April 17, 2024

Dollar Climbs Higher As Putin Escalates War Angst 

As the war between Russia and Ukraine waxes, USD value flips alongside. On Wednesday, Putin raids the Ukrainian region with another battalion. Interestingly, Dollar’s reaction to the announcement saw it strengthen. 

Putin’s Orders Affected The Dollar 

The USD upended despite the United States Central Bank on the verge of calling for a hiked interest rate. Raising interest rates became a routine for the US Fed since inflation broke out. So, as inflation soared, the chances of pricing in higher interest rates also surged.

Meanwhile, last week’s CPI data revealed that inflation took flight and landed at 8.3%. At this level, it had retested its 40-year high. Therefore, investors started predicting a 75bps or 100bps rate lift. 

ING analysts opined that Fed officials would not resolve a soft landing. Especially after inflation only soared with the Fed Chair proclaiming a 75bps boost at the Wyoming conference. However, the US Treasury accumulated massive yields from its bonds after August’s CPI report dropped. 

The USD smashed a twenty-year high at the opening of Europe’s trading session on Wednesday. And this followed Putin’s direction of Russian soldiers into foraying into Ukraine. Elsewhere, the US Federal Reserve prepares jumbo basis points to tackle inflation. 

The Dollar index (USD tracker) projected a new high for the USD at 3ET or 7GMT. The height brought the USD close to its brim two decades ago at 110.79, which it last touched in July. Meanwhile, Wednesday’s high was 110.457, a 0.5% rise evoked by Putin’s war news. 

Earlier on Wednesday, Vladimir Putin, president of Russia, mobilized two million troops. He did so to annex the vicinities in Ukraine occupied by Russians. A video of the situation went viral as the event unfolded. 

Furthermore, Putin modified the ambient temperature as a threat to utilize nuclear weapons if provoked. He warned countries not to involve themselves with his mission in Ukraine. Also, he accused the West of nuclear blackmail. 

Russia’s president said he would respond aggressively if his country’s terrains got trespassed. Furthermore, stating that he is not bluffing. 

Other Currencies Fell Against The USD

Euro plummeted against the USD at a drastic rate. Its index recorded a 0.7 percent drop setting it at 0.9903. Earlier in September, the currency had traded at a level lower than 0.99. 

USD/JPY declined 0.1%, putting it down at 143.64. Meanwhile, the Yen had backing from its contingency which held it down against the booming Treasury yield. However, the Yen has fallen 20 percent against the USD in 2022.

At the Bank of Japan meeting on Thursday, economists say it will maintain its ultra-low rates policy. Although Japan’s August consumer inflation report showed a jump of 2.8 percent, it still would not switch its position. Record reflected inflation in Japan hits an eight-year high.

GBP/USD dived close to its thirty-seven-year bottom of 1.1351 at 1.1388. A 0.4 percent fall from its previous level. The Bank of England is also in motion to raise interest rates to tame inflation.

AUD/USD delved 0.5 percent, touching 0.6658. Conversely, USD/CNY trailed off to 7.0509 after printing a 0.5 percent increase.

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