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The euro has fallen below two decades due to fears of a recession

The euro has fallen below two decades due to fears of a recession
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  • Euro is at its lowest level since the end of 2002
  • The dollar has risen in demand for safe haven
  • The yen sank again near the 24-year low

NEW YORK, July 5 (Reuters) – Demand for safe havens strengthened the dollar to its most recent level in 2002, and the euro plunged to its lowest level in two decades as the latest rise in European gas prices worries.

The dollar index rose 1.6% at one point and the euro fell 1.75% as seen in late 2002. This was the biggest one-day fall for the euro and the biggest one-day gain for the dollar since the COVID-19 spread. Market in March 2020.

Other currencies also declined as stocks declined in Europe and initially on Wall Street amid fears of a recession. The Japanese yen was again near a 24-year low, the Canadian dollar fell to a near 19-month low, and Norway’s crown fell more than 2% as gas workers went on strike, adding to European growth concerns. Read more

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In both Europe and the UK, the risk of a recession in Europe has risen after a big 17% jump in natural gas prices that will push inflation even higher. Read more

Joachim Nagel, head of the German Bundesbank, on Monday expressed concern over how the European Central Bank would react to hurt feelings after hitting the ECB’s plan to protect high-debt countries from rising lending rates. Read more

Bipon Rai, North America head of FX strategy at CIBC Capital Markets in Toronto, said the market is in a risk-off mood due to the energy crisis in Europe.

“The threat of a recession in the euro zone is now a more obvious risk than ever before,” Rye said.

Traders told Reuters a large dollar order in London’s first trade that triggered a chain reaction and accelerated the euro’s fall as it fell to its 2017 low of 0 1.0236.

The euro has fallen to its lowest level against the Swiss franc due to heavy volatility since the Swiss National Bank lifted its currency cap in 2015. It also fell against Sterling, although the pound’s own economic and political concerns kept it below $ 1.20 again.

Nomura Securities says the fall of the euro is just a warning sign of what could happen if Russian gas shuts down in Germany later this month, a move that could lead the currency to breach parity and fall to 0. 0.98 in August, Nomura Securities said.

“We have a central bank that is a gazelle mile behind the curve and seems more concerned about growth than inflation,” said Axel Mark, president of Mark Investments, California’s Palo Alto and chief investment officer of the ECB.

“(ECB President Christine) None of the central bankers, including Lagarde, would say that something could go wrong with their approach.”

Mark Chandler, chief market strategist at Bancburn Global Forex, said as the euro approached its two-decade low, volatility increased and trading on options increased.

“Whether it’s going to play for the bad side like a speculative move or whether it’s a hedge against the long euro, I can’t tell you,” Chandler said.

Sterling fell to a two-year low against the dollar on Tuesday amid a crisis in the government of British Prime Minister Boris Johnson, amid fears of a recession and pressure on a currency suffering from a resurgent greenback. By 1930 GMT it was trading 1.25% lower at 19 1,195 GBP = D3. Read more

The Australian dollar has fallen despite the country’s first recurring, 50-basis point interest rate hike in recent memory overnight, cementing the fastest rate there since 1994. Read more

Aussie fell 1.4% to $ 0.677, after trading as high as $ 0.6895 at the start of the day. This year it has now dropped by about 7%.

The strength of the dollar pushed the yen to a 24-year low, just before some fall. It was last up to 5 135,705.

Eastern Europe was also feeling the heat because its countries are the most dependent on Russian gas. The MSCI’s main EM FX index has touched its lowest level since November 2020. Euro-linked currencies such as the Hungarian Forint, Polish Zloty and Romanian Liu have fallen 1.6-2.3% against the dollar.

3:51 PM (1951 GMT) Currency bid price

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Additional reporting by Herbert Lash, Sinad Kearu of New York, Mark Jones of London, Danilo Masoni of Milan and Shruti Shankar; Edited by Bernadette Baum, Angus Maxwan, Deepa Babington and Mark Henrik

Our value: Thomson Reuters Trust Policy.

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