Yesterday we saw a reversal of the patterns seen towards the end of last week. It has been an ongoing theme in the marketplace since the crisis in Ukraine first developed; when news emerges from the region that the situation has worsened, we see a global risk-off, with traders selling high-yielding assets in favour of safer bets. When the situation seems to have improved, we see global confidence increase. The situation looked fairly dire at the end of last week, but tensions appear to have eased slightly over the weekend – as a result we saw the Japanese yen and Swiss francs lose much of the ground that they made up last week. Emerging market currencies, such as the South African rand, Indian rupee and Turkish lira all showed strength throughout the day yesterday.
Interestingly, despite the fact that the US imposed sanctions on seven influential Russian individuals and 17 companies, the rouble still logged gains yesterday as the situation in the Ukraine seemed to be improving. A statement released from the White House claimed Russia ‘had done nothing to meet its Geneva commitments and in fact has further escalated the crisis’. This did not seem to deter traders, however, who looked to capitalise on recent rouble weakness by buying-up the relatively cheap currency.
Overnight last night we had monthly trade balance figures out of New Zealand which grew as we saw an increase in the export of dairy products to China, and later today we have a speech from the governor of the Bank of Canada.
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