Yen, Swiss franc in demand on flared up tension over Ukraine
March 14, 2014 10:41 am
Safe-haven currencies like the Japanese Yen and the Swiss franc were on fire in Friday trading action, having bolstered overnight as tensions in Ukraine flared up and worries about the status of the Chinese economy continued to intensify.
Russia launched new military exercises near its border with Ukraine on Thursday, displaying no indication of pulling back on plans to annex its neighbor’s Crimea region. U.S. Secretary of State John Kerry stated that serious actions would be brought in by the United States and Europe if the referendum on Crimea joining Russia takes place on Sunday as planned.
“With the approach of Sunday’s referendum in Crimea, reports of Russian troop movements near the Ukraine border and escalating warnings of Western sanctions all contributed to renewed anxiety,” analysts at BNP Paribas wrote in a note to clients.
The dollar settled at 101.81 yen, having steeply declined from Thursday’s topmost mark of 102.865. The euro exchanged at 141.14 yen well under a high of 143.38 yen reach on Thursday.
“The dollar and euro had been stuck in a narrow range for a while, and positions tend to build up in such an environment. When stops are triggered under those conditions, currency movements tend to be volatile,” said Bart Wakabayashi, head of forex at State Street in Tokyo.
“The situation in Ukraine is worrying but the world has not changed dramatically since Monday, with chances of heavy Russian military involvement in Crimea still appearing limited,” Wakabayashi said.
Against the Swiss franc, the dollar exchanged at 0.8752 francs, having tumbled a 2-1/2-year low of 0.8698 francs.
Fragile Sentiment
Market sentiment was already fragile after another batch of unsatisfactory Chinese data on Thursday prompted fears of a slowdown in the world’s second-largest economy.
Investors took cover in highly rated government bonds while dumping riskier assets, with Wall Street .SPX declining more than 1 percent.
The euro was further undermined by remarks from European Central Bank President Mario Draghi, who stated that the power of the currency was increasingly important to the bank’s evaluation of price stability as it was having a negative effect on inflation.
Speaking at an awards ceremony in Vienna, Draghi said the bank has been preparing extra policy steps to protect versus deflation taking hold in the euro zone.
The euro orchestrate a dramatic reversal on those comments, pulling back to $1.3867 from a 2-1/2-year high of $1.3967.
Market participants are waiting to see if the U.S. producer price index and the University of Michigan sentiment index on Friday offer further evidence that the economy is acquiring strength, following solid retail sales and employment data on Thursday.
Commodity currencies, regularly merchandised in times of elevated risk aversion, also came under pressure. That took the luster off the Australian and New Zealand dollars.
The Antipodean currencies had been star performers on Thursday with the Aussie boosted by unexpected firm jobs data, while an increase in New Zealand interest rates and talk of more to come gave the kiwi a solid lift.
The Aussie last stood at $0.9034, having retreated from a one-week high of $0.9104, while the kiwi was knocked back to $0.8548 from an 11-month high of $0.8607.
The material has been provided by InstaForex Company – www.instaforex.com
Safe-haven currencies like the Japanese Yen and the Swiss franc were on fire in Friday trading action, having bolstered overnight as tensions in Ukraine flared up and worries about the status of the Chinese economy continued to intensify.
Russia launched new military exercises near its border with Ukraine on Thursday, displaying no indication of pulling back on plans to annex its neighbor’s Crimea region. U.S. Secretary of State John Kerry stated that serious actions would be brought in by the United States and Europe if the referendum on Crimea joining Russia takes place on Sunday as planned.
“With the approach of Sunday’s referendum in Crimea, reports of Russian troop movements near the Ukraine border and escalating warnings of Western sanctions all contributed to renewed anxiety,” analysts at BNP Paribas wrote in a note to clients.
The dollar settled at 101.81 yen, having steeply declined from Thursday’s topmost mark of 102.865. The euro exchanged at 141.14 yen well under a high of 143.38 yen reach on Thursday.
“The dollar and euro had been stuck in a narrow range for a while, and positions tend to build up in such an environment. When stops are triggered under those conditions, currency movements tend to be volatile,” said Bart Wakabayashi, head of forex at State Street in Tokyo.
“The situation in Ukraine is worrying but the world has not changed dramatically since Monday, with chances of heavy Russian military involvement in Crimea still appearing limited,” Wakabayashi said.
Against the Swiss franc, the dollar exchanged at 0.8752 francs, having tumbled a 2-1/2-year low of 0.8698 francs.
Fragile Sentiment
Market sentiment was already fragile after another batch of unsatisfactory Chinese data on Thursday prompted fears of a slowdown in the world’s second-largest economy.
Investors took cover in highly rated government bonds while dumping riskier assets, with Wall Street .SPX declining more than 1 percent.
The euro was further undermined by remarks from European Central Bank President Mario Draghi, who stated that the power of the currency was increasingly important to the bank’s evaluation of price stability as it was having a negative effect on inflation.
Speaking at an awards ceremony in Vienna, Draghi said the bank has been preparing extra policy steps to protect versus deflation taking hold in the euro zone.
The euro orchestrate a dramatic reversal on those comments, pulling back to $1.3867 from a 2-1/2-year high of $1.3967.
Market participants are waiting to see if the U.S. producer price index and the University of Michigan sentiment index on Friday offer further evidence that the economy is acquiring strength, following solid retail sales and employment data on Thursday.
Commodity currencies, regularly merchandised in times of elevated risk aversion, also came under pressure. That took the luster off the Australian and New Zealand dollars.
The Antipodean currencies had been star performers on Thursday with the Aussie boosted by unexpected firm jobs data, while an increase in New Zealand interest rates and talk of more to come gave the kiwi a solid lift.
The Aussie last stood at $0.9034, having retreated from a one-week high of $0.9104, while the kiwi was knocked back to $0.8548 from an 11-month high of $0.8607.
The material has been provided by InstaForex Company – www.instaforex.com
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