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The euro was weakened by tensions in Ukraine and talks of a Fed hike

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News Tech: Tensions in Eastern Europe weighed on the euro on Tuesday and boosted demand for the dollar and safe-haven yen, while the greenback was also helped by the debate over US interest rate hikes. increasingly fierce. The euro was at $1.1308 in early Asian hours after touching $1.1278 the previous day, its lowest level in a week and a half. The yen was at 115.33 against the dollar, having briefly touched 114.99 on Monday, its strongest level in a week.

However, Ukrainian officials emphasized that Zelenskiy was not planning an attack that day, but reacted skeptically to foreign media reports. Away from geopolitics, US Federal Reserve officials continued to debate how aggressively to initiate further rate hikes at their March meeting. Hawkish Fed official James Bullard, who broke his ratings last week to call for a 50 basis point increase, reiterated calls for an acceleration of rate hikes on Monday, though officials are more cautious in their public comments.

Performances were slightly more cautious elsewhere and the overall result was that the dollar index, which tracks the greenback against six other currencies, was at 96.244, just below Monday’s two-week high. Investors panicked a bit overnight when Ukrainian President Volodymyr Zelensky urged people to wave the country’s flag from buildings and sing the national anthem in unison on February 1. The 16th, a date that some Western media have cited as the possible date of a Russian invasion.

Tensions in Ukraine and a more positive outlook for federal funds rates are both supportive of the dollar in the short-term, said Kim Mundy, senior currency strategist at Commonwealth Bank of Australia. “Your best bet to see what has the biggest impact is to look at USD/JPY and we’ve seen trading a bit weaker over the past few days, showing that the market is very much aware of what’s going on. is happening on the Ukrainian border,” Mundy said. “We just have to keep watching the headlines and see what happens.”

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