Euro weakens on concerns that Ukraine crisis may deepen: March 19,2014

Market Review - 18/03/2014 22:53GMT

Euro weakens on concerns that Ukraine crisis may deepen

The single currency weakened against the greenback in hectic trading on Tuesday as despite initial rebound after Russia's President Vladimir Putin said Russia does not want Ukraine to be divided further, price retreated on risk aversion.

Earlier in the day, euro remained under pressure in Asia and fell to 1.3890 in European morning after the release of weaker-than-expected German ZEW data, however, price rose briefly but sharply to session high at 1.3944 on comments from Putin. Later, the pair pared its gains and dropped to an intra-day low at 1.3880 in New York morning but short-covering lifted price and euro closed at around 1.3934.

Germany ZEW survey current situation and survey expectations came in below forecasts at 51.3 and 46.6 vs expectations of 52.0 and 53.0 respectively.

Russia's Putin said 'U.S. foreign policy is dictated by not international law but by the right of the strong; Western partners have crossed the line over Ukraine, acted unprofessionally n irresponsibly; thanks China for support on Ukraine; Russia does not need the further division of Ukraine; will never seek to spark confrontation with the west but will defend Russian interests.'

Versus the Japanese yen, the greenback fell from session high at 101.94 in Asia to 101.32 in European morning on broad-based buying of jpy before staging a rebound to 101.78 after Putin's comments. However, dollar pared its gains and weakened to 101.27 in New York before stabilizing.

The British pound traded in a narrow range in Asia and retreated to 1.6590 in early European morning before rebounding to 1.6632 at New York open. However, renewed selling there pressured the pair lower and cable fell sharply to an intra-day low at 1.6545 in New York morning before recovering. Cable closed at around 1.6593.

In other news, German Chancellor Angela Merkel said 'confidence growing in Eurozone overall, will support Portugal in its bailout exit decision.'

On the data front, Italy trade surplus widened to 1262M in Jan from 179M in Dec.

Data to be released on Wednesday:

New Zealand current account, Australia leading index, Japan trade balance, import, export, all activity index, leading index, France current account, U.K. BoE minutes, jobless claim, average weekly earning, unemployment rate, employment change, Swiss Zew expectation, Canada wholesale sales, U.S. FOMC rate decision.

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