The euro is on track for its worst quarter against the dollar since the end of 2016, with a quarterly drop of 6%. At 1057 GMT, it was down 0.36% against the US currency at $1.0404.
It also fell to a new 7 1/2-year low against the Swiss franc at CHF0.9964 as the Swiss currency still benefits from the Swiss National Bank’s surprise rate hike two weeks ago. The euro was later up 0.08% at 0.9979 francs.
Gloomy new economic data from the euro zone showed French inflation rose to a record 6.5% in June, while Greece cut its growth forecast to 3.2% this year from 3.8%.
Unemployment in the euro zone fell to a record low in May as the economy continued to recover from the COVID-19 pandemic, although inflation exacerbated by Russia’s invasion of Ukraine is expected to dampen growth.
A US recession in the next 12 months is “more likely than not,” said PIMCO’s global chief investment officer for fixed income Andrew Balls.
The ECB is expected to raise interest rates in July for the first time in a decade to try to cool inflation, although economists are divided on the size of any hike.
Christine Lagarde and US Federal Reserve Chairman Jerome Powell spoke at the ECB’s annual conference in Sintra, Portugal on Wednesday, saying it was important to bring down inflation, even if it meant economic pain.
The dollar hit a two-week high against a basket of currencies, with the index up 0.3% at 105.37.
The dollar was trading at 136.4 yen, just below a 24-year high hit at 137 yen on Wednesday, as policy divergence between the Federal Reserve and the Bank of Japan continued to weigh on the Japanese currency.
Bitcoin fell back below the symbolic level of $20,000 due to persistent market tensions.
Source: Ambito
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