By Peter Nurse
Investing.com – The price surged during Wednesday’s European trading, nearing a 20-year high after Russian President Vladimir Putin raised tensions against Ukraine, in addition to expectations of a further rise in prices. interest in the US.
At 9 am ET, the , which tracks the US currency against a basket of six currencies, was up 0.46% to 110.76, close to a two-decade peak of 110.79 reached this month.
Russian President Vladimir Putin ordered the mobilization of 2 million of the country’s reservists in a videotaped speech on Wednesday, confirming his intention to annex parts of Ukraine that are currently under occupation by Moscow.
Putin has also raised the geopolitical temperature, making a thinly veiled threat to use the country’s nuclear arsenal to defend his achievements in Ukraine, while accusing the West of “nuclear blackmail” against his government.
“If Russia’s territorial integrity is threatened, we will use all means at our disposal. This is not a bluff,” Putin said.
As a result, the dollar began to record losses, devaluing 0.64%, to 0.9906 against the dollar, and approaching its lowest exchange rate level, a little below 0.99, since the beginning of September.
The dollar also benefited from expectations that the Federal Reserve would announce an increase of at least 75 basis points on Wednesday, in an attempt to combat rising inflation in the country.
However, a one-percentage-point increase cannot be completely ruled out after the (CPI), released last week, remained close to 40-year highs.
CHECK: Federal Reserve Interest Rate Monitor
“There is no reason to soften the rigor demonstrated at the last Jackson Hole symposium, so a 75bp rise should keep the dollar close to year highs,” analysts at ING said in a note.
Expectations caused the US Treasury rate to rise overnight to 3.992%, the highest level since 2007, while the US Treasury yield reached 3.604%, the highest level since 2011.
The US appreciated 0.23% to 143.64 against the dollar, thanks to the Japanese currency’s safe-haven status despite pressure exerted by rising US bond rates. The yen has lost 20% against the US dollar this year.
The next monetary policy meeting will be held on Thursday, and the institution is expected to maintain its ultra-flexible stimulus measures, even in the face of the release of data, on Tuesday, showing that the in the country rose to 2.8 % in August, its fastest pace of growth in nearly eight years.
The dollar was down 0.35% to 1.1338 against the dollar, hitting a new 37-year low, on concerns over Putin’s intentions, which could trigger another rate hike by Thursday.
The more sensitive to risk, on the other hand, depreciated 0.28% to 0.6658 against the US dollar, while it fell 0.42% to 7.0509 against the US dollar, remaining above the important psychological level of 7.