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The
move came a day after the United States said Russia could attack
Ukraine at any time. Russia has denied having any such plans
though a senior official said it was ready to fire on foreign
ships and submarines that illegally enter its waters.
The dollar index rose 0.4% to 96.351, its highest since Feb. 1,
at 1133 GMT.
Euro-dollar one-month implied volatility was at 7.45%, the
highest since November 2020, from below 6% at the end of
January.
The rouble was flat at 77.08 against the dollar, after tumbling
to its lowest since Jan. 28 on Friday as investors ditched
Russian assets.
“European dependency on Russian energy makes the cyclical
economic performance of the euro zone particularly vulnerable in
case of an escalation of the conflict in Ukraine,” Commerzbank
analysts said.
The euro was down 0.4% at $1.1301, its lowest level since Feb.
3.
The euro weakened on Friday when a rush into safe-haven assets
overshadowed expectations for monetary policy tightening from
the European Central Bank.
ECB president Christine Lagarde had also dampened some of the
bullish euro sentiment by reiterating that any policy action
will be gradual.
The U.S. Federal Reserve will release its January meeting
minutes on Wednesday, but analysts said central bank action was
unlikely to return to the spotlight until the risk of an
escalation over Ukraine recedes.
The rush into safe-haven assets has boosted the Japanese yen
since Friday, while the Bank of Japan successfully defended its
key bond yield target on Monday, holding the line on its
ultra-loose monetary policy.
The yen strengthened 0.3% to 115.16 against the dollar, and 0.6%
versus the euro.
“These two currencies (the U.S. dollar and the yen) – as well as
the Swiss franc – should remain bid until, and if, we get
indications that a diplomatic solution is in sight,” ING
analysts said, adding that “markets are adopting a wait-and-see
approach on geopolitics at the start of the new week.”
We “flag quite significant downside risks for exposed currencies
- directly the rouble and indirectly all pro-cyclical currencies
and especially the European ones - should tension escalate
further,” ING added.
The Swiss franc rose 0.5% against the euro to 1.0451, its
highest since Feb. 3.
Riskier currencies such as Australian and New Zealand dollars
fell 0.6% and 0.9% respectively.
The Swedish crown fell 1% versus the greenback to $9.4212, its
lowest level since January 28.
A divided central bank in Sweden kept policy plans broadly
unchanged on Thursday, pouring cold water on expectations of
monetary tightening.
The Norwegian crown, which is sensitive to oil prices, fell 0.8%
against the dollar to 8.9511, its weakest level since the end of
January, while Brent crude futures steadied after hitting their
highest since October 2014.
In cryptocurrencies, bitcoin was down 0.8% at around $42,220.
(Reporting by Stefano Rebaudo, Editing by Andrew Heavens)
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