Safe Havens Currencies On The Fall

The safe-haven Japanese yen fell on Friday, while riskier currencies such as the Australian dollar rose, as investors took heart from reports of talks between the US and Russia over the Ukraine crisis.

In the face of a weakened dollar, the euro gained ground. The yen and a competing safe-haven currency, the Swiss franc, also rose this week as investors sought refuge from escalating tensions along the Ukrainian border, where over 100,000 Russian troops are stationed. Western nations accuse Russia of seeking an excuse to invade, which Moscow denies.

On Friday, the mood improved as the US State Department said late Thursday that Secretary of State Antony Blinken had accepted an offer to meet with Russian Foreign Minister Sergei Lavrov late next week, assuming Russia does not attack Ukraine. Following tense exchanges of fire between Kyiv’s soldiers and pro-Russian rebels on Thursday, this gave some comfort.

The Meetings Impact on Risk

“The confirmed meeting between Blinken and Lavrov may help markets remain calm throughout the weekend, although risk appetite will likely be controlled until that meeting,” MUFG analyst Derek Halpenny said.

The dollar surged 0.2% against the yen, reaching as high as 115.28 yen earlier in the day after hitting a two-week low of 114.78 in early Friday trade. The dollar is down 0.3% against the yen this week, a minor fall given the geopolitical sensitivities of the previous week, indicating that investors are not yet panicked by the issue.

On Friday, the dollar advanced 0.12% against the Swiss franc to 0.9208 francs, while the euro rose 0.1% against the Swiss currency. Currencies that are extremely vulnerable to market mood have risen. The Australian currency increased by 0.4% to $0.7218 per dollar.

The euro, which has had a bumpy week due to Ukraine news, was last up 0.1% at $1.1369, while the pound rose slightly to $1.363, boosted by market expectations of additional monetary tightening from the Bank of England. “The back-and-forth of the Ukraine issue continues to dominate FX markets, but investors are becoming increasingly cautious following the euphoria that prevailed earlier this week amid early signs of de-escalation. The end effect in FX is that major currencies are being locked into ever tighter trading ranges “In a note to clients, UniCredit analysts stated. After a drop late on Thursday, bitcoin was trading at $40,768, near two-week lows, despite the improving mood.

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