The dollar rose early Friday in Asia, but the euro was in its worst week against the US currency in nine months. Russia's invasion of Ukraine and the resulting higher commodity prices continue to drag on expectations of European economic growth.
The US Dollar Index, which tracks the greenback against a basket of other currencies, edged up 0.16% to 97.950. The USD/JPY pair edged down 0.09% to 115.36. The AUD/USD pair edged up 0.08% to 0.7335, with Australian retail sales growing 1.8%.
Higher commodity prices due to the Russian invasion have helped the riskier Australian dollar to continue its gains over the past few weeks. The NZD/USD pair edged up 0.07% to 0.6805.
The USD/CNY pair was steady at 6.3204 and the GBP/USD pair edged down 0.02% to 1.3343. In a move that deepened the crisis in Ukraine, Russian troops opened fire on the Zaporizhzhia power plant in Enerhodar, Ukraine earlier in the day.
Russia also continued to besiege and attack Ukrainian cities on the eighth day of its invasion, which began on February 24. These include the eastern port city of Mariupol, which has been heavily bombarded.
Euro Weakens Against Dollar as Russia Moves
The largest factory of its kind in Europe reportedly caught fire, which boosted the Australian dollar. The news sent the euro tumbling further 0.48% to $1.1009, its lowest since May 2020. The single currency has lost 1.84% in the week to date, its worst week since June 2021.
This war will destroy Ukraine. As for Russia, the short-term and long-term implications are sure to hurt the economy. But European Union countries will also be among the most affected by these sanctions.
The effects of a spike in energy and gas prices could undermine the rebound in industrial and private consumption that had been expected after the easing of COVID-19 restrictions and would also likely slow down the normalization of European Central Bank policy.
At the ECB meeting next week, hints of a rate hike are out of the question. Across the Atlantic, the US Federal Reserve will raise interest rates for the first time since COVID-19 began when it dropped its policy decision on March 15.
Fed Chair Jerome Powell reiterated in his second day of testimony before Congress that he would support an early quarter percentage point rate hike.
The euro faced its worst week against the dollar in nine months, as the war in Ukraine and the prospect of high commodity prices continued to drag on expectations of European economic growth.
Russian Attack on Ukraine Causes Some Currencies to Weaken
Adding to concerns in early Asian trade was news that Ukraine's Zaporizhzhia nuclear power plant, the largest of its kind in Europe, caught fire on Friday morning after an attack by Russian troops.
The dollar in turn slipped 0.15% in the safe-haven yen on Friday morning, following reports of the fires, although with gains elsewhere, the dollar index, which measures the currency against another currencies.
Russian troops continued to besiege and attack Ukrainian cities, on the eighth day of their invasion, including Mariupol, the main port in the east that had been heavily bombarded.
They said the effects of surging energy and gas prices could undermine the rebound in industrial and private consumption that had been expected after the easing of COVID-19 restrictions and would also likely slow the European Central Bank's policy normalization.
In contrast, the US Federal Reserve is almost certain to raise interest rates at its March 15-16 meeting for the first time since the pandemic.
Fed Chair Jerome Powell overnight reiterated his comments from Wednesday that he would support an initial quarter percentage point hike in the Fed's benchmark interest rate.
Elsewhere, sterling was lower at $1.3326, while the Australian dollar eased from four-month peaks on news of the fires. Higher commodity prices due to the war have caused the Aussie to continue to climb in recent weeks.
