WELLINGTON, March 3 (Reuters) - The yen rallied to a three-week high against the U.S. dollar on Monday while the Australian and New Zealand dollars stumbled as escalating political tensions in Ukraine prompted investors to dump higher-risk currencies in favour of lower-risk, liquid ones.
Ukraine mobilised for war on Sunday while the United States and European countries condemned steps taken by Russia to use military force in its politically vulnerable neighbour in what could become Moscow's biggest confrontation with the West since the Cold War.
"It's a reaction to the escalation in tension in Ukraine over the weekend ... the traditional risk proxies are getting hit, and the safe havens getting bid," said ANZ currency strategist Sam Tuck in Auckland.
Growing geopolitical risks pushed the U.S. dollar
The euro
The euro
"Monday should bring a lower bund yield and EUR/USD at least to discount the ordinary risk scenario of another supply interruption," JPMorgan analysts said in a note.
Investors dumped the higher yielding Antipodean currencies, pushing the Aussie
The kiwi
Analysts said the relatively illiquid Aussie and kiwi, which tend to sell off during periods of risk aversion, could fall further against the yen if the situation in Ukraine deteriorates further.
Keywords: MARKETS FOREX/