With safe haven demand rising, the U.S. Dollar Index remained close to a 2-week peak as geopolitical tensions in the Ukraine escalate with Russia implying that they were militarily ready to intervene if necessary, an implication that the U.S. warned would be considered a “grave mistake.” Currencies in emerging markets came under pressure as the Ukraine currency fell hard following a monetary policy change by the central bank.
As reported at 11:53 a.m. (JST) in Tokyo, the U.S. Dollar Index was trading at 80.405 .DXY, just edging away from the February 13th peak of 80.524 .DXY. The Index is used by FX traders to gauge the greenback’s relative weight versus its peers. The USD/JPY pair was up by 0.1% to trade at 102.41 Yen, while the EUR/JPY steadied at 140.12 Yen. The AUD/USD fell to $0.8935, a loss of 0.4%, after an unexpected decline in capital spending was reported for the fourth quarter, the largest decline in several years.
Euro Could Feel the Heat
The EUR/USD was trading at $1.3687, moving away from yesterday’s 2-week trough at $1.3662. As a result of the Ukraine crisis, the common currency is also beginning to feel some pressure and analysts believe the Euro could be on the defensive in the coming weeks, especially if tension escalates and safe haven demand increases further.