Fear of the economy pushes the euro down

The Ukrainian conflict weighed heavily on the euro and European currencies on Monday, but the dollar reached a high in almost two years and investors feared the economy and inflation of the Old World. The euro has fallen to $ 1.0806, the lowest since May 2020, due to possible Russian oil sanctions. At around 7:45 pm Greenwich Mean Time, the European currency fell 0.59% to $ 1.0863. Since the beginning of the conflict, the euro has fallen almost 4% against the dollar, which serves as a safe haven.

The dollar index, which measures the value of the greenback against the other six major currencies, rose 0.49% to 99.12 points, the highest since May 2020. In terms of prices, the US Central Bank (Fed) is expected to raise interest rates several times this year. On the ECB’s side, on the other hand, the currency’s screw spin is moving away, analysts say. This puts pressure on European currencies. “The rise in economic uncertainty caused by Russia’s invasion of Ukraine has led to a sharp reassessment of monetary policy expectations from the European Central Bank (ECB) side,” he said.Scotiabank’s Shawn Osborne said.

Western ricochet effect

“Economic damage caused by the war in Ukraine could postpone the first ECB rate hike in early 2023, and perhaps later, depending on the development of the situation.”Added Scotiabank’s Forex Market Chief Strategist. “On the other hand, the dynamics of US employment and inflation will keep the Fed on the road to tightening.”, He said. The Fed will hold a monetary policy meeting next week, while the ECB board will meet on Thursday. European financial institutions cannot afford the double risk of inflationary shocks and slowing growth in the euro area. “Despite rising prices, the ECB may delay monetary tightening schedules.” Exinity analyst Han Tan will also be judged.

In the forex market, the first victims of the conflict were still in trouble. The Russian currency fell 16% to 139.29 rubles per dollar after touching a new historical low of 177.26 rubles. Since January 1st, the ruble has fallen 51%. The currencies of the countries bordering Ukraine also suffered. After hitting a new low at 4.62 zloty since November 2000, the Polish currency was -2.5% at 4.58 zloty at $ 1. Hungarian forints were moving at 364 forints per dollar after reaching a record low of 367.94 forints.Sanctions on Russian oil exports “Will rebound savings“Europe, “Reducing supply in the global market, raising industrial prices and making rising living costs even more painful.”Details of Susannah Streeter, an analyst at Hargreaves Slan’s Down.

Europe is much more dependent on Russian gas than the United States. Therefore, the expected impact on the growth of the Old World will be greater than that of the US economy, which is less relevant to the Russian and Ukrainian economies. Traders have also restricted the purchase of British pounds as the Bank of England meets next week. The British pound has had little direct impact so far (-1st January to -3%), but fell sharply on Monday (-0.94% to $ 1.3106). This is a level that has not been seen for over a year. In this pessimistic situation, gold, a safe haven, rose to $ 1994 around 19:45 GMT after hitting a high of $ 2002.59 since August 2020.

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Greenwich Mean Time 7:45 pm Greenwich Mean Time 10:00 pm

EUR / USD 1.0863 1.0928

Euro / Yen 125.33 125.48

EUR / CHF 1.0063 1.0018

EUR / GBP 0.8289 0.8260

USD / JPY 115.37114.82

USD / CHF 0.9264 0.9167

Pound Sterling / US Dollar 1.31061.3230