* Yen extends broad slide, focus shifts to data
* Euro lower against the dollar ahead of ECB
* Overnight euro/dollar implied vols rise
By Anirban Nag
LONDON, March 5 The safe-haven yen extended its
losses against the dollar and euro on Wednesday as concerns over
the standoff between Russia and Ukraine eased somewhat, allowing
investors to focus on a slew of forthcoming data.
Markets will still be keeping a close eye on developments in
the region after Russia test-fired an intercontinental ballistic
missile from a base not far from the east of Ukraine to a range
But for now, traders are shifting their sights to a raft of
data including a private sector survey of the U.S. labour market
and retail sales out of the euro zone.
The euro was up 0.15 percent at 140.64 yen after
gaining 0.8 percent on Tuesday, while the dollar was up 0.2
percent at 102.38 yen after rising 0.8 percent on Tuesday
- its biggest one-day gain since mid-January. It was flat
against the Swiss franc at 0.8874 francs.
"While the market remains vulnerable to the game of
brinkmanship between the West and Russia over the situation in
Ukraine, it seems that the markets will need a dose of good data
to hold up," said Jeremy Stretch, currency strategist at CIBC
Demand for safety faded on Tuesday after Russian President
Vladimir Putin played down the prospect of a war in Ukraine, but
market players remained on watch.
"I think there's obviously hesitancy to take bigger
positions here," said Mitul Kotecha, Hong Kong-based head of
global foreign exchange strategy for Credit Agricole.
"There is still a wait-and-see attitude. There's been some
relief, but I don't think the market's convinced that this is a
sustained relief," he added.
Russian stock markets fell nearly 2 percent
on Wednesday, bucking Wall Street's trend, which also kept alive
interest in safe-haven currencies.
EURO CHOPPY BEFORE ECB
The euro eased 0.1 percent to $1.3730, having
retreated from Friday's two-month high around $1.3825.
Investors preferred to stay away from the euro given the risk
that the European Central Bank could loosen monetary policy at
With inflation running well below the ECB's target of just
under 2 percent, the central bank is under pressure to do more
to drag inflation out of a "danger zone" that threatens to
stagnate the region's fragile recovery.
On Wednesday, investors will eye January retail sales and
services sector surveys, but CIBC's Stretch added that any move
above $1.37 by the would be sold.
"I do not think the market has priced in the risk of ECB
action fully," he added.
Indeed, overnight euro/dollar implied volatility,
a gauge of how sharp currency swings will be, jumped to 11.50
percent from around 5 percent at the start of the week.
The start of China's annual parliament meeting offered no
major surprises, and major currencies showed little reaction.
China announced on Wednesday it would maintain its economic
growth target for 2014 at about 7.5 percent signalling that its
policy focus would be slanted in favour of reforms and
rebalancing the economy.
In the United States, a services sector survey, the private
sector ADP employment report and the Federal Reserve's Beige
Book, are all likely to offer evidence on the extent to which
weather influenced a recent soft patch in economic data.