Greenback treads water as Ukraine headlines gasoline warning By Reuters

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© Reuters. FILE PHOTO: Euro, Hong Kong greenback, U.S. greenback, Japanese yen, pound and Chinese language 100 yuan banknotes are seen on this image illustration, January 21, 2016. REUTERS/Jason Lee/Illustration/File Picture

By Saikat Chatterjee

LONDON (Reuters) – The U.S. greenback treaded water on Thursday and the Japanese yen held on to its earlier good points after a Russian information report of mortar fireplace in jap Ukraine jangled market nerves and boosted the attraction of secure haven bets.

Russia-backed rebels accused Ukrainian forces of shelling their territory in violation of agreements aimed toward ending battle within the contested Donbass space, the RIA information company mentioned, a report later denied by Ukraine.

Whereas the dollar retreated from its Asian highs after the information broke, buyers remained cautious that Russia will invade the Ukraine once more regardless of rising optimism at the beginning of this week {that a} diplomatic resolution could be discovered to forestall battle.

In opposition to a basket of its rivals, the greenback steadied at 95.747 after rising above 96 in early Asian buying and selling.

However in an indication that markets weren’t panicking but, the rouble remained beneath a November 2020 excessive of 80 hit final month, whereas bond yields had been solely modestly increased.

“This strongly means that market individuals stay optimistic general that battle will probably be prevented,” MUFG strategists mentioned in a consumer observe.

The geopolitical information dwarfed the Fed’s minutes of its January assembly, the place policymakers agreed that it was time to tighten financial coverage but in addition that selections would rely on a meeting-by-meeting evaluation of information, in response to minutes of the newest coverage assembly.

Brief-dated U.S. Treasury yields fell and the yield curve steepened after the minutes as merchants reassessed the chance of a 50 bps hike on the Fed’s March assembly. Cash markets had been pricing in a 72% probability of a 50 bps hike subsequent month in comparison with 80% at the beginning of the week.

The euro rebounded from earlier lows after falling as a lot as 0.4% after the Ukraine information. However Ukraine’s denial and the situation of the reported assault inside already contested territory calmed issues and the euro final sat at $1.1382.

The yen and the Swiss franc clung on to earlier good points, up 0.2% and 0.1% respectively versus the dollar.

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