As Russian President Vladimir Putin’s threat to invade Ukraine intensifies one of the most serious standoffs since the end of the Cold War, traditional havens such as the U.S. Treasuries, gold and the yen are poised to gain while high-risk assets from stocks to emerging-market currencies fall.
U.K. government bonds rose, with 10- year yields falling the most in five weeks, as deepening tensions in Ukraine and reports of Russian fighter planes being put on combat alert boosted demand for haven assets.
Hedge funds are losing confidence in Bank of Japan Governor Haruhiko Kuroda’s ability to keep depreciating the yen to boost growth and banish deflation as they wait for a second round of monetary easing to materialize.
Serbia’s central bank cut its 2014 economic growth forecast for the second time in three months, citing limited scope for further expansion of car output, an average agricultural season and weak recovery in the euro area.
Corporate bond premiums in Australia fell to a six-year low and investors including Western Asset Management Co. predict more narrowing as a global economic recovery withstands bouts of market turmoil.
KRW’s rebound from a 4-month low versus USD will probably be “short lived” as “risk aversion” may still push greenback higher, says Stuart McPhee, technical analyst at OANDA, a provider of FX trading services. * “The main culprit presently appears to be risk aversion, and that has fueled the U.S. dollar stronger and emerging-market currencies weaker,” Sydney-based McPhee says in e-mail interview yday. “The long-term outlook for the USD is still up” vs KRW, he says, without providing forecasts * KRW closed 0.2% higher at 1,081.10/dlr yday after touching 1,087.50 on Jan. 27, lowest level since Sept. 13 * KRW rebound followed USD/KRW’s rise above upper end of Bollinger band on Jan. 24 and Jan. 27, a sign USD gains aren’t sustainable * KRW’s 14-day RSI was around 71 on Jan. 27, above the 70 level that signals to some traders a reversal is imminent