The greenback advanced today as the flight to safety affected assets from equities to currencies. The USD, one of the safest and most liquid assets out there appreciated as the military confirmed Russia is amassing 20,000 strong troops that are closer to the Ukrainian border than before. Bets on the next European conflict, the first since 90s yugoslav wars sparked a rally in global safe assets. The Yen also advanced on the news, strengthening against most of its 31 peers on NATO report that Russia may use peace keeping as excuse to get troops onto Ukrainian territory. Additional negative news came from Germany where industrial production prospects fell after it was announced that factory orders fell. Italy was also in the spotlight after the statistics office report showed that country fell back into recession.
Risk aversion to Ukraine is topping after relatively smooth june period. Fear of sanctions and current situation is pushing down yields as investors buy bonds and dump equities. Some not so good data from Europe also had effects on the overall sentiment. USD rose 0.2 percent against the EUR as the common currency traded at $1.3347 in New York. It fell as much as 0.4 percent to $1.3333, most since November 2013. Dollar Spot Index stagnated at 1023.10 points.
Of the developing market currencies, Polish zloty was the biggest loser, falling 0.6 percent against the greenback after the PM Tusk said the country is wary of Russia’s assertions in Ukraine believing it could invade the country. Czech koruna also slipped 0.2 percent against the USD and 0.9 percent against the euro to 28 CZK per EUR. Of other eastern European currencies, the Forint of Hungary, HUF depreciated 0.2 percent with the exchange rate against the EUR rising to 317.37. The lowest level since the start of 2012.
Turning to Asia-Pacific, the NZD fell after the employment figures, showing gains of 0.4 percent, missing the 0.7 percent estimate. Kiwi fell 0.1 percent to 84.55 US cents. Yuan broke PBoC’s fixing band for the first time since the widening of the peg corridor. The news that China growth may be accelerating lifted the currency which advanced 0.12 percent to a five month high of 6.1633 per USD.
Euro was under the influence of bad German factory orders data and falling Italian GDP in the second quarter. The common currency depreciated 0.3 percent in the last month and it is 3.6 percent lower since the start of the year.