Tom Westbrook

SINGAPORE, (Reuters) – The euro fell on Wednesday due to the intensifying Russian bombardment in Ukraine and a rising oil price. Investors were concerned about the impact of this attack on Europe’s economy.

The common currency fell briefly below support overnight to $1.1090, but then recovered a little to trade at $1.1131 during the Asia session.

Kim Mundy from the Commonwealth Bank of Australia (OTC), said, “The risk of a sustained movement below $1.1106 is if market players downgrade Eurozone economic outlook.” The price of sterling, which dropped 0.7% overnight was also reached at $1.3327.

Russia bombed the TV tower of Ukraine’s capital, on Tuesday. It also rained rockets into Kharkiv. Experts in munitions said that cluster bombs were used to attack Kharkiv.

The safe-haven Japanese yen was steady, reflecting a cautious mood in other markets. Last week’s closing average of 114.85 per $1 was just above 50.

Russia’s currency, the rouble of Russia, fell to record levels of 117 against the dollar Tuesday, as Western sanctions were imposed. It remained at 100 percent.

Overnight, commodity-linked currencies like the Australian Dollar fell against a stronger currency, but they have held steady as support from rising prices for oil and gas as well as coal, grain, and other commodities. [MKTS/GLOB]

In morning trade, the New Zealand dollar was at $0.6760 while the Australian dollar rose to $0.7263. At 97.324, the exchange rate remained constant.

Chinese traders have cut back on imports of Russian coal because they are unable to get financing from the state banks. This has resulted in higher prices from Australia, South Africa and Indonesia.

Jane Foley of Rabobank said, “The strength in commodity prices together with Australia’s significantly improved current accounts position suggest that there is good cause to expect it to break from its traditional role as a ‘higher-risk’ G10 currency.” She believes it could rise to $0.74 by 2022.

The State of the Union speech by Joe Biden, the U.S. president, will be delivered later in the session. According to excerpts from speech, he will state that the West is ready to allow Russia to invade Ukraine and that his administration has a plan for fighting inflation.

European inflation data are due at 1000 GMT. For insight on the thinking of policymakers about the economic consequences of the Ukraine crisis, Philip Lane (CEO European Central Bank) will give a speech at 1600 GMT.

At 1800 GMT, Silvana Tenreyro, a Bank of England policymaker will talk about British economic outlook.

Offshore trade was relatively steady at 6.3166 dollars, though it did weaken slightly on Tuesday.

Emerging markets saw sharp drops in currencies overnight, so Eastern European currency were able to recover. [EMRG/FRX]

The dollar’s strength has slowed down the gains of the pound, which helped it rebound from its lows last month.

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Exchange rate bid prices starting at 0027 GMT

Description: RIC U.S. Last Close Pct. Change YTD High Bid Low

Previous change

Session

Euro/Dollar

$1.1129 $1.1124 +0.05% -2.10% +1.1133 +1.1117

Dollar/Yen

114.8550 114.8350 -0.03% -0.19% +114.8900 +114.8050

Euro/Yen

127.83 127.83 +0.00% -1.91% +127.8700 +127.6900

Dollar/Swiss

0.9187 0.9188 +0.00% +0.73% +0.9189 +0.9188

Sterling/Dollar

1.3330 1.3328 +0.03% -1.42% +1.3335 +1.3326

Dollar/Canadian

1.2728 1.2748 -0.12% +0.70% +1.2743 +1.2725

Aussie/Dollar

0.7264 0.7253 +0.16% -0.07% +0.7267 +0.7248

NZ

Dollar/Dollar 0.6768 0.6763 +0.09% -1.10% +0.6770 +0.6753

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