FOREX-Euro holds one-month high against dollar on Ukraine rally

FOREX-Euro holds one-month high against dollar on Ukraine rally

HONG KONG Reuters -- The euro held a one-month high against the dollar on Thursday after a rally on hopes that the war in Ukraine might be going on in a new de-escalating phase, while the yen was set for its worst month since November 2016.

The European single currency was at $1.1175, its highest point in a month, having gained 1.7% so far this week.

Carol Kong, FX strategist at Commonwealth Bank of Australia, said the euro has been one of the biggest winners over the past sessions and is part of the positive news about the Russia Ukraine tensions.

Kong said that continued euro gains would be dependent on further developments in Ukraine.

At peace talks this week in Istanbul, Russia said it would curtail operations near Kyiv and the northern city of Chernihiv to build trust, though Ukraine and its Western allies dismissed Russia's pledge as a ploy to stem losses and prepare for other attacks.

The Ukrainian forces are preparing for new Russian attacks in the east of the country, President Volodymyr Zelenskiy said on Thursday.

The dollar index fell to 97.681 overnight, its lowest level in three weeks, due to the euro's gains as well as a brief recovery for the Japanese yen and strength for commodity currencies like the Canadian dollar.

It was at 97.778 on Thursday morning.

The yen fell to 122.45 yen on Thursday, with the dollar climbing 0.5% to as high as 122.45 yen.

The Japanese currency has fallen sharply this month, dropping to its lowest since November 2015 on Monday, before recovering slightly over the next few days.

Intervention by the Bank of Japan to prevent government bond yields rising too high has reinforced the contrast with rising rates in the United States, which has caused the yen to decline.

It is set to have its worst month since November 2016.

CBA's Kong said that Thursday's moves in Japanese assets are likely to be choppy, as it is the end of the fiscal year.

The pound was relatively steady at $1.3143, and the Aussie dollar was at $0.7509 holding the month's 3.3% gains, but struggling to climb higher.

In the last week, it was $47,240, not too far off its year-to-date peak of $48,234 hit earlier this week.