Euro bruised by Ukraine tensions, Fed hike talk

U.S. greenback banknotes are displayed on this illustration taken, February 14, 2022. REUTERS/Dado Ruvic/Illustration

HONG KONG, Feb 15 (Reuters) – The euro edged up a bit of in Asian buying and selling, however was nonetheless nursing bruises after two classes of sharp losses as tensions in Jap Europe pushed demand for the greenback and the safe-haven yen.

Central financial institution coverage was additionally high of thoughts for traders because the Financial institution of Japan stated it will “not incessantly” step in to purchase authorities bonds, complicating the state of affairs for traders after the BOJ defended its key bond yield goal on Monday.

The euro was at $1.1320, up 0.12% on Tuesday, having touched $1.1278 the day earlier than, its lowest in a week-and-a-half, whereas the yen was at 115.4 per greenback, after briefly hitting 114.99 on Monday, its strongest in every week.

Strikes have been barely extra cautious elsewhere and the general outcome was that the greenback index, which tracks the buck towards six friends was at 96.185, down 0.1%.

Traders have been spooked in a single day by Ukrainian President Volodymyr Zelenskiy calling on residents to fly the nation’s flags from buildings and sing the nationwide anthem in unison on Feb. 16, a date that some Western media have cited as a attainable begin of a Russian invasion.

Ukrainian officers harassed, nevertheless, that Zelenskiy was not predicting an assault on that date, however responding with scepticism to international media experiences. learn extra

Away from geopolitics, U.S. Federal Reserve officers persevering with to spar over how aggressively to start upcoming rate of interest will increase at their March assembly.

Hawkish Fed official James Bullard, who final week broke ranks to name for a big 50 foundation level enhance, reiterated requires a quicker tempo of rate of interest hikes on Monday, although different officers have been extra cautious of their public remarks. learn extra

Tensions in Ukraine and the extra aggressive outlooks for the Fed funds fee are each supportive for the greenback within the close to time period, stated Kim Mundy, senior foreign money strategist at Commonwealth Financial institution of Australia.

“Your greatest wager for seeing which is having a larger affect is to take a look at USD/JPY and we now have seen that buying and selling a bit of bit weaker within the final day or two, which suggests markets are very acutely aware of what is taking place on the Ukraine border,” Mundy stated.

“We simply should maintain watching the headlines and see what occurs.”

The safe-haven yen sometimes advantages when traders are nervous, whereas the distinction between U.S. rate of interest hikes and a dovish Financial institution of Japan must push the yen decrease.

Elsewhere, sterling was regular at $1.354 and the Australian greenback was little modified at $0.7129.

Russia’s rouble was regular on Tuesday having gained 1.1% in a single day.

In cryptocurrencies, bitcoin was 2.4% greater, buying and selling round $43,500.

Reporting by Alun John; Modifying by Sam Holmes and Tom Hogue

: The Thomson Reuters Trust Principles.