FOREX-Yen and Swiss franc advance on safe-haven offers as Russian-Ukrainian tension rises
By Gertrude Chavez-Dreyfuss and Caroline Valetkevitch
NEW YORK, February 17 (Reuters) – The Japanese yen and Swiss franc hit two-week highs against the U.S. dollar on Thursday on concerns over escalating Russian-Ukrainian tensions that could have economic repercussions around the world.
In afternoon trading, the dollar slipped to 114.845 yen. JPY=EBS, the lowest since early February. It was last down 0.4% at 114.93 yen.
Against the Swiss currency, the greenback fell to 0.9189 francs CHF=EBSthe lowest since February 3. The dollar last changed hands at 0.9202 francs, down 0.2%.
“Safe havens are performing better as today’s geopolitical development has dampened hopes for a diplomatic deal to avert military action around Ukraine,” said Joe Manimbo, senior market analyst at Western Union Business. Solutions in Washington.
US President Joe Biden said on Thursday that there was now every indication that Russia was planning to invade Ukraine in the coming days and was preparing a pretext to justify it, after Ukrainian forces and pro-Moscow rebels exchanged fire in eastern Ukraine.
Russia also accused Biden of stoking tensions and issued a heavily worded letter saying Washington was ignoring his security demands and threatening unspecified “military-technical measures.”
Fears of a Russian invasion pushed US stocks lower and boosted bids for safe-haven Treasuries. WE/
For now, the Russian-Ukrainian conflict has replaced concerns about the Federal Reserve’s plans to tighten monetary policy, starting with the March meeting of the Federal Open Market Committee. But the market is divided on the magnitude of the expected rise in interest rates.
Last week, with the latest US consumer price data pointing to the biggest annual gain in 40 years, the rate futures market had priced in about a 70% chance of a half percent rate hike in March. That went down to 37% on Thursday, FEDWATCH
The most likely scenario is a quarter-point tightening by the Fed, analysts say.
But even with the Fed’s hawkish turn, the dollar remained broadly unchanged.
“We believe this is largely because hawkish moves by other central banks have also pushed up long-term government bond yields in other developed markets, leading to less variation in yields. relative,” said Jonathan Petersen, market economist at Capital Economics. .
The dollar index, a measure of its value against the six major currencies, has gained just 0.2% so far this year. Against the yen, however, the greenback is down 0.2% so far in 2022.
2-year US Treasury yields, which reflect rate expectations and are correlated to the dollar/yen, jumped around 74 basis points US2YT=RR.
In afternoon trading, the dollar index was steady at 95.827.
Some commodity currencies, which are sensitive to risk sentiment, fell with the Australian dollar losing 0.1% to US$0.7188. AUD=D3. The Norwegian krone also fell against the dollar, which rose 0.5% to 8.917. NOK=.
In cryptocurrencies, bitcoin BTC=BTSPwhich moves in tandem with other risky assets, was last down 7.8% at $40,590.
Currency rates at 4:19 p.m. (21:19 GMT)
Closing of the previous session
Percentage change since the beginning of the year
New Zealand Dollar/Dollar
World exchange rateshttps://tmsnrt.rs/2RBWI5E
(Reporting by Caroline Valetkevitch and Gertrude Chavez-Dreyfuss; Additional reporting by Saikat Chatterjee in London; Editing by Mark Potter, Richard Chang and Richard Pullin)
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