FXStreet (Córdoba) - Lutz Karpowitz, analyst at Commerzbank, thinks that if economic tensions between Russia and the western world escalate further, this would have an increasing effect on the FX market.

Key Quotes

“Should economic tensions between Russia and the western world escalate further, this would have an increasing effect on the FX market too”.

“The USD will profit in relation to the EUR as the USA would be much less affected economically”.

“One victim would be the euro, which would be likely to fall against the dollar; Europe’s
trading connections with Russia are much tighter than the USA’s. Germany in particular is reliant on substantial energy supplies from Russia. Consequently, a trade war with Russia would hit the European economy much harder than the USA, especially as much stronger third-market effects would be likely for the euro zone. Indeed, should Russia slide into serious recession, many Eastern European trading partners would be affected. What’s more, European firms deliver much more goods than their US competitors to these countries”.

“The biggest loser will be the rouble; the sanctions issued by Russia itself will also harm the country’s own currency”.

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