* Euro, dollar gain as Putin pulls back troops on exercise
* Markets still focused on Crimea, major currencies in
* Aussie struggles in face of new central bank warning
* Non-farm payrolls, ECB meeting loom later in week
By Patrick Graham
LONDON, March 4 The dollar and the euro rose
against the yen on Tuesday, helped by signs Russia may be
seeking to avoid further escalation of its military involvement
The euro had fallen sharply against the yen, traditionally
seen as a safe haven, after Western powers threatened over the
weekend to take steps to isolate Russia economically, raising a
host of risks for Western Europe and the global economy.
But a sell-off in the rouble and Russian assets halted on
Tuesday, and investors pulled money out of the perceived safety
of the yen, helped by Russian President Vladimir Putin's
ordering some troops in Russia back to base.
Putin later told a news conference he saw no need to use
military force in Ukraine's Crimea region for now.
The surprise for some dealers has been the extent to which
major currencies have taken in their stride the West's biggest
confrontation with Russia since the Cold War.
"We came in yesterday expecting it to be bedlam," said one
senior dealer with a large European bank in London. "Instead,
particularly on euro-dollar its been among the quietest 36 hours
I can remember."
There was some movement overnight. The euro and the dollar
both gained around half a percent against the yen to 140.16 and
101.86 respectively. The euro rose 0.2
percent to $1.3752.
The Swiss franc, also seen as a safe haven, retreated from
its strongest in a year against the euro, trading at 1.2172
francs compared to the Swiss National Bank's cap of 1.20.
"Given three days worth of bad headlines, I think the market
was just willing to take any sort of stability it can get," said
Geoffrey Yu, a strategist with UBS in London.
"Given the amount of reduction in risk we saw yesterday
people were just looking to get back in."
Traders were also looking ahead to major economic events
later this week.
Opinion remains deeply divided as to the European Central
Bank's likely course of action at a policy meeting on Thursday.
A higher than expected inflation number last Friday prompted
many to pare bets on outright easing of interest rates but that
is not the only action the bank can take.
An ECB source told Reuters there would be unanimous
agreement to end so-called sterilisation of the bank's bond
purchases under the bank's Securities Markets Programme.
"I think there is some degree of easing priced into
markets," UBS's Yu said. "That's not our position but we do
think we may get some dovish talk from (ECB President Mario)...
Draghi. So it may be a case of the euro rising on the decision
and falling on his comments an hour later."
UBS is also among the many banks predicting a stronger
dollar this year. That move has so far failed to materialise,
largely thanks to a halt in the flow of improving U.S. data.
Most put that down to extremely harsh winter weather,
however, and non-farm payrolls data on Friday is seen unveiling
a more bullish increase of 150,000 jobs in February.