The euro falls below parity with the dollar

The euro falls below parity with the dollar

Fears that gas flows through the pipeline may not resume after scheduled maintenance comes to an end on Saturday has kept operators on their toes. Uncertainty sent the euro down 0.4% to $0.9976.

Meanwhile, inflation in the euro zone reached a record high again in August, exceeding expectations and consolidating the arguments in favor of new rate hikes by the European Central Bank (ECB).

A growing number of ECB officials are calling for broader interest rate hikes to combat rising inflation, which could top 10% in the coming months.

Money markets take a 50 basis point rate hike by the ECB for granted, with a greater than 60% chance of a higher than 75 basis point hikeaccording to Refinitiv data.

The dollar index, which measures the greenback’s performance against a basket of six currencies, rose 0.3% to 109.10, near a two-decade high hit on Monday at 109.48. The index is headed for its third consecutive month of gains, having risen more than 3% in August.

Market attention is focused on US Non-Farm Payrolls data due out on Friday, and Tuesday’s job openings data could herald a good outcome in the week-end report, which would reinforce the case for more aggressive rate hikes.

Federal Reserve officials on Tuesday reiterated their support for further rate hikes to rein in inflation.and New York Fed chief John Williams told the Wall Street Journal that “it will be some time” before interest rates are cut.

According to Refinitiv data, traders are pricing in a 70% chance that the Fed will raise interest rates by 75 basis points next month.

Source: Ambito

Leave a Reply

Your email address will not be published. Required fields are marked *

Latest Posts