Mounting tension in Ukraine has sent FX players flooding back to the safe haven Japanese Yen. Russia has stepped up its military presence in Ukraine in the days after the Ukraine army killed a handful of pro-Russian rebels, and many fear that Vladimir Putin could use this event as an excuse to pour more troops into Ukraine. The U.S., which had been at the diplomatic table when Russia sat down with officials from the Ukraine, E.U. and U.S., is now considering meting more economic sanctions on Russia.
As reported at 11:11 a.m. (JST) in Tokyo, the USD/JPY was trading at 102.30 Yen, not far from Thursday’s 1-week trough at 102.085 Yen. News that core consumer inflation rose to 2.7% in Japan, slightly below expectations, was not viewed with any real enthusiasm by FX traders, however, as analysts had cautioned that the numbers would reflect in large part this month’s imposition of a larger sales tax thus rendering the actual numbers essentially flat. The Bank of Japan had imposed a 2% inflation target but accounting for the sales tax impact, inflation was essentially unchanged from the previous period.
Dollar’s Gains Limited
The U.S. Dollar, which is also generally viewed as a safe haven currency in times of global uncertainty, is however under growing pressure in the wake of the situation in Europe even in spite of an unexpected improvement in economic data. Durable goods orders improved in March, rising 2.6% and beating analysts’ expectations of a rise of 2% while Apple earnings and news of another buyback helped to push Wall Street higher. Analysts point out that the situation in Ukraine is limiting further gains.