© Reuters.
By Peter Nurse
Investing.com – The US dollar remains strong while the euro approaches a 21-month low as the war in Ukraine is likely to continue to weigh on Europe’s growth as the Federal Reserve talks about interest rate hikes.
At 08:55 AM ET, the , which tracks this coin against a basket of six other majors, is up 0.1% at 97.525.
The pair is down 0.2% to the 1.1097 level, just above its overnight lows at 1.1058, its lowest since May 2020, and down 1.5% on so far this week.
The pair posted a 0.2% gain to the 115.72 level, the traded higher to 1.3406 and the traded 0.3% higher to 0.7319, hitting fresh 7-week highs as it is seen as the Australian economy is benefiting from higher prices for its commodity exports.
Federal Reserve Chairman Jerome Powell said on the first of his two-day appearance before Congress that he remained comfortable supporting a 25 basis point rate hike at the central bank’s next meeting later this year. month, prioritizing the fight against inflation over the risks of the Russian invasion of Ukraine.
While his remarks effectively wipe out a half-point hike when the central bank meets in mid-March, this is likely to put the Fed several months ahead of the European Central Bank, even before the likely impact is factored in. of the Ukraine conflict.
“The macroeconomic dent from Putin’s war will clearly cost Europe much more than the United States,” ING (AS:) analysts say in a note. “The relative isolation of the US economy is allowing the Federal Reserve to maintain his aggressive stance and he will probably have more reason than anyone else to stick to his monetary tightening plans.
The eurozone’s hit a new all-time high in February, rising to 5.8% in annual terms from 5.1% the previous month, Eurostat data showed on Wednesday.
These figures illustrate the European Central Bank’s dilemma, as fears mount that the Ukraine war will curb growth in the region, but fuel even higher inflation due to supply disruptions, creating the dreaded stagflation.
That said, the ECB’s chief economist, Philip Lane, stated on Wednesday that the central bank is closely monitoring the economic fallout from the war in Ukraine and will do whatever it takes to support the continent’s rally.
On the other hand, the ruble continues to fall as Russian citizens try to get rid of the currency, which has led the country’s central bank to impose a 30% commission on foreign currency purchases by individuals at exchange houses. says Reuters, citing a letter from the regulator.
The pair is up 3.8% to the 110.0261 level, about to hit new all-time highs.
Lastly, the pair is down 0.1% to the 1.2614 level, after on Wednesday it raised its benchmark interest rate to 0.5% from record lows of 0.25%, rising by the first time since October 2018, and indicated that it would have to raise them even more to tackle inflation.
