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Euro slips as Ukraine tensions ease

The euro softened on Monday (Aug 18) after a Berlin meeting between the foreign ministers of Ukraine and Russia helped lower market worries, even if it did not resolve tensions between the two.

NEW YORK: The euro softened on Monday (Aug 18) after a Berlin meeting between the foreign ministers of Ukraine and Russia helped lower market worries, even if it did not resolve tensions between the two.

Traders had fled higher-risk currencies to safe havens on Friday after Ukraine said it had destroyed some Russian armoured cars, sparking fears of an escalation. But Russia dismissed the claim.

Then, five hours of talks late Sunday that also involved the foreign ministers of Germany and France concluded with an agreement for the sides to meet again and continue trying to de-escalate the worst East-West crisis since the Cold War.

The dollar pushed higher against the euro Monday, to US$1.3363 (S$1.664) per euro, in the range it traded last week before the Ukraine situation heated up.

The pound meanwhile won support from comments over the weekend from Bank of England governor Mark Carney that improving wage growth was not a prerequisite for increasing interest rates.

"Carney shows a greater willingness to normalise monetary policy sooner rather than later," said David Song of DailyFX, while adding that any plan will be contingent on the strength of inflation.

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