NEW YORK: News that Ukraine had attacked a Russian military convoy that entered its territory sent investors fleeing to the safe-haven yen and Swiss franc on Friday, while the dollar slipped.
The foreign-exchange market reacted in a relatively muted fashion to the spike in geopolitical tensions between the neighboring countries, which had weighed on US and European equity markets and sent oil prices surging higher.
Ukrainian President Petro Poroshenko said that government artillery had destroyed a "considerable part" of the convoy late Thursday after it crossed into Ukraine, but Russia denied the allegation of a military incursion.
The yen and Swiss franc gained in a "typical reaction you would expect in a period of flight to safety assets," said Omer Esiner of Commonwealth Foreign Exchange.
The yen and the Swiss franc firmed against both the euro and the dollar. But the euro turned positive against the yen later in the session as worries eased after Kiev's foreign minister said he would meet his Russian counterpart in Berlin on Sunday for talks alongside the top diplomats from France and Germany.
The dollar suffered from some weak economic data this week, said Joe Manimbo, senior market analyst at Western Union Business Solutions.
Traders were cautiously looking ahead to next week when the Federal Reserve hosts its annual economic conference in Wyoming, he said.
"The dollar may have peaked for now with markets likely to position carefully ahead of the Fed's three-day summit next week, commencing Thursday, at Jackson Hole, Wyoming, a venue that in the past has served as a launching pad for what's around the bend for bank policy."
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