
The geopolitical tensions led to safe haven plays, with gold touching a six-month high of 1392.07 and the yen being supported near the highs of the month.
The dollar came under pressure early in the Asian session, dipping to lows of 101.27 before bouncing to 101.65 yen but still far off a 1 1/2-month high of 103.75 yen hit in on March 7.
The euro was steady against the yen to trade at 141.32 yen but remained off its March 7 high of 143.77 yen, which was its highest since January 2.
The euro slipped against the dollar to 1.3896. The single currency remains fairly resilient though, as it hovers near the key 1.39 handle. Comments from European Central Bank President Mario Draghi on Thursday regarding concerns about the euro’s strength knocked it off a 2-1/2-year high of 1.3966 touched on Thursday.
Sterling traded around a 20-pip range in against the dollar after opening in Asia at 1.6639.
Another major development over the weekend was the People’s Bank of China announcing that it doubled the yuan trading band from 1.0% to 2.0% but the fix was within market expectations.
On the economic calendar today, Euro zone inflation data are scheduled for release. This will be a final CPI reading and does not tend to have much impact as the preliminary reading. The main event of the week will be the Federal Reserve policy announcement on Wednesday, following a two-day policy meeting.
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