The safe-haven yen strengthened more against the dollar on Friday as US President Joe Biden said Moscow was preparing a pretext to justify a possible attack on Ukraine, also supporting the Swiss franc and hurting Bitcoin.
The dollar slipped to a fresh two-week low of 114.78 yen in early Asian trade and is down 0.5% so far this week. At the other end of the risk spectrum, bitcoin is trading around $40,500, around a two-week low, after falling late Thursday to make it down 7.6% on the day.
The support level 114.63 is seen within reach today if more negative news about Ukraine emerges, adding that the market is also focused on the Bank of Japan's policy, as the central bank continues its policy of yield curve controls.
The tension also caused the dollar to weaken against the Swiss franc, with the greenback holding at 0.9196 francs, just above Thursday's two-week intraday low of 0.9186 francs.
The euro continued a choppy trading week based on Ukrainian headlines and was at $1.1360, while the pound was at 1.3609 supported by market bets on further monetary tightening from the Bank of England.
Every Central Bank's Policy Against Ukraine
Central bank policy was also a factor in the yen after the BOJ this week offered to buy an unlimited number of 10-year government bonds to underscore its determination to contain domestic borrowing costs.
The market has yet to aggressively test the BOJ's 0.25% yield target on the bond but yields on other tenors have picked up.
Meanwhile, within the us, policymakers still discussion in public however sharply the Federal Reserve System ought to be in raising interest rates, and whether it ought to begin with a 25 or fifty basis purpose hike at its March meeting.
Cleveland Fed President Loretta Mester said late Thursday that the Fed needed to raise interest rates sooner and shrink the balance sheet sooner than after the 'big recession'.
The safe-haven Japanese yen and Swiss franc rose to two-week highs against the US dollar on Thursday, amid concerns about escalating Russia-Ukraine tensions that could impact economies around the world.
In afternoon trade, the dollar slipped to 114.845 yen, its lowest since early February. Against the Swiss currency, the greenback fell to 0.9189 francs, its weakest since February 3.
US President Joe Biden aforesaid Thursday that there's currently each indication that Russia is progressing to invade Ukraine within the next few days and is making ready a pretext to justify it when Ukrainian troops and pro-Moscow rebels changed hearth in Japanese-Ukraine.
There Is Tension in The Movement of Some Currencies
Russia also accused Biden of stoking tensions and released a strongly worded letter saying Washington was ignoring its security demands and threatening unspecified "military-technical measures".
For now, the Russo-Ukrainian conflict has replaced concerns about the Federal Reserve's plans to tighten monetary policy, starting at the March Federal Open Market Committee meeting. But the market has been divided over the size of the expected rate hike.
Last week, with the latest US consumer price data showing the biggest annual gain in 40 years, futures markets were pricing in about a 70% chance of a half-percentage gain in March. It had dropped to 37% on Thursday,
The dollar index, a measure of its value against a basket of six major currencies, has risen just 0.2% so far this year. Against the yen, however, the greenback has lost 0.2% so far in 2022.
The 2-year US Treasury yield, which reflects interest rate expectations and is dollar/yen correlated, has jumped around 74 basis points.
Several commodity currencies, which are sensitive to risk sentiment, were down, with the Australian dollar down 0.1% to $0.7188. The Norwegian krona was also down against the dollar, which was up 0.5% to 8.917.
