Tensions Send Safe Haven Demand Higher

Demand for safe haven assets has increased significantly, pushing the Japanese Yen higher as a geopolitical continues to escalate in Ukraine following the mobilization of troops to counter those sent in by the government of Russia. The U.S. President, Barack Obama, has threatened economic sanctions against Russia if they do not withdraw. Analysts say that the situation in Ukraine hasn’t necessarily resulted in a sell off for the Euro but that pressure could mount from that direction as well as directly from the European Central Bank which might be compelled to consider a monetary policy change.

As reported at 12:45 p.m. (JST) in Tokyo, the EUR/JPY pair dipped to 139.36 Yen, falling from Friday’s late trade of 140.56 Yen. The USD/JPY also fell to 101.25 Yen, while the AUD/JPY dropped to 90.08 Yen. Safe haven demand was not limited to only the Japanese Yen as the Swiss Haven Franc is also seeing increased demand with the EUR/CHF trading at 1.2108 Swiss Francs at one point, before moving higher to 1.2116 Swiss Francs; the Swiss National Bank (SNB) had long ago capped the pair at 1.20 Swiss Francs and FX players are cautiously testing the SNB’s resolve.

The FX Week Ahead

This past weekend, economic news also helped to ratchet up demand for safe haven currencies with a report that the factory sector in China slowed to a fresh 8-month low last month, once again suggesting that the economy is slowing down. Markets will focus on this week’s release of U.S. non-farms payroll data which are due out on Friday and ahead of that manufacturing and factory orders, all of which should afford investors a better chance to gauge the health of the U.S. economy and the Fed’s likely response to it.

 

Barbara Zigah

After working on Wall Street, Barb began her second career as a freelance writer at Daily Forex, where the CEO recognized fresh, untapped potential and was willing to give her a try. She’s never looked back. Since then, she’s worked steadily as a freelance writer and editor in the financial services and Forex-related industry.