Flight To Safety
Tough talk at the UN and from US Secretary of State John Kerry to the US Congress, and from Germany’s Chancellor Angela Merkel sent uneasy tremors through global equity markets and turned Forex investors toward the yen and Swiss Franc on Thursday. Russia continued its defiant, self-serving double talk as a Sunday referendum in the Ukraine drew near.
With Russian troops poised on the Ukrainian border and in the Crimean peninsula, Chancellor Merkel warned of the potential for disastrous consequences. At the same time, Kerry promised severe economic penalties for Russia if it continued to violate international law by occupying a foreign land. Kerry, the US Senate and the European Union appear ready to take a hard economic line against President Putin and Russia. In a return to cold war mentality, Putin seems to relish in the spotlight of controversy, flexing his ego and muscle in the Ukraine without abandon.
Mario Draghi Euro Zone Comments
European Central Bank president Mario Draghi hinted that the lingering threat of deflation and the relative strength of the euro were matters of concern. The strong euro puts the Euro Zone partners at a trade disadvantage and the deflation has lingered longer than expected. The signal is clear. The ECB will have to counter with monetary measure to soften the euro and raise inflation.
The euro lost 0.4 percent against the USD after reaching a two-year high earlier in the session. The euro lost 1.3 percent against the yen. The yen was a big winner on the day, gaining 1 percent against the USD.
Other safe haven currencies also fared well. The Swiss franc achieved a two-year high against the USD and gained 0.2 percent against the nervous euro.
Crisis in Ukraine
Secretary Kerry promised the US and European Union would take serious and punitive steps against Russia on Monday if interference in Ukraine’s sovereign rights continues. Ukrainian acting president Oleksander Turchinov told S media that Russian forces were preparing to invade.
Kerry spoke to Congress on Thursday in a briefing that underscored the perilous nature of Russia’s aggression.
In China, industrial output missed market targets and retail sales also came up short. It is a tense world and safety is the key for many investors.
- Euro – USD – (0.02 %) – 1.3863
- GBP – USD – (0.2%) – 1.6619
- USD – JPY – (0.4%) – 101.79
- USD – CAD – + 0.5% – 1.1074
- AUD – USD – +0.01% – 0.90300
- USD – RUB – 36.5725