Dollar climbs, euro plunges, as Biden brings sanctions package to Europe

NEW YORK, March 23 (Reuters) – The dollar appreciated on Wednesday while the euro weakened as oil prices rose again, with U.S. President Joe Biden set to announce, alongside European leaders, new sanctions against Russia during his trip to Europe.

Biden is due to arrive in Brussels later on Wednesday for his first trip abroad since the start of the war in Ukraine, and will meet NATO and European leaders in an emergency summit at the headquarters of the military alliance. western. Sources said the US package would include measures targeting Russian lawmakers. Read more

Prices of commodities such as oil and wheat soared as tensions in Ukraine escalated, putting further upward pressure on already high inflation due to supply chain bottlenecks . Rising inflation has led many central banks, including the US Federal Reserve, to take steps to control prices, including raising interest rates.

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“The flow of capital is going to be I don’t want to be in Europe, it’s literally closer to Ukraine geographically, but it’s also the fallout from the sanctions, there’s a lot of money coming back from Europe and back to the United States,” said Huw Roberts, head of analytics at Quant Insight.

“If we get another round of sanctions, then people say the backlash on the West is going to fall disproportionately on Europe.”

The dollar index rose 0.097%, with the euro falling 0.17% to $1.1008.

Crude prices rose more than 5% on Wednesday, supported by the disruption in Russian and Kazakh crude exports. Read more

The Russian ruble strengthened 8.65% against the greenback to 89.50 to the dollar after hitting a one-month high of 87.50 after Russian President Vladimir Putin said Russia would seek to be paid in rubles for gas sales from “hostile” countries. Read more

Federal Reserve Chairman Jerome Powell has raised the possibility of raising interest rates by more than 25 basis points in upcoming meetings, a more aggressive stance echoed by other policymakers, who backed the note. green and helped boost the yield of the 10-year US Treasury. more than 2.4%.

On Wednesday, San Francisco Fed President Mary Daly and Cleveland Fed President Loretta Mester became the latest Fed policymakers to indicate a bigger hike was in sight at the meeting. of May from the central bank. Read more

Jefferies updated its Fed forecast on Wednesday in light of Powell’s comments and now forecasts a 50 basis point rate hike at the May and June meetings, followed by 25 basis point hikes at the meetings. remaining from 2022.

The Japanese yen weakened 0.30% to 121.12 to the dollar, while the pound last traded at $1.3207, down 0.42% the previous day after hitting a three-week high at $1.3298.

Britain’s inflation rose faster than expected last month to hit a new 30-year high with a 6.2% year-on-year rise. Britain’s Finance Minister Rishi Sunak slashed taxes on workers and cut a fuel tax on the heels of inflation data as he sought to ease a severe squeeze on the cost of living amid the rapidly rising prices and slowing economic growth. Read more

The yen has been weak against the dollar recently, with the currency slipping to a fresh six-year low of 121.40 to the dollar as their respective central banks’ trajectories diverged. Bank of Japan Governor Haruhiko Kuroda said on Tuesday that the central bank should maintain an ultra-loose monetary policy as recent cost inflation could hurt the economy.

In the cryptocurrency markets, Bitcoin last fell 0.98% to $42,179.99.

Ethereum last fell 1.32% to $2,962.69.

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Reporting by Chuck Mikolajczak Editing by Bernadette Baum and Jonathan Oatis

Our standards: The Thomson Reuters Trust Principles.

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