Title: Dollar Hits Fresh 20-Year High; Euro Near Parity
Jul 12, 2022 02:57AM ET
Global growth concerns, European energy issues, and expectations for more aggressive interest rate hikes by the Federal Reserve have pushed the euro down to near parity, while the dollar rose to a 20-year high at the start of European trading on Tuesday.
At 2:55 AM ET, the dollar index was trading 0.4% higher at 108.225, tracking the greenback against a basket of six other currencies.
The dollar has surged this year as the Federal Reserve has proven to be one of the most aggressively tightening central banks to curb soaring inflation.
The Fed raised interest rates by 75 basis points in June, the largest increase since 1994. The consumer price index for June, to be released on Wednesday, is expected to rise at an annual rate of 8.8%, signaling an even bigger rate hike.
The single currency has been hit by fears of a possible energy supply shortage in the region, as Nord Stream 1, the largest single pipeline carrying Russian gas to Germany, begins annual maintenance on Monday and is expected to stop flowing for 10 days.
French Finance Minister Bruno Lemaire said Monday that Europe must prepare for a complete shutdown of Russian gas supplies, and many fear that Russia will take the opportunity to halt or significantly cut exports.
Attention now turns to Germany's July ZEW business climate index, to be released later in the session, which is expected to weaken significantly as growth slows in Europe's major economies.
The risk-sensitive AUD/USD fell to 0.6729, slightly above the two-year low hit on Monday, while USD/Yuan gained 0.2% to 6.7304, as the yuan was weighed down by another COVID outbreak in China.