Escalation of Tensions in Ukraine Drive Safe Haven Flight

Geopolitics between Russia and Ukraine reared its head once again and pushed investors toward safe haven currencies like the Swiss Franc and the Japanese Yen, which both rose versus the common currency Euro. It was reported that an aid convoy sent by Russia crossed over into Ukraine without first obtaining approval from the Ukraine government. Analysts say gains were limited, however, as FX traders are squarely focused on events in the U.S., specifically the upcoming speech by Janet Yellen, the Federal Reserve Bank chairman. Investors are exercising caution until after the Yellen speech, which could offer some clues as to the Fed’s thinking on the timing of an interest rate policy shift.

As reported at 7:24 a.m. (EST) in New York, the EUR/JPY was trading at 137.32 Yen, a session low, before recovering to 137.60 which was still a 0.3% loss. The EUR/CHF, which is pegged at 1.21, fell to 1.2095 Swiss Francs, not far from last Friday’s 19-month trough at 1.20865 Swiss Francs. The EUR/USD was trading lower at $1.3264, closing in on Thursday’s 11-month trough at $1.3242; the Euro sell off occurred as part of investors’ flight to safety with Yen, Swiss Franc or German bunds, the recipient.

Yellen, Draghi on Jackson Hole Menu

While Yellen’s speech will undoubtedly be the headliner at the Jackson Hole symposium, Mario Draghi will also be in the spotlight today and FX traders will be anxious to hear if he drops any hints as to when the ECB might decide to use its last remaining tool in the tool box to spur the Eurozone economy and to put a halt to a prolonged deflationary trend.

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.