Greenback hits two-week excessive on tensions over Ukraine By Reuters



© Reuters. FILE PHOTO: U.S. greenback notes are seen on this November 7, 2016 image illustration. REUTERS/Dado Ruvic/Illustration


By Stefano Rebaudo

(Reuters) -The greenback rose on Monday together with the yen and Swiss franc as traders rushed into safe-haven property on fears that Russia is getting ready to invade Ukraine.

Russia may make such a transfer at any time and may create a shock pretext for an assault, in accordance with the US, which reaffirmed on Sunday a pledge to defend “each inch” of NATO territory. Moscow denied any such plans and has accused the West of “hysteria”.

The rose 0.4% to 96.328, its highest since Feb. 1.

Euro-dollar one-month implied volatility was at 7.6%, from beneath 6% on the finish of January.

The rouble was 0.1% decrease at 77.20 towards the greenback, after tumbling to its lowest since January 28 on Friday as traders ditched Russian property.

Commerzbank (DE:) analysts identified that “European dependency on Russian vitality makes the cyclical financial efficiency of the euro zone significantly weak in case of an escalation of the battle in Ukraine.”

The euro was down 0.3% at $1.1318, after hitting its lowest degree since Feb. 3 at $1.1305.

The euro weakened on Friday when a rush into safe-haven property overshadowed expectations for financial coverage tightening from the European Central Financial institution.

ECB president Christine Lagarde had additionally dampened among the bullish euro sentiment by reiterating that any coverage motion will probably be gradual.

The U.S. Federal Reserve will launch its January assembly minutes on Wednesday, however analysts mentioned central financial institution motion was unlikely to return to the highlight till the chance of an escalation over Ukraine recedes.

A rush into safe-haven property has propped up the Japanese yen since Friday, whereas the Financial institution of Japan efficiently defended its key bond yield goal on Monday, holding the road on its ultra-loose financial coverage.

The yen rose 0.3% to 115.16 towards the greenback, and 0.5% towards the euro.

“These two currencies (the U.S. greenback and the yen) – in addition to the Swiss franc – ought to stay bid till, and if, we get indications {that a} diplomatic resolution is in sight,” ING analysts mentioned, including that “markets are adopting a wait-and-see method on geopolitics at the beginning of the brand new week.”

We “flag fairly important draw back dangers for uncovered currencies – immediately the rouble and not directly all pro-cyclical currencies and particularly the European ones – ought to pressure escalate additional,” ING mentioned.

The Swiss franc rose 0.4% towards the euro to 1.0452, its highest since Feb. 3.

In cryptocurrencies, bitcoin was down 1% at round $42,116.

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