Trading of the euro and pound was under pressure on Wednesday as a growing Russian offensive on Ukrainian cities prompted investors to return to the safe-haven of the US dollar.
The economies of the European Zone and the UK are the most sensitive to the slowdown in growth and the sanctions imposed on Russia. This is because, almost 40% of the gas and over 25% of the oil imported into the European Union is from Russia.
This loss of supply and combined with rising global energy prices will put pressure on Europe even more.
In contrast, the Aussie dollar and kiwi recorded limited declines as Australia and New Zealand did not import oil or oil products from Russia. Therefore, they are less impressed with this situation.
Ahead of the ‘State of the Union’ speech by US President Joe Biden at 10am (local time), Russia is preparing to intensify its attacks on Ukraine by warning Kiev residents to get out of the city.
This at once raises concerns that Russia will step up its attacks when Joe Biden’s speech takes place shortly.
Investors are now more cautious about increasing their holdings on safe-havens and the US dollar, while the euro plunged to its most recent low since June 2020.
Meanwhile, the pound remained silent at a one -month low against the US dollar, trading weakly at around 1.3300 in the Asian session.
