Yen Gains With Dollar as Putin Sparks Haven Asset Demand.
The greenback will outperform amid rising volatility, while there’ll be an automatic selloff in the ruble as commodity currencies and Asian equities come under pressure, said Sebastien Galy at Societe Generale SA in New York. Haven assets such as Treasuries will climb as investors assess the impact on commodities, said Ian Lyngen at CRT Capital Group LLC.
At the end of a month in which global equities, bonds and commodities rose together for the first time since July, the crisis in Ukraine deteriorated as President Vladimir Putin won parliamentary backing to send troops into Russia’s southern neighbor. Crimea, where Russian speakers comprise the majority, has become the focal point of Ukraine’s crisis after an uprising that triggered last month’s overthrow of President Viktor Yanukovych. Ukraine has put its forces on combat readiness and U.S. President Barack Obama warned Russia not to intervene.
“It’s going to be a classic flight to quality move,” Lyngen said by phone from Stamford, Connecticut. “The market is more focused on the extent to which Russia is willing to press their case and how escalated the conflict becomes. They just want to make sure that if there is some big move that has bigger implications that they’re not caught on the wrong side of it.”