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The yen held advances, following last week’s sharpest increase since January, as the West prepares to impose penalties versus Russia after a referendum in Crimea, aiding demand for safer assets.
European Union foreign ministers will have an assembly in Brussels today to talk about travel bans and asset freezes on some Russian officials aa Vladimir Putin's government prepares to annex the region in Ukraine’s south. China doubled the limit for the yuan's daily moves versus the dollar from today. The Federal Reserve meets this week as economists projections it will trim down monthly bond purchases by another $10 billion.
“We are watching with great interest if there will be any sanctions from the U.S. and Europe on Russia for a sense of how much deeper geopolitical events will go,” said Robert Rennie, head of currency and commodity strategy at Westpac Banking Corp. in Sydney. “In the short run, given the situation in China, with the weakening in economic momentum and signs of stress within some commodity markets, it’s an added layer of risk.”
The yen exchanged with a slight change at 101.44 per dollar as of 10:17 a.m. in Tokyo after surging 1.9 percent last week in its largest increase since January 24 to 101.36. Japan’s currency fetched 141.06 per euro following a 1.6 percent hike in the five days ended March 14. Europe's shared currency backslide 0.1 percent to $1.3903 from the end of last week, after reaching $1.3967 on March 13, the topmost performing mark since October 2011.
The MSCI Asia Pacific Index of shares retreat 0.2 percent, following a 3.5 percent decrease last week, the most since May 2012.
Crimea Vote
A total of about 96 percent of voters in the Black Sea peninsula supported in leaving Ukraine to join Russia in the referendum, preliminary results revealed. The Ukrainian administration, the EU and the U.S. consider the vote illegal, while Russia said it “fully met international norms.”
A level of penalties versus Russia will be decided today, German Foreign Minister Frank-Walter Steinmeier stated in an interview on ARD television late yesterday. President Barack Obama told Putin that the U.S. won’t ever acknowledged the Crimean vote, the White House said in a statement.
Demand for Australia’s dollar was damped after China eased controls on the yuan exchange rate as appreciation bets waned in the middle of slower economic progress.
Yuan Ceiling
The yuan will be able to exchange today as much as 2 percent on either side of a daily central bank reference rate, from 1 percent previously, the People’s Bank of China stated in a statement on its website on March 15. The band was last widened in April 2012 from 0.5 percent, and before that from 0.3 percent in May 2007. The move underscores promises from China’s leaders to make the exchange rate more market based and advertise freer movement of capital for investment purposes.
The Australian dollar slipped 0.2 percent to 90.14 U.S. cents. It depreciatted 0.1 percent to 91.41 yen, down 2.5 percent since March 6. China is Australia’s largest trading partner.
U.S. policy makers will meet March 18-19 in the Federal Open Market Committee’s first gathering led by Federal Reserve Chair Janet Yellen since she succeeded Ben S. Bernanke last month. The Fed has trim down monthly bond purchases to $65 billion this year, from $85 billion in 2013. Yellen last month pledged further “measured” steps to slow the purchasing if development continues.
The Bloomberg U.S. Dollar Index, which tracks the greenback versus 10 major currencies, was slightly altered at 1,013.37 after declining 0.3 percent last week.
Futures traders boosted their bets that the yen will pullback versus the U.S. dollar, figures from the Washington-based Commodity Futures Trading Commission show. The disparity in the number of wagers by hedge funds and other huge speculators on a retreat in the yen compared with those on a surge-- so-called net shorts -- was 99,356 on March 11, the most bearish since January 21.
