Title: Dollar Edges Higher; Euro Slips Ahead of Lagarde Comments
Jun 29, 2022 02:56AM ET
The US dollar edged higher in early European trade on Wednesday as traders sought refuge in the safe haven amid lingering fears of a global economic slowdown.
At 02:55 AM ET (0655 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was trading 0.1% higher at 104.410, after rising about 0.5% overnight.
The dollar gained on Tuesday after US consumer confidence fell to a 16-month low in June on fears that high inflation could significantly slow the US economy in the second half of the year.
The dollar's strength was reinforced by weakness in the euro after European Central Bank chief Christine Lagarde offered no new insights on the path of European interest rates or the composition of the new anti-fragmentation tool at the central bank's annual forum.
EUR/USD fell 0.3% to 1.0490, a level not seen in almost two weeks, after Germany's most populous state, North Rhine-Westphalia, announced that consumer prices fell 0.1% in June from the previous month, bringing the annual inflation rate down to 7.5% from 8.1%.
Morgan Stanley now expects the eurozone to fall into a mild recession in the fourth quarter of this year and contract for two quarters before resuming growth in the second quarter of next year, driven by a surge in investment.
European Central Bank President Christine Lagarde will take part in a panel discussion later on Wednesday, along with Federal Reserve Chairman Jerome Powell and Bank of England Governor Andrew Bailey.
Lagarde is expected to comment on how seriously the ECB is considering a 50 basis point rate hike in September, given recent economic surveys pointing to a rapid deterioration in the eurozone.
USD/CNY traded broadly unchanged at 6.7074, with the yuan experiencing some demand after China announced an easing of quarantine rules for inbound passengers, which could be seen as the biggest relaxation yet of the country's "zero COVID" strategy.
GBP/USD rose slightly to 1.2187, USD/JPY fell 0.1% to 136.04, while risk-sensitive AUD/USD fell 0.4% to 0.6882.