Support for FOREX-Euro tests as Ukraine crisis threatens growth

Band Tom Westbrook

SINGAPORE, March 2 (Reuters)The euro was under pressure on Wednesday as intensified Russian bombardment of Ukrainian cities and soaring oil prices raised fears among investors of a hit to Europe’s economy and growth.

The common currency EUR=EBS briefly fell below support to hit a 21-month low at $1.1090 overnight, before recovering a bit to trade at $1.1131 at the start of the Asian 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 GBP=which fell 0.7% overnight, was also compressed to $1.3327.

Russia bombed a television tower in the Ukrainian capital on Tuesday and rained rockets on the city of Kharkiv. Ordnance experts said cluster bombs were also used on Kharkiv.

The safe haven yen JPY=EBS was firm, following a risk-averse mood in other markets and was just above its 50-day moving average at 114.85 to the dollar.

The Russian Ruble RUB=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 held up against soaring oil, gas, coal and grain prices. MKTS/GLOB

The New Zealand dollar USD=D3 hovered at $0.6760 in morning trade and the Australian dollar AUD=D3 rose slightly to $0.7263. The US dollar index =USD held at 97.324.

Chinese traders are cutting imports of Russian coal as they struggle to secure funding from state banks worried about potential sanctions, pushing up prices from Australia and other exporters such as Indonesia and Africa from South.

“The strength in commodity prices combined with Australia’s much improved current account position suggests that there is good reason to expect the AUD/USD to break away from its traditional role as a global currency. G10 “highest risk,” said Rabobank strategist Jane Foley, expecting it. may climb to $0.74 by the end of 2022.

Later in the session, US President Joe Biden delivers his State of the Union address. He will say the West was ready for Russia’s invasion of Ukraine and that his administration has a plan to fight inflation, according to speech excerpts.

European inflation data is due at 10:00 GMT. A speech at 4:00 p.m. GMT by the European Central Bank’s chief economist, Philip Lane, will also be closely watched for insight from policymakers reflecting on the economic damage of the Ukraine crisis.

Bank of England policymaker Silvana Tenreyro will speak on the UK economic outlook at 18:00 GMT.

The Chinese Yuan CNH=D3 was steady in offshore trade at 6.3166 to the dollar, after weakening slightly on Tuesday.

In emerging markets, Eastern European currencies suffered steep losses overnight. EMRG/FRX

Bitcoin BTC=BTSPmeanwhile, has rebounded from last month’s lows and last held around $44,500, its lead somewhat blunted by dollar strength.

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(Reporting by Tom Westbrook; Editing by Lincoln Feast.)

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