Title: Dollar Edges Lower; Remains Near 20-Year High on Safe Haven Flows

Jul 06, 2022 03:14AM ET

By: AnalysisWatch

The U.S. dollar edged lower in early European trading Wednesday, but remained near a 20-year high as traders sought this safe haven amid renewed recession fears, rising gas prices and political uncertainty in Britain.

At 2:55 AM ET, the dollar index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 106.285, just below its 20-year high of 106.57.

EUR/USD fell 0.1% to 1.0260, marginally above its low of 1.0236, the weakest since late 2002, after S&P GIobal's purchasing managers' index for the common currency bloc hit its lowest level in 16 months, pointing to an impending recession.

Fears of gas rationing in Europe as Russia threatens further supply cuts added to the negative sentiment.

German and French power prices for next year are at record highs as regulators try to ensure enough gas is bought for storage as winter approaches.

GBP/USD fell 0.3% to 1.1923, near a two-year low, as Prime Minister Boris Johnson was under intense pressure following the resignation of two senior ministers on Tuesday, both of whom said he was unfit to govern.

The USD/JPY fell 0.6% to 135.04, with the Japanese yen, another safe haven, in demand, while the risk-sensitive AUD/USD fell 0.3% to 0.6780, under pressure on concerns about the global economy.

The release of the minutes from the latest Federal Reserve meeting will be of particular interest later in the session, as the Fed raised interest rates by 75 basis points at the meeting, the largest hike since 1994.