Dollar Up While Euro Still Feels Effect of Ukraine Conflict By

By Gina Lee

Investing.com – The dollar was up on Friday morning in Asia, hitting a new five-year high on the yen after a U.S. inflation report showed the largest annual increase in 40 years. The euro struggled to hold its own, with a from the European Central Bank (ECB) offset by growth risks from the Russian invasion of Ukraine.

The that tracks the greenback against a basket of other currencies inched up 0.02% to 98.520 by 10:43 PM ET (3:43 AM GMT).

The pair was up 0.29% to 116.47, with the dollar gaining 1.3% on the yen this week.

The pair was down 0.23% to 0.7340 and the pair edged down 0.15% to 0.6852. New Zealand’s was 53.6 in February.

The pair inched up 0.05% to 6.3248 and the pair inched up 0.04% to 1.3089.

The U.S. report, released on Thursday, showed that the consumer price index (CPI) grew 7.9% and 0.8% in February. The core CPI grew 0.5% and 6.4% .

The CPI data “basically indicates that the U.S. Federal Reserve should be hiking rates this month, but it also indicates that they will keep going with interest rate hikes, at least initially,” National Bank of Australia currency strategist Rodrigo Catrill told Reuters.

The and the will both hand down policy decisions in the following week. While the Fed is widely expected to hike interest rates, its Japanese counterpart is choosing to maintain a more dovish stance.

Both the pound and euro have felt the impact of the conflict in Ukraine and the resultant surge in commodity pieces.

The euro last traded at $1.1010, after a volatile Thursday that saw it finish 0.8% lower.

“The more hawkish message from the ECB had a temporary upward pressure on the euro but it was very short-lived which tells you that other dynamics are overriding any considerations about what the ECB might do, including news coming from Ukraine,” said Catrill.

He was referring to the ECB’s , handed down on Thursday, which kept the interest rate steady at 0% but said that the central bank will phase out its stimulus in the third quarter. The decision also leaves the possibility of an interest rate hike before the end of 2022 open.

The ECB also modestly downgraded its growth forecasts for both 2022 and 2023, while ramping up inflation expectations. ECB President Christine Lagarde also called the conflict in Ukraine a “watershed for Europe” that would boost inflation but curb economic growth.

Meanwhile, talks between Ukrainian foreign minister Dmytro Kuleba and his Russian counterpart Sergey Lavrov on Thursday made disappointingly little progress towards ending the conflict.