FX Primus Ltd.

FX Primus Ltd.

April 28, 2014 05:50 ET

FXPRIMUS Market Brief of the Week: Investors Favor the Safe Haven Again

SINGAPORE, SINGAPORE--(Marketwired - April 28, 2014) - In FXPRIMUS' Market Brief of The Week for 28 April, the brokerage firm's Senior Economist, Jimmy Zhu, looks at how the Russia-Ukraine geopolitical risk affects to the related currencies.

Economic Insights

Riskier assets might take a break for a while, when Russia-Ukraine geopolitical risk elevated

USD ended last week mostly in narrow ranges, despite equities selling off on the tech companies' valuation and the Russia-Ukraine concern. USDJPY forms a clear downtrend last week, as JPY was favored by the investors when the geopolitical crisis affected global haven flight, pulling USD to yield lower.

G7 has prepared sanctions on Russia that could be imposed as soon as Monday as U.S., U.K. called on Moscow to help release observers seized by rebels in eastern Ukraine. Asian Stocks Drop on Earnings because of the Ukraine tensions. The U.S. and European Union will impose new sanctions on Russia as soon as today during the detention of international observers by pro-Russian separatists.

Possible actions could affect Russian companies and individuals close to President Vladimir Putin over the escalating crisis in Ukraine. They will be looking to designate people who are in his inner circle, who have a significant impact on the Russian economy, according to White House. They will also be looking at taking measures as well with regard to the high-technology exports to their defense industry. All of this together is going to cause an impact.

The Yen held weekly gains against most of its 16 major peers as tension in Ukraine spurred investor demands for safety. The intensifying situation in Ukraine had propelled stock selling and Yen buying. Japanese markets will close down tomorrow and on the 5th-6th May for The Golden Week public holidays.

The Fed meets on 29th-30th April, when economists are predicting that the central bank will cut monthly asset purchases by another $10 billion, down to $45 billion. Policy makers will continue to taper at that pace until ending the program at the 28th-29th Oct.

30th April: Euro-area Consumer Price Index (CPI) will be released. Euro-area CPI is likely to remain below 1% for the seventh month in April. Fifteen of the eighteen countries of the Euro area were reported to have headline measures of inflation of less than 1% in March. Five nations had experienced complete deflation. The European Central Bank (ECB) forecasts the average price growth to remain below 2% through 2016. A weak inflation reading on the 30th April will probably see the president of ECB facing calls to act as soon as next week by imposing negative interest rates for the first time or pushing forward with the plans for quantitative easing.

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