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US Secretary of State Antony Blinken will be delivering his remarks on the Russia-Ukraine conflict at a UN Security Council Meeting, from UN Headquarters in New York City, on Thursday.
Markets remain risk-averse on Thursday on reports pointing to a heightened risk of a Russian invasion. The benchmark 10-year US Treasury bond yield is down more than 3% on the day and the S&P 500 Index is losing 1.25%.
Meanwhile, the US Dollar Index, which tracks the dollar’s performance against a basket of six major currencies, stays relatively quiet below 96.00.
On Thursday, increasing tensions between Russia and Ukraine dampen the market mood, boosting the safe-haven appeal of the Japanese yen vs. the greenback, as depicted by the 60+ pip fall in the USD/JPY. The USD/JPY is trading at 114.92.
In the last two hours, a “packed” US economic docket reported Building Permits, Housing Starts, for January. The former came at 1.899M vs. 1.76M, higher than expected, while the latter rose to 1.638M lower than the 1.7M. At the same time.
Initial Jobless Claims for the week ending on February 12 showed an increase of 248K higher than the 219K. Further, February’s Philadelphia Fed Manufacturing Index decreased to 16 vs. 20 foreseen.
Putting US economic data aside, the Russia-Ukraine front developments have dominated the financial market mood.
In the last hour, NATO Chief Stoltenberg said that NATO is “concerned” about the increased ceasefire violations in Ukraine. Meanwhile, in the US, President Joe Biden said that the threat of Russia’s invasion of Ukraine is very high. He reiterated that he believed Putin would invade Ukraine in a matter of days. Furthermore, reports from Ukraine, the Defense Ministry said that “shelling from pro-Russian forces ceased”.
Therefore, tension escalation boosted the appeal of the Japanese yen, as the USD/JPY heads towards the high 114.90s, a level last reached on 2 February.
Technically speaking, the USD/JPY is neutral biased, but the breach of the February 14 daily low at 115.00 opened the door for a February 2 daily low test at 114.14, but first, JPY bulls would need to reclaim the 50-day moving average at 114.73.
However, a shift in the market mood could pave the way for a mean reversion move. The USD/JPY first resistance would be 115.00. A clear break would expose the January 28 daily high at 115.68, followed by 116.00 and the YTD high at 116.35.
