Traders were on the brink of war in Europe; Simultaneously, they were vulnerable to rising inflation. Hence, on Monday, Dollar and haven currencies held more robust and riskier coins. The risk of conflict in Ukraine lowered the euro on Friday. It lost $1.1346EUR = EBS on Monday; It was much lower at $1.1495 last week. The Australian and New Zealand dollars were also down last week. The Russian ruble has struggled since the range of sanctions on Friday caused its sharpest drop in almost two years. The haven yen rose to 115.53 yen from a five-week low of 116.34 JPY = EBS last week.
The U.S. says Russia could invade Ukraine at any time and possibly create an unexpected pretext for an attack. The German Chancellor, who travels first to Kyiv and then to Moscow for talks; Warned of sanctions if Moscow invades.
The blast point adds to the stress; Which is already evident in the volatile response of markets to hotter-than-expected data on U.S. inflation last week. This will unleash bets on raising Federal Reserve rates by more than 160 basis points by the end of the year. Analysts say that while the Fed’s growth expectations continue to rise, geopolitical tensions in Ukraine are rising sharply. The dollar index should still return to the previous feet.
Russian-Ukraine Tension and Euro
At the Asian session, the dollar index fell to 96,059. The euro fell 1.2% against the yen on Friday. The currencies of oil importers are most at risk due to the conflict in Ukraine. The price of oil has risen. According to reports, on Monday, the President of the European Central Bank addressed the President of the European Parliament and the President of the Fed. They blew the markets in the wake of last week’s inflation data.
Sterling remained at $1.3542 on Monday. Investors are confident that the Bank of England will raise interest rates next month. We will also increase the price by 50 basis points; Which has a 40% chance of growing. The New Zealand dollar fell 0.5% to a total of $0.6622. The Australian dollar fell to $0.7119, for a total of 0.2%. Australian job data will be released on Thursday. The risk of surprise brought Australian dollar volatility meters to an almost one-year high. The U.S. Federal Reserve will release the minutes of its January meeting on Wednesday. The talk of a hike between meetings was delayed last week. The Fed released its bond-buying schedule for next month. The central bank said it would increase only after the cessation of purchases.
