Dollar higher on risk aversion; euro revisits parity


  • Euro under pressure as Russia halts gas supplies
  • Yuan dips to nearly 2-year low as PBOC eases policy again

NEW YORK, Aug. 22 (Reuters) – The US dollar rose across the board on Monday, pushing the euro briefly back below par as investors shy away from riskier assets amid growing fears that interest rate hikes in the United States and Europe are targeting would be on in cutting inflation, the world economy would weaken.

Against a basket of currencies, the dollar was 0.5% higher at 108.71, not far from its two-decade high of 109.29 reached in mid-July.

The greenback found support in recent sessions as several Federal Reserve officials reiterated aggressive monetary tightening this week ahead of the Fed’s symposium in Jackson Hole, Wyoming, this week.

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The last of these officials, Thomas Barkin, president of the Richmond Fed, said Friday the “urge” among central bankers was toward faster, frontal rate hikes. read more

“It’s a risk of being taken off the table after the market got a reality check from last week’s Fed speakers that an impending dovish pivot of the map is on,” said Michael Brown, head of market intelligence at Caxton in London.

With investors now clearly anticipating a relatively hawkish message from Fed Chair (Jerome) Powell at Jackson Hole on Friday, it’s a perfect cocktail of risk aversion and an aggressive Fed for a higher dollar rate, especially when growth is concerned. especially in Europe.” , continue assembling,” Brown said.

The euro fell after Russia’s announcement late this month of a three-day shutdown of European gas supplies through the Nord Stream 1 pipeline at the end of this month. Investors worry that the shutdown could exacerbate an energy crisis that has weighed on the single currency in recent months. read more

The European Central Bank must continue to raise interest rates even as a recession in Germany becomes increasingly likely, as inflation will remain uncomfortably high until 2023, Bundesbank president Joachim Nagel told a German newspaper.

The weakness caused the euro to dip below $1 for the first time since July 14. The euro last fell 0.7% to $0.99715.

“0.9950 seems to be the crucial level as that is the previous low, if that admits we could see significant further losses, especially as the ECB’s window to tighten policy is closing fast,” said Brown.

The Chinese yuan fell to its lowest point in nearly two years after the country’s central bank cut lending rates and cut the mortgage reference by a wider margin on Monday, adding to last week’s easing measures as Beijing ramps up its efforts to revive an economy hampered by a property crisis and a resurgence in COVID-19 cases. read more

Against the offshore yuan, the dollar was 0.55% higher at 6.8621.

Sterling fell to its lowest point since mid-July against the dollar on Monday as rising energy costs and a summer of strikes highlighted Britain’s cost of living crisis and exacerbated fears of a further economic slowdown. read more

The pound last fell 0.43% to $1.1781, in a snap after breaking from the nearly 2-1/2 year low of 1.1761 reached in mid-July.

In cryptocurrencies, bitcoin was down about 0.92% at $21,316, weighed down by the broad risk aversion in markets.

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Reporting by Saqib Iqbal Ahmed; adaptation by Jonathan Oatis

Our Standards: The Thomson Reuters Trust Principles.

The Valley Voice
The Valley Voice
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.


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