* Ukraine tensions heighten on Russia's military
* Rise in U.S. spending and income helps dollar
By Gertrude Chavez-Dreyfuss
NEW YORK, March 3 The dollar and yen gained on
Monday as investors sought the safety of these currencies as
Russia's military intervention in Ukraine's Crimean peninsula
fanned geopolitical tensions.
The greenback was further supported by economic data showing
an increase in U.S. personal income and spending in January in
the midst of one of the worst seasons in recent memory.
But the worsening situation in Ukraine has rattled investors
"Investors turned to classic safe havens amid heightened
tensions in Ukraine," said Joe Manimbo, senior market analyst,
at Western Union Business Solutions in Washington.
"The deteriorating situation in Ukraine poses a fresh threat
to the global economy. The world economy is already seen on a
fragile footing due to mounting signs of weakness in China."
Ukraine said Russia was building up armoured vehicles on its
side of a narrow stretch of water closest to Crimea after
Russian President Vladimir Putin declared at the weekend he had
the right to invade his neighbour to protect Russian interests
The United States threatened to isolate Russia economically
after Putin's action provoked what Britain's foreign minister
called "the biggest crisis in Europe in the twenty-first
In mid-morning trading, the dollar index rose 0.3 percent to
The dollar was also underpinned by data showing U.S.
consumer spending rose more than expected in January, rising 0.4
percent, as outlays on services recorded their largest increase
since late 2001, likely driven by demand for heating. Income
also gained 0.3 percent in January after being flat the prior
The dollar's gains pushed the euro 0.2 percent lower at
However against the safe-haven yen, the dollar fell 0.4
percent to 101.43. The euro also dropped versus the yen,
falling 0.6 percent to 139.67 yen.
"The one to watch in our opinion is dollar/yen given the
overall increase in political risk and the evidence of a
slowdown in China," said Ian Stannard, strategist with Morgan
Stanley in London.
"If risk does become more challenged there is room for a lot
more movement there. We favour a shift to as low as 97 yen per
Western powers have threatened to isolate Russia
economically in the biggest confrontation with Moscow since the
Cold War, raising a host of risks for Western Europe and the
The euro is the first safe port of call for capital from
eastern European countries such as Poland, Latvia or Lithuania
who may be the first to feel the fallout of any conflict or
sanctions. But the euro zone also has close ties to Russia.