Dollar Up as Russia-Ukraine Tension Escalates

By Gina Lee – The dollar was up on Tuesday morning in Asia as Russia recognized two breakaway parts of eastern Ukraine, increasing concerns of a major war.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies edged up 0.15% to $96.168 by 10:11 PM ET (3:11 AM GMT).

The USD/JPY pair inched down 0.10% to 114.63.

The AUD/USD pair inched up 0.03% to 0.7192 while the NZD/USD pair inched up 0.09% to 0.6704.

The USD/CNY pair inched up 0.09% to 6.3408, and the GBP/USD pair inched down 0.09% to 1.3584.

Investors turn to safe-haven assets as Russia and Ukraine tension escalates. The euro dipped about 0.1% to a one-week low of $1.1297 while the Swiss franc, another safe-haven, hit a one-month high overnight.

“It is remarkably restrained…but in these circumstances risk metrics are the driving force,” NAB head of foreign exchange strategy Ray Attrill told Reuters.

Russian President Vladimir Putin recognized two breakaway regions in eastern Ukraine as independent on Monday and ordered the deployment of troops to the areas.

Whether the action was the start of an invasion of Ukraine is not clear yet, but the West has begun to respond by preparing sanctions.

The Russian robule extended its slide on Tuesday after it tanked more than 3% against dollar on Monday.

“The sharp sell-off in Russian assets is a stark reminder that tension remains super high and risk sentiment is being hit across equity, credit and bond markets,” Westpac analysts said in a note.

“However, the commodity story remains super supportive though and we are in the middle of miner dividend season meaning that we are likely set for more rangy price action around $0.72,” the note added.

Cryptocurrencies were also under pressure, with bitcoin sitting its near three-month low at $37,112.

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