4.8 C
New York

Euro falls below parity with dollar amid surging inflation


The euro fell below the dollar for the primary time in 20 years before inching back above parity after data on Wednesday showed US consumer price inflation surged to a greater than 40-year high in June.

The one currency plunged to $0.9998 against the greenback on the awful CPI news, breaking below the $1 level for the primary time since December 2002. It bounced back to last trade at $1.0061.

The euro is viewed as having support on the $1 area.

The dollar index reached 108.59, the very best since October 2002, before falling back to 107.95.

The US annual consumer prices jumped 9.1% in June, the most important increase in greater than 4 many years, leaving Americans to dig deeper to pay for gasoline, food, healthcare and rent.

“This morning’s number is staggeringly high. It’s higher than expected and shows that inflation goes quickly within the flawed direction,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.

The euro plunged to $0.9998 against the greenback after the information, breaking below the $1 level for the primary time since December 2002.ZUMAPRESS.com

The euro is being hurt because the region faces an energy crisis sparked by sanctions imposed on Russia attributable to its invasion of Ukraine.

“The sanctions which are attempting to hurt Russia are also hurting the European Union,” said Lou Brien, a market strategist at DRW Trading in Chicago. “They’re in a troublesome time to start with coming out of the pandemic, but this extra layer of trouble also makes the euro less attractive.”

Concerns about Europe’s outlook have increased since the most important single pipeline carrying Russian gas to Germany, Nord Stream 1, began annual maintenance on Monday. Governments, markets and firms are anxious the shutdown is perhaps prolonged due to Ukraine war.

The Federal Reserve can be expected to hike rates further than peers including the European Central Bank.

Euro sculpture in Frankfurt.The ECB is anticipated to boost rates by 25 basis points at its July 21 meeting, the primary increase since 2011.AP

Traders ramped up bets after the inflation print that the US central bank could raise rates by 100 basis points when it meets on July 26-27. A hike of no less than 75 basis points is seen as almost certain.

Atlanta Fed President Raphael Bostic on Wednesday said that the higher-than-expected June inflation might require policymakers to think about a rise of 100 basis points on the meeting.

The ECB is anticipated to boost rates by 25 basis points at its July 21 meeting, the primary increase since 2011.

The euro’s depreciation is unlikely to influence its rate path. The ECB is watching the euro exchange rate due to its impact on inflation but doesn’t goal a particular level, an ECB spokesperson said.

The Canadian loonie gained after the Bank of Canada raised its benchmark rate of interest by a full percentage point, surprising markets with its biggest rake hike since 1998.

The greenback fell 0.39% against the Canadian currency to C$1.2967.

The US dollar gained 0.31% against the Japanese yen to 137.33, after earlier hitting a 24-year high of 137.81.

Within the cryptocurrency market, bitcoin gained 2.43% to $19,791.

Get the latest Sports Updates (Soccer, NBA, NFL, Hockey, Racing, etc.) and Breaking News From the United States, United Kingdom, and all around the world.

Related articles


Recent articles