Euro hits weakest level to Dollar
JOHANNESBURG – The Euro sank to a two-decade low versus the Dollar yesterday, as another surge in natural gas prices reignited worries about the health of the Eurozone economy, and data showed Eurozone business growth slowed sharply in June.
The Euro tumbled 0.9 per cent against the Dollar, to US$1.0325, its weakest since December, 2002. Against the Swiss franc, it dropped 0.7 per cent to Sf0.9941, its lowest since 2015.
“It will continue to be very difficult for the Euro to rally in any meaningful way with the energy picture worsening and risks to economic growth increasing notably,” said Derek Halpenny, an analyst at MUFG.
Survey data showed business growth across the Eurozone slowed further in June and forward-looking indicators suggested the region could slip into decline this quarter as the cost of living crisis keeps consumers wary. The Dollar index gained 0.8 per cent to 105.98, a new two-decade high for the currency.
Elsewhere, stock markets gave up early gains yesterday, as the latest surge in natural gas prices rattled sentiment, offsetting earlier optimism about signs of easing US-China trade tensions.
Australia’s central bank became the latest to extend its interest rate tightening cycle, hiking by a second straight 50 basis points, although the Australian Dollar fell 0.8 per cent as investors interpreted the bank’s accompanying messaging to be more dovish than expected.
With US markets closed on Monday, trading was expected to be livelier yesterday and Wall Street reversed early gains and headed lower by 8:25am GMT .
Offering brief respite to nervous markets was a report that United States (US) President Joe Biden was leaning towards a decision on easing tariffs on goods from China as well as news that Chinese Vice-Premier Liu He had spoken to US Treasury Secretary Janet Yellen.
Pace
A survey showing China’s services activity grew at the fastest pace in almost a year also helped sentiment.
But as European trading picked up, the Euro Stoxx reversed course and was last down 0.43 per cent while Germany’s DAX fell 0.6 per cent. The FTSE 100 dropped 1.05 per cent.
In Asia, MSCI’s gauge of Asia Pacific stocks outside Japan rose 0.17 per cent. Yesterday offers little in the way of key economic data but later this week, both the US Federal Reserve and European Central Bank will release their minutes from recent policy meetings, and on Friday, widely watched US payrolls data will be published.