Safe-Haven FX in Demand as Geopolitical Risks Climb
Safe-haven assets, including the yen and Swiss franc, advanced Tuesday as Ukraine launched its first attack on Russian soil with US missiles, while Moscow expanded its nuclear doctrine and can now use nuclear weapons in response to an attack on its soil. US Treasuries as well as gold prices rose as tensions escalated.
USD/JPY was down 0.5% at 153.91.
The pair dropped as much as 0.9% to trade at 153.29 after Russia headlines. One-week volatility on the pair spiked as much as 143 basis points to 11.02%.
The USD/JPY was under pressure earlier after Japanese Finance Minister Katsunobu Kato said there was no change in the government’s stance on taking appropriate measures against excessive currency movements.
USD/CHF fell 0.1% to 0.8821.
The Bloomberg Dollar Spot Index is little changed on the day.
USD/CAD fell 0.3% to 1.3979
Domestic inflation accelerated faster than forecast, which may dissuade policymakers from a second straight 50 basis-point cut to interest rates next month.
“This has driven USD/CAD below the 1.40 threshold as the market prices out some possibility of outsized cuts,” said Sarah Ying, head of foreign-exchange strategy at CIBC Capital Markets. “We still have a slew of data before the December BOC meeting.”
She added that “it’s a tad early to settle the debate between 25 and 50 just yet.”
“Our official forecasts are still looking for an outsized cut, contingent on the upcoming data,” she said.
EUR/USD down 0.1% to 1.0586.
AUD/USD climbed 0.2% at 0.6519; Reserve Bank of Australia sees its current policy settings as appropriate to try to pull down core inflation that is still “too high,” according to minutes of its Nov. 4-5 policy meeting.
Source : Bloomberg
