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March 10, 2022
The U.S. dollar index (DXY) opened up to 98.00 in the friday trading. This currency is continuing to advance within its highest range since June 2020.
The second day of testimony from the Fed Chairman, Jerome Powell, again supported the prospect of a rate hike. Based on the calculation, that can be for about 25 basis points.
This condition makes USD is stronger than before. In contrast, the euro' main rival continues to be pressured by the Russo-Ukrainian war which is happened lately.
Russia and Ukraine agreed to make the "humanitarian corridor" Deal yesterday They also opened the possibility of a limited ceasefire to accommodate the civilians fleeing.
However, tensions have not subsided Even with the agreement made by both countries. The Ukrainian President Volodymyr Zelensky this morning accused Russia of deliberately firing at the Zaporizhzhia nuclear power plant.
Zelensky though that the activity like that causing fires at the high-risk public facility. The Zaporizhzhia fire has been extinguished, but Zelensky remind that they have 15 nuclear reactors.
If one of them explodes, the Chernobyl tragedy may be repeated again. This situation further worsened the euro and ruble exchange rates in the market.
Meanwhile, that condition is also keeping the energy commodity prices at a high record. The Commodity Dollar remained resilient due to high market concerns over the supply of diverse commodities amid the war.
Elsewhere, the United States dollar was supported by the high demand for safe haven assets combined with Powell's hawkish testimony. The US dollar rate is quite high today.
In fact, that currently puts it in a vulnerable position to correct if the release of Non-farm Payroll (NFP) data later tonight is not as good as the expectations. However, some analysts still tend to be optimistic about the greenback.
The dollar is in a significant groove at the moment, benefiting from safe-haven flows and solid United States economic conditions. That was said by Manimbo as a senior market analyst in Western Union Business Solution.
This week's data has been really bullish for the American Dollar. If the analysts see strong (U.S.) job growth coupled with oil exacerbating inflation, they think that will keep the chances of a Fed rate hike in large numbers
The crisis happened in the Ukraine has been rising the oik prices. That is why; the analysts thought that as a significant weak source for the Euro.
Vice versa, that becomes the source of strength for the commodities currencies. The United Nations passed a resolution backed by 141 of the 193 members to denounce Russia.
More severe sanctions have been given To Moscow. One of them is to remove some Russian banks from the SWIFT network And also the "nuclear options" previously said by some EU countries.
That situation triggers the world oil prices to increare. The Brent Crude Oil has been in the position of USD 120 per barrel before and WTI is still around USD 115 per barrel until now.
It Reflects the Severed Energy Crisis
Rising oil prices reflect an increasingly severe energy crisis that could further complicate the lives of the Europeans. Various European countries are still struggling to escape dependence on Russian energy supplies.
It means that the sanctions on Russia also have a boomerang impact on them. Moreover, Russia and Ukraine are among the exporters of important agricultural products.
The Energy prices have risen higher, as have various agricultural products. Therefore, the war in Ukraine signifies high inflation for a longer period of time and the potential for slower economic growth.
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