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Euro falls to 20-year low, approaches parity with dollar – SABC News

The euro fell after a 20-year low and came closer to parity against the dollar on Monday on concerns that a energy crisis will tip the region into a recession, while the U.S. currency was boosted by expectations that the The Federal Reserve will raise rates faster and beyond as peers.

The largest single pipeline transporting Russian gas to Germany, the Nord Stream 1 pipeline, began annual maintenance on Monday, with streams expected to stop for 10 days.

Governments, markets and companies are worried that the shutdown could be extended due to the war in Ukraine.

“The most proximal concern for markets is whether or not Nord Stream 1 returns online,” said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto, adding that “the markets are likely to price in a recession” for the region if it does not.

The euro fell as low as $ 1.0045 against the US dollar, the weakest since December 2002.

The dollar index reached 108.19, the highest since October 2002.

The US currency has won on expectations that the Fed will continue to increase aggressive rates as it tackles increasing inflation.

“The Fed will increase rates more aggressively than most other developed central bank banks and we do not think other developed market central banks really have the bandwidth to keep up,” Rai said.

The Fed is expected to raise rates by 75 basis points at its July 26-27 meeting. Fed-funded futures traders praise for their benchmark rates to rise to 3.50% by March, from 1.58% now.

U.S. consumers see inflation continue to rise in the coming year, but expect a more moderate pace over the longer term in a signal that inflation expectations remain reasonably anchored, a New York Fed survey released on Monday.

Consumer price data to be expected on Wednesday are the US main economic focus this week.

Economists polled by Reuters expect the index to show that consumer prices rose in June with an annual rate of 8.8%.

The Australian dollar was the worst performer of the day, falling after a two-year low on fears of global growth.

Several Chinese cities have adopted fresh COVID-19 curbs, from downtime to lockdowns, to curb new infections, which could create new delivery disruptions.

The Aussie fell as low as $ 0.6716, the weakest since June 2020.

In the cryptocurrency market, bitcoin fell 1.62% to $ 20,519.

Euro falls to 20-year low, approaches parity with dollar – SABC News

Source link Euro falls to 20-year low, approaches parity with dollar – SABC News

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