Risk appetite continued to be subdued as investors worries grow over the ongoing Ukraine crisis and the impending Chinese economic slowdown, with the result that FX traders moved strongly into safe haven assets such as the Swiss Franc and the Japanese Yen. At the same time, however, demand for both the Australian and New Zealand currencies, which are typically shunned in times of economic woes, surged following an indication by the Reserve Bank of New Zealand that it might be on the verge of a rate hike while unexpectedly upbeat labor data boosted the Aussie Dollar.
As reported at 11:04 a.m. (JST) in Tokyo, the USD/CHF was trading at 0.8741 Francs, recovering from a session low of 0.8731 Francs, a level which had not been seen I more than two years. The USD/JPY pair moved away from the recently struck 1-week trough of 102.55 Yen and held steady at 102.74 Yen. The EUR/USD remained close to a multi-year high at $1.3904, only a few pips from last Friday’s peak of $1.3915.
Euro Outlook Warily Positive
While the worries in Ukraine are weighing on the Euro, overall sentiment is improving as a result of Mario Draghi’s comments last week which signaled that a monetary policy shift was not imminent given that the ECB felt that the threat of deflation was not yet perceived as a concern by the ECB monetary policy committee.