The Yen depreciated for the third day in a row against the greenback on signs that the crisis between Russian and the Ukraine could be subsiding, and as gains in equities reduced demand for harbor assets.
No Need For Safety
While it appeared that the crisis between Moscow and the Ukraine may have subsided after the Eastern region of the Ukraine declared its independence following Sunday’s referendum, the Euro region expanded its list of sanctions against Russia. Demand for safe havens declined, causing the Yen to drop for a third consecutive day versus the U.S. Dollar, and for it to weaken against the majority of its Forex market peers. However, the U.S. worries that the new sanctions may impact the Russian energy sector, and Mr. Putin, the country’s President could retaliate. In Japan, Monday’s releases showed another month of trade deficits, making this the 21st one. This has caused the Bank of Japan to re-evaluate its policies and consider expanding stimulus in the months to come. The central bank’s members predict that inflation could rise to 1.9 percent in 2015, despite the sales tax hike. The Yen was also weakened by a rally of 1.95 percent in the Japanese Nikkei, another factor that lowered the appeal of harbor assets. In the U.S., the S & P 500 closed at a record high on Monday.
Sterling Comes To A Halt
The British Pound did not continue its rally, and declined against the U.S. Dollar. However. Its drop was limited as the U.K. prepared to issue employment data and the Bank of England’s quarterly inflation report due out today. The Sterling dipped versus the Euro after reaching 16-month highs. This came about despite that industry reports confirmed a hike in retail sales. According to official news, sales surged by the most in three years, this April. Today’s announcements are slated to reveal that unemployment fell to 6.8 percent in the initial quarter of 2014, the lowest in five years. And the central bank’s governor, Mark Carney is expected to offer forecasts for the British economy.
Kiwi Steadies Before Report
New Zealand’s Dollar traded steady versus its U.S. counterpart as the foreign exchange markets wait for the release of the Reserve Bank’s financial stability report. The currency shrugged off lackluster economic fundamentals out of China indicating that industrial output as well as retail sales dripped. But demand for the South Pacific currency was down, on worries that the world’s second largest economy continues to weaken.