Dollar rules as recession fears drag euro to 20-year low, pound under fire





The dollar stood tall on Wednesday, holding at a 20-year peak against the and multi-month highs against other major peers as higher gas prices and political uncertainty renewed recession fears and sent investors scrambling to the safe-haven currency.


The was at $1.0262, only a fraction above its overnight low of $1.0236, its weakest since late 2002.


Sterling was also trading down slightly at $1.1965 just off its 18-month intraday low hit overnight, and the Aussie dollar was under pressure at $0.6816.


“There’s no investment case to be long right here, right now. No one’s buying euros other than just as a trade,” said Chris Weston, head of research at Melbourne-based brokerage Pepperstone. He pointed to a 100% rally in European gas prices in the last 16 days which he said had left the European Central Bank with a brutal juggling act.


“You’ve got high inflation which they need to raise rates towards but you’ve got a trade deficit in Germany now, and falling growth. It’s not even a matter of recession, it’s a question of how deep that recession gets and how prolonged,” he said.


Traders told Reuters of a major dollar order in early London trading that sparked a chain reaction and sped the euro’s drop as it broke through its 2017 low.


The euro’s tumble, allied with declines in commodity currencies due to lower oil prices, left the dollar index at 106.46, just off its own overnight 20-year peak.


The euro’s drop against the was much more muted however, slipping just 0.2% on Tuesday, as sterling was hit by fresh political turmoil. Prime Minister Boris Johnson’s premiership tottered on the brink after the resignations of two senior UK cabinet ministers – finance minister Rishi Sunak and health secretary Sajid Javid – over his leadership.In contrast the recently-under-fire Japanese yen gained a little support from some safety bids, with the dollar dropping 0.2% to 135.5 yen.


“So far the yen is the currency of choice as it sucks in the obligatory safe-haven flows,” said Matt Simpson, a senior market analyst at City Index.


“Yet momentum remains low relative to moves overnight, suggesting traders are erring on the side of caution without venturing into panic mode – on hopes that the dire data from Europe doesn’t lead to contagion,” he added.


Bitcoin managed to sit out the turmoil, still hovering around the $20,000 level from which it has been unable to break significantly in either direction for the past month.


(Reporting by Rae Wee in Singapore and Alun John in Hong Kong; Editing by Sonali Desai)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor





Source link

Comments are closed.