FOREX-Dollar gains on tensions in Russia, Ukraine

Wed Feb 26, 2014 11:27am EST

Related Topics

* Dollar index up on geopolitical concerns
    * U.S. new home sales boost dollar
    * Dollar flat against yuan after yuan's slide


    By Sam Forgione
    NEW YORK, Feb 26 (Reuters) - The dollar rose to its highest
in two weeks against a basket of major currencies on Wednesday,
as investors sought the greenback's safety on continued
geopolitical tensions in Russia and Ukraine.
    President Vladimir Putin put Russian combat troops on high
alert for war games near Ukraine on Wednesday, the Kremlin's
most powerful gesture yet after days of saber rattling since its
ally Viktor Yanukovich was toppled as president in Kiev.
 
    "Tensions between Russia and Ukraine are creating a
safe-haven play into the dollar," said Joseph Trevisani, chief
market strategist at WorldWideMarkets.
    In late morning trading, the dollar index rose 0.39
percent to 80.457. It hit a high of 80.490, it strongest level
since mid February.
    The dollar also rose against the euro, which was down
0.54 percent at $1.3672 after hitting a two week-trough of
$1.3584.
    The greenback extended gains versus the euro after data
showing sales of new U.S. single-family homes surged to a
5-1/2-year high in January, easing concerns of a sharp slowdown
in the housing market. 
    Against the yen, the dollar was up 0.09 percent at 102.30
.
    The dollar also gained on expectations Federal Reserve chair
Janet Yellen will reassure traders that the central bank will
not pause tapering its bond-buying program in testimony before
the Senate Banking Committee on Thursday. 
    The dollar, meanwhile, traded mostly flat against the yuan
 after the Chinese currency slid in recent days. It
was last at 6.1248 yuan, compared with levels closer
to 6.0600 just a week ago  
    Analysts said the decline was engineered by the People's
Bank of China to help soften a slowdown in the Chinese economy,
with signs this week of a cooling of property prices.
  
    Spot yuan has entered a dramatic weakening cycle in recent
weeks, guided downward by a series of weak fixings by the
central bank, with additional momentum added to the slide by the
unwinding of yuan positions by Chinese banks. 
    Many market watchers see the move as a prelude to a widening
of the yuan's trading band and believe the currency's
longer-term uptrend remains intact, despite recent data showing
the world's second-biggest economy is losing steam.
    "Chinese macro economic risk is a factor capping the dollar
against the yen," said Shusuke Yamada, chief Japan currency
strategist at Merrill Lynch Japan Securities.
    "Macro economic risks from the U.S., China and Japan have
grown significantly. That said, such risks are unlikely to fully
materialize until key data releases in April, and the dollar is
likely to be range bound until then," Yamada said.
FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

A tourist takes a plunge as she swims at Ngapali Beach, a popular tourist site, in the Thandwe township of the Rakhine state, October 6, 2013. Picture taken October 6, 2013. REUTERS/Soe Zeya Tun (MYANMAR - Tags: SOCIETY) - RTR3FOI0

Where do you want to go?

We look at when to take trips, budget considerations and the popularity of multigenerational family travel.   Video