Feb 18 (Investing) – The dollar was up on Friday morning in Asia. However, the safe-haven yen gained more ground on the dollar after U.S. President Joe Biden accused Russia of preparing a pretext to justify a possible attack on Ukraine.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.02% to 95.825 by 10:09 PM ET (3:09 AM GMT). The dollar is down 0.5% so far in the week.
The USD/JPY pair was up 0.22% to 115.19.
The AUD/USD pair was up 0.24% to 0.7200, and the NZD/USD pair was up 0.33% to 0.6709.
The USD/CNY pair inched down 0.03% to 6.3354, and the GBP/USD pair inched up 0.03% to 1.3609.
"The support level of 114.63 looks within reach today if more negative headlines on Ukraine emerge," CBA analysts said in a note. The note added that markets were also focused on the Bank of Japan (BOJ) 's policy, as the central bank continues with its yield curve control policy.
On Thursday, Ukrainian forces and pro-Russian separatists exchanged fire, renewing Western concerns of an imminent Russian invasion. U.S. President Joe Biden accused Moscow is preparing a pretext to justify a possible attack, and Russia expelled an American diplomat.
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The tensions also caused the U.S. currency to lose ground on the Swiss franc, with the greenback last at 0.9196 francs, or just above Thursday's two-week intraday day low of 0.9186 francs. Meanwhile, bitcoin was around the $40,500 mark, around a two-week low.
"Crypto has shown us once again that it is a high beta risk asset, and it has a dark sinister look that could morph into something ugly," Pepperstone head of research Chris Weston said in a morning email.
Volatility continued for the euro due to the tensions in Ukraine, and the single currency last traded at $1.1360. Bets supported the British pound that the Bank of England would further tighten its monetary policy.
Central banks and their monetary policies were also under scrutiny with the BOJ's offer to buy an unlimited amount of benchmark 10-year government bonds earlier in the week weighing on the yen. Although markets have not aggressively tested the BOJ's 0.25% yield target on those bonds, yields on other tenors have been rising.
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Meanwhile, the debate continues on how aggressively the U.S. Federal Reserve should hike interest rates and whether it should be a 25 or 50 basis point hike at the March 2022 meeting.
The Fed would need to hike interest rates quicker and shrink its balance sheet more quickly than it did after the 'great recession, Cleveland Fed President Loretta Mester said on Thursday.
