The Euro fell by -0.45% against the US Dollar on Friday as investors grew nervous ahead of an independence referendum in Eastern Ukraine due to be held on Sunday.
Tensions increased after the self proclaimed ‘Donetsk Peoples Republic’ vowed to go ahead with holding an independence referendum over the weekend despite appeals by Russian President Vladimir Putin to delay it.
The decision to press ahead with the vote escalated the crisis and makes a further break up of Ukraine a very real prospect. Potentially an extra 10,000 square miles of territory could be lost to pro-Russians, adding to the annexation of the Crimea earlier in the year.
Clashes between Ukrainian and separatist forces continued today with several people reported to have been killed in the eastern town of Mariupol.
The government in Ukraine has vowed to eliminate the rebels and in anticipation of further violence Donetsk has reinforced its defences. Ukraine is on the brink of civil war.
Ukraine also said that it would pay in advance for Russian gas, increasing tensions between the two nations and raised the prospect of gas supplies being cut off to Europe.
Also weighing upon the Euro was the release of data earlier in the session which showed that Germany’s trade surplus narrowed in March. Exports tumbled by 1.8% in March and imports fell by 0.9%. The crisis in Ukraine was being blamed for the weak data.
A report out of Greece also weighed. Data out of the struggling peripheral nation showed that year on year Greek industrial production plummeted by -3.10% and the yearly inflation rate softened by -1.3%.
The Euro is also still experiencing weakness from comments made by ECB President Mario Draghi who said that the Central Bank’s policy makers were comfortable with the idea of introducing new monetary stimulus measures at next month’s policy meeting.
If Sunday’s referendum vote triggers fresh violence we can expect the Euro to weaken further as demand for safe havens such as the US Dollar, Swiss Franc and Japanese Yen will all increase.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.3792 ,
Euro,,British Pound,0.8178 ,
Euro,,Australian Dollar,1.4705 ,
Euro,,Canadian Dollar,1.5041 ,