The euro falls to its lowest level in 20 years and approaches parity with the dollar

NEW YORK, July 11 (Reuters) – The euro fell to its lowest level in 20 years and edged closer to parity with the dollar on Monday on fears an energy crisis could tip the region into recession, while the US currency was boosted by expectations. that the Federal Reserve will raise rates faster and further than its peers.

The largest pipeline carrying Russian gas to Germany, the Nord Stream 1 pipeline, began its annual maintenance on Monday, with flows expected to stop for 10 days, but governments, markets and businesses fear the closure is extended due to the war in Ukraine. . Read more

“The most immediate concern for markets is whether or not Nord Stream 1 will come back online,” said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto, adding that “markets will assess probably a recession.” for the region if this is not the case.

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The euro fell 1.29% to $1.0056 against the US dollar, the weakest since December 2002.

The dollar gained 1% against a basket of six major currencies, hitting 108.14, the strongest since October 2002.

The US currency gained on expectations that the Fed will continue to aggressively raise rates as it tackles soaring inflation.

“The Fed is going to raise rates more aggressively than most other developed market central banks and we don’t think other developed market central banks really have the bandwidth to follow,” Rai said.

The Fed is expected to raise rates by 75 basis points at its July 26-27 meeting. Fed funds futures traders expect their benchmark rates to rise to 3.49% by March from 1.58% currently. ,

Consumer price data due on Wednesday is the main US economic focus this week. Economists polled by Reuters expect the index to show consumer prices rose at an annual rate of 8.8% in June. (USCPNY=ECI)

The Australian dollar fell to its lowest level in two years as several Chinese cities adopted new COVID-19 restrictions, from business shutdowns to closures, to curb new infections, raising concerns about global growth. Read more

The Aussie fell 1.93% to $0.6724, the lowest since June 2020.

In the cryptocurrency market, Bitcoin fell 1.88% to $20,458.

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Currency rates at 9:38 a.m. (1:38 p.m. GMT)

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Additional reporting by Saikat Chatterjee and Dhara Ranasinghe in London Editing by Tomasz Janowski

Our standards: The Thomson Reuters Trust Principles.

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