U.S. dollar firms consider new Ukraine sanctions

Euro, Hong Kong dollar, U.S. dollar, Japanese yen, pound and Chinese 100 yuan banknotes are seen in this illustration, January 21, 2016. REUTERS/Jason Lee/

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  • The US dollar rises for three consecutive sessions
  • Killings of civilians in northern Ukraine weigh on feelings
  • More sanctions against Russia for harming Europe’s energy supply; fall of the euro

NEW YORK/LONDON, April 4 (Reuters) – The dollar appreciated on Monday, rising for three consecutive sessions, as the killing of civilians in northern Ukraine and the prospect of increased sanctions prompted investors to seek security in the greenback.

The U.S. currency also continued to benefit from a strong nonfarm payrolls report for March that supported expectations of a significant half-percentage-point tightening by the Federal Reserve at next month’s meeting. .

“The dollar is bouncing higher as geopolitical developments have clouded the clouds over the global economy,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

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“The dollar was already enjoying jobs-inspired gains after strong hiring and falling unemployment cemented expectations of sweeping U.S. rate hikes this year.”

French President Emmanuel Macron called for new sanctions and said there were clear indications that Russian forces had committed war crimes in the town of Bucha. Read more

The Kremlin has denied any charges related to the killing of civilians in the city. Read more

German Defense Minister Christine Lambrecht said the European Union should discuss ending Russian gas imports. Russia supplies about 40% of Europe’s gas needs. Read more

By late morning, the dollar, which measures the greenback against a basket of peers, rose 0.3% to 98.89 (.DXY).

Friday’s data showed U.S. unemployment hit a two-year low of 3.6% last month, leading investors to weigh whether the numbers would bolster the Fed’s resolve to fight the coronavirus crisis. inflation by raising interest rates sharply. Read more

The euro, which has been under pressure due to concerns over economic damage from the war in Ukraine, fell 0.6% to 0.4% against the dollar at $1.0988. Against the pound, the euro fell to a six-day low and it was last down 0.6% at 83.73 pence.

“More sanctions of course also means that the risk of energy disruption in Europe increases, either because of our own sanctions or because Russia might get completely serious with its counter-sanctions rather than just changing the way natural gas is paid for. “, said Ulrich Leuchtmann, head of foreign exchange at Commerzbank.

“In my view, the risk of significant euro weakness is increasing.”

Against the yen, the dollar gained 0.3% to 122.855 yen.

Kit Juckes, head of FX strategy at Societe Generale, said a 50 basis point rate hike was already priced in.

“CFTC data suggests that the market has rebuilt its long position in the dollar. This is one of the reasons why the dollar is trying hard to rise further right now,” he said.

Net long bets by dollar speculators hit an 11-week high last week.

On Friday, federal funds futures priced an 80% chance of a 50 basis point hike next month, while two-year U.S. yields hit 2.4950%, their highest since March 2019.

Markets in mainland China were closed for a public holiday, but in offshore trading the yuan was kept under pressure amid concerns over a prolonged lockdown in Shanghai, where authorities are seeking virus testing on 26 millions of inhabitants. Read more

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Currency rates at 10:40 a.m. (2:40 p.m. GMT)

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Reporting by Gertrude Chavez-Dreyfuss in New York and Joice Alves in London; Editing by Ed Osmond, John Stonestreet and Barbara Lewis

Our standards: The Thomson Reuters Trust Principles.

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