SINGAPORE- The euro was pinned near a 21-month low on Thursday by worries that Russia’s invasion of Ukraine will hurt European growth, while commodity currencies hit multi-week highs as export prices surged.
The euro recovered to $1.1111 early in the Asia session from an overnight trough of $1.1058, its lowest since May 2020. Yet it is down 1.4 percent for the week so far and is heading for a fourth consecutive weekly loss against the US dollar.
The Australian dollar, on the other hand, touched a seven-week high of $0.7306 on Wednesday and hovered near that at $0.7295 on Thursday as prices for Australian exports such as coal, gas and grains soar.
The euro is now down nine sessions in a row to a four-year low of A$1.5218 against the Australian dollar.
“In the current crisis, we view the euro’s status as vulnerable,” said senior FX strategist Jane Foley at Rabobank, which is reviewing its $1.11 target on the downside.
“On a corporate level there is web of complex relationships between the EU and Russian firms, particularly in the energy sector,” Foley said.
“Energy prices have pushed higher as have those for many agricultural products. The war in Ukraine thus suggests higher for longer inflation and the potential of slower economic growth.”
Euro zone inflation hit a record high at 5.8 percent last month, overnight data showed, surpassing expectations and prompting warnings from policymakers about stagflation. – Reuters
