Ukraine crisis – How it’s impacting the currency market
The brokering of a ceasefire between Russia and Ukraine has finally brought stability to Forex trading markets in the last week, particularly in the Eurozone.
The conflict has significantly slowed the recovery in central Europe, with Germany’s finance minister Wolfgang Schäuble recently announcing that the growth forecast for the country may not attain its predicted target of 1.8 per cent.
This is to be expected in a country only 400 miles from the conflict; fighting has affected business confidence in the powerhouse economy of Europe, and this has had a negative knock-on effect on the price of the Euro.
However, the tenuous peace deal between Russian rebels and the Ukrainian government has helped the Euro advance against the Dollar faster than all other currencies; from previous lows to a price of $1.311565.
Whilst the Euro has since retreated slightly, it is predicted to remain stable as well as strong against Stirling due to jitters over the question of Scottish independence. Although stability has returned as a result of the peace deal, the markets remain dovish, with the Central European Bank refusing to take any strong action as a result of developments.
This is to be expected, as although the agreement has held for the last few days, there have been reports of fresh shelling near Donetsk. For this reason, traders are likely to be cautious due to the fragile nature of the situation in the Crimea. However, if there are any further developments to help both sides come to a lasting agreement there is cause for optimism, particularly in the Eurozone.
