SINGAPORE- The euro was under pressure on Wednesday as intensifying Russian bombardment of Ukraine’s cities and a surging oil price raised investor concerns about a hit to Europe’s economy and growth.
The common currency briefly fell below support to touch a 21-month low of $1.1090 overnight, before recovering a bit to trade at $1.1131 early in the Asia session.
“The risk is a sustained move below $1.1106 if market participants downgrade the Eurozone economic outlook,” said Commonwealth Bank of Australia analyst Kim Mundy.
Sterling, which fell 0.7 percent overnight, was also squeezed at $1.3327.
Russia bombed a TV tower in Ukraine’s capital on Tuesday and rained rockets on the city of Kharkiv. Munitions experts said cluster bombs were also used on Kharkiv.
The safe-haven yen was firm, tracking a risk-averse mood in other markets and was last just above its 50-day moving average at 114.85 per dollar.
Russia’s rouble, hammered to a record low of 117 to the dollar on Tuesday as Western sanctions hit, remained on the cheaper side of 100.
Commodity linked currencies, such as the Australian dollar, fell slightly against a stronger dollar overnight but have held their own as surging prices for oil, gas, coal and grains provided support.
The New Zealand dollar hovered at $0.6760 in morning trade and the Australian dollar edged up to $0.7263. The US dollar index held at 97.324.
Chinese traders are scaling back imports of Russian coal as they struggle to secure financing from state banks worried about potential sanctions, pushing prices higher from Australia and other exporters such as Indonesia and South Africa. – Reuters
