Despite on-going geopolitical risks with regards to Crimea, the foreign exchange market has been quite complacent. Crimea has formally applied for union with Russia after 95% of voter backed the idea in a referendum on Sunday. US President Obama issued a new executive order to authorize sanctions on certain Russian government officials. The EU issued similar sacntions on Russian and Crimean officials.
Markets will likely become concerned that any counter-move by Russia, such as affecting the gas supply to Europe.
For today, currencies during the European session took a neutral tone. The euro moved higher despite soft Euro zone inflation. A final reading of Eurozone inflation data came in at 0.3% month-over-month in February from a previous drop of 1.1%.
The euro was fairly steady against the dollar for most of the European session and eventually burst higher into the 1.39 handle. The euro gained 0.25% to 1.3936.
As the US session came around, market sentiment improved after a series of upbeat US data on factory output and the Empire State manufacturing index. The New York Federal Reserve’s index of manufacturing conditions improved in March to 5.61 compared to 4.48 in February. However this was softer than the expected increase to 6.0 this month.
Meanwhile US industrial production rose in February by the most in six months. There was a 0.6% gain in February which followed a revised 0.2% slump in January. Forecasts called for a 0.2% gain. The data added to confidence that US factories were beginning to recover after the severe weather in the US this winter had briefly affected output.
The dollar was up 0.14% against the yen to 101.77.
Sterling dipped against the dollar to 1.6603 before heading higher to gain 0.05% to 1.6652. The pound will likely gain a clearer direction on Wednesday when the UK releases its 2014 budget statement as well as UK jobs data.
The Federal Reserve policy announcement is also scheduled for Wednesday, which will be a key event for the dollar.
Despite on-going geopolitical risks with regards to Crimea, the foreign exchange market has been quite complacent. Crimea has formally applied for union with Russia after 95% of voter backed the idea in a referendum on Sunday. US President Obama issued a new executive order to authorize sanctions on certain Russian government officials. The EU issued similar sacntions on Russian and Crimean officials.
Markets will likely become concerned that any counter-move by Russia, such as affecting the gas supply to Europe.
For today, currencies during the European session took a neutral tone. The euro moved higher despite soft Euro zone inflation. A final reading of Eurozone inflation data came in at 0.3% month-over-month in February from a previous drop of 1.1%.
The euro was fairly steady against the dollar for most of the European session and eventually burst higher into the 1.39 handle. The euro gained 0.25% to 1.3936.
As the US session came around, market sentiment improved after a series of upbeat US data on factory output and the Empire State manufacturing index.
The New York Federal Reserve’s index of manufacturing conditions improved in March to 5.61 compared to 4.48 in February. However this was softer than the expected increase to 6.0 this month.
Meanwhile US industrial production rose in February by the most in six months. There was a 0.6% gain in February which followed a revised 0.2% slump in January. Forecasts called for a 0.2% gain. The data added to confidence that US factories were beginning to recover after the severe weather in the US this winter had briefly affected output.
The dollar was up 0.14% against the yen to 101.77.
Sterling dipped against the dollar to 1.6603 before heading higher to gain 0.05% to 1.6652. The pound will likely gain a clearer direction on Wednesday when the UK releases its 2014 budget statement as well as UK jobs data.
The Federal Reserve policy announcement is also scheduled for Wednesday, which will be a key event for the dollar.
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