Japan’s currency touched its strongest level in almost one month versus the greenback after Putin won parliamentary backing to send troops into Russia’s southern neighbor. Ukraine, which put its forces on combat readiness, said over the weekend an invasion would be “an act of war.” The euro slid for a fifth day against the Swiss franc, after the Russian ruble and Ukraine’s hryvnia dropped to record lows last week.
“Events in Ukraine have intensified and we don’t know how that’s going to play out,” said Imre Speizer, a market strategist at Westpac Banking Corp. in Auckland. “There’s been a modest risk averse reaction in currencies so far.”
The yen climbed 0.5 percent to 101.28 per dollar as of 8:46 a.m. in Tokyo, after earlier reaching 101.26, the strongest level since Feb. 6. It jumped 0.7 percent to 139.49 per euro. The 18-nation currency slid 0.2 percent to $1.3775. Australia’s dollar weakened 0.2 percent after earlier touching 88.92 U.S. cents, the lowest since Feb. 5. The Aussie has fallen 1.4 percent since Feb. 24.
U.S. Secretary of State John Kerry will travel to Kiev to meet with Ukrainian leaders tomorrow to offer support as Russian troops occupy the nation’s Crimea region, U.S. officials said yesterday. The trip to Ukraine comes as President Barack Obama contacted overseas leaders, including Germany’s Angela Merkel and the UK’s David Cameron, on how to respond to Russia’s incursion in Ukraine’s Crimea region, which prompted Ukraine to mobilize its army reserves as it seeks international economic aid.
‘Classic Flight’
“It’s going to be a classic flight to quality move,” Ian Lyngen, a bond strategist at CRT Capital Group LLC in Stamford, Connecticut, said in a phone interview. “The market is more focused on the extent to which Russia is willing to press their case and how escalated the conflict becomes. They just want to make sure that if there is some big move that has bigger implications that they’re not caught on the wrong side of it.”
The greenback and the Swiss franc gained against most of their major counterparts on demand for haven assets. The franc advanced 0.3 percent to 1.2116 per euro and gained 0.1 percent to 87.96 centimes per dollar.
Swiss Franc
“The dollar should outperform, especially versus emerging markets and volatility should rise. They will be going long Swissie, particularly in the euro zone,” Sebastien Galy, a senior currency strategist at Societe Generale SA in New York, said by phone yesterday. “You’re going to get some automatic selling of Russian ruble. Aussie dollar, kiwi, Canadian dollar are not going to be very happy places.”
Australia’s dollar declined for a fifth day and the nation’s three-year bonds advanced on signs of a slowdown in China, the nation’s largest export market. China’s purchasing managers’ index of manufacturing released on March 1 dropped to 50.2 for February, from 50.5 in January. Analysts polled by Bloomberg News projected a reading of 50.1 with levels below 50 signaling shrinking output.
Three-year yields in Australia fell five basis points to 2.79 percent, after touching 2.77 percent, the lowest since Sept. 30. A basis point is 0.01 percentage point.
To contact the reporters on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net; Kevin Buckland in Tokyo at kbuckland1@bloomberg.net
To contact the editor responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net
http://www.bloomberg.com/news/2014-03-03/yen-gains-with-dollar-as-putin-sparks-haven-asset-demand.html
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