Currency trading in a spin after the Polish explosion
NEW YORK/LONDON, Nov 15 (Reuters) – Trading in the dollar and euro was volatile on Tuesday, with the two currencies trading below their session highs as investors tried to interpret reports that stray Russian missiles may have hit NATO member Poland, killing two people. people.
The euro had fallen sharply against the safe-haven dollar as stocks pared gains after reports on Poland fueled fears that the nine-month war between Russia and Ukraine could escalate.
Firefighters said two people were killed in an explosion in Przewodow, a village in eastern Poland near the border with Ukraine, while a NATO official said the alliance was investigating on reports that the explosion came from Russian missiles.
But the Russian Defense Ministry said that “no strikes on targets near the Ukraine-Poland border were carried out by Russian means of destruction”.
Meanwhile, the Pentagon said it could not confirm the information and the White House said it was working with the Polish government to gather information.
“The market is particularly sensitive now that Ukraine has taken back more territory than Russia captured after the war began,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.
The euro last rose 0.38% to $1.0364 after falling 0.44% following reports from Poland. The dollar index, which measures the greenback against a basket of major currencies, last fell 0.23% after rising 0.42% after reports on Poland.
News of the blasts had overshadowed the euro’s earlier gains after US economic data suggested lower inflation in the United States.
The U.S. producer price index (PPI) rose 8.0% for the 12 months to October, compared with economists’ expectations of 8.3% and the 8.4% increase in September, according to Labor Department data.
The data, following last week’s weaker-than-expected increase in consumer prices for October, encouraged investors who were watching inflation data closely for signs that the Federal Reserve may be slowing down. its interest rate hikes, which are aimed at mitigating the surge in prices.
“Risk appetite has improved. This tends to weaken the dollar,” said Karl Schamotta, chief market strategist at payments firm Corpay.
“Fed officials will have to see this for several months before pausing the rate hike cycle, but overall price pressures appear to be headed in the right direction,” said the strategist who says the dollar has likely hit a low. peak in September.
Ahead of the US data, the euro, pound and Swedish krona had already risen sharply against the dollar as traders assessed a slew of economic data, including jobs figures from the UK and the UK. euro zone, as well as German economic sentiment.
In Europe, traders were also watching encouraging data such as Germany’s ZEW Economic Sentiment Index, which rose in November.
The data also showed that employment in the single currency area increased in the third quarter.
The dollar index fell earlier in the day to a session low of 105.34, its lowest point since August.
The greenback lost 0.65% against the Japanese yen at 139.025.
The pound rose 0.95% to $1.1870 after rising 2.27% earlier, putting it at a three-month high against the dollar.
This was ahead of a tough UK Government budget plan due to be released later this week and after data showed Britain’s unemployment rate rose unexpectedly and vacancies fell for a fifth consecutive report as employers worried about the economy.
Currency rates at 3:42 p.m. (8:42 p.m. GMT)
Reporting by Sinéad Carew and Herbert Lash in New York, Joice Alves in London; Editing by Andrew Cawthorne, Angus MacSwan, Andrea Ricci and Alex Richardson
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