By Gina Lee
Investing.com – The dollar was up on Friday morning in Asia, but the euro was set for its worst week versus the U.S. currency in nine months. The Russian invasion of Ukraine and the resultant higher commodities prices continue to drag on expectations of European economic growth.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies edged up 0.16% to 97.950 by 10:36 PM ET (3:36 AM GMT).
The USD/JPY pair inched down 0.09% to 115.36. Japanese data released earlier in the day showed that the jobs/applications ratio was 1.2 and the unemployment rate was 2.8%, in January 2022.
The AUD/USD pair inched 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 climb steadily over the past few weeks.
The NZD/USD pair inched up 0.07% to 0.6805.
The USD/CNY pair was steady at 6.3204 and the GBP/USD pair inched down 0.02% to 1.3343.
In a move that deepens the crisis in Ukraine, Russian troops shelled the Zaporizhzhia power plant in Enerhodar, Ukraine earlier in the day. Russia also continued to surround and attack Ukrainian cities on the eighth day of its invasion, which began on Feb. 24. These include the eastern port city of Mariupol, which has come under heavy bombardment.
The largest plant of its kind in Europe was reportedly on fire, which gave the Australian dollar a boost. The news sent the euro tumbling a 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. The dollar also fell against the safe-haven yen but gained against other currencies.
"This war will be devastating for Ukraine. As for Russia, the short and longer-term implications will definitely hurt the economy. But European Union countries will also be among those which will be hit the most by these sanctions," ING analysts told Reuters.
The effects of surging energy and gas prices could undermine the industrial and private consumption rebound that had been expected following the easing of COVID-19 restrictions and was also likely to slow European Central Bank policy normalization. "At next week's ECB meeting, any hints of rate hikes are out of the question," they added.
Across the Atlantic, the U.S. Federal Reserve is set to hike interest rates for the first time since COVID-19 began when it hands down its policy decision on Mar. 15. Fed Chairman Jerome Powell reiterated in his second day of testimony before Congress that he would back an initial quarter percentage point hike in the interest rate.