The euro fell on Tuesday to its lowest level against the US dollar since 2002, in the wake of economic data pointing to a growing risk of recession in the eurozone. The single European currency fell nearly 1% and traded at $1.03 per euro, its lowest level since late 2002.
(Also read: UK investigates hacking of army accounts on Twitter and YouTube)
The uncertainty of the war in Ukraine and the Russian gas supply problems it has spawned weigh heavily on the European currency. The dollar is further boosted by a more aggressive monetary policy by the US Federal Reserve (Fed).
In this way, the euro is close to parity with the dollar for the first time since its creation in 1999. “Growing fears of a recession make the euro fall, while the dollar rises on bets that the Fed will maintain its interest rate hikes.” rates aggressively to curb inflation,” City Index expert Fiona Cincotta told AFP.
And “PMI (Composite Purchasing Managers’ Index) data released in Europe highlighted the risk of a slowdown in growth at the end of the second quarter,” it added.
The growth of economic activity in the eurozone slowed down sharply in June in the private sector to its lowest level in 16 months, according to the S&P Global Composite PMI. “This is a sign that economies are starting to really feel the pinch of inflation,” OFX analysts said.
As a result, the indicator caused the euro to sink further than in 2016, when the European debt crisis and then the Brexit vote raised fears that the European Union would blow up.
major risk
Inflation will remain high for the time being. Energy prices continued to rise due to a strike in Norway, which limits hydrocarbon production.
“The strong increases in the price of gas and electricity make running a risk significant chance that the EU economy slips into recession sooner than expected,” Trevor Sikorski, an analyst at Energy Aspects, said in a report.
Since the beginning of the year, the price of the Dutch TTF, the benchmark for natural gas in Europe, has risen by almost 150%, reaching 176.01 euros per megawatt hour on Tuesday. Before the Russian invasion of Ukraine on February 24, it was below 100 euros per megawatt hour.
The European Central Bank (ECB) has little room for maneuver as a rise in interest rates could make some countries’ debt too heavy.
In this context, any increase in the euro should be considered “as a short-term rebound”, warned Fawad Razaqzada, an analyst at StoneX, who fears that without a major change in the Ukrainian front or in that of the ECB, the euro will continue to lose land. Since the beginning of the year the euro has lost 9.4% against the dollar Biden close to reducing tariffs on China to combat inflation
AFP
More news
Shooting in a shopping center in Denmark: terrorist act ruled out
NATO shields itself to face Russia and begins to look at China
#euro #falls #lowest #dollar