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Euro falls below dollar again due to further Fed rate hike

Date: October 2, 2022 Time: 20:09:20

The euro falls back below the mark dollar to disgust Risk has investors taking refuge in dollars and speculation that the Federal Reserve (Fed) will be even more aggressive and raise its interest rates by a large amount. The euro traded at $0.9988 around 1500 GMT against $1.0066 in European forex trading the day before. European Central Bank (ECB) set the base rate of the euro at $1.0005.

Rising inflation in US in June up 9.1% year on yearthe highest since 1981 (8.6% in May), fueled speculation that the Federal Reserve (Fed) will more aggressively restrict its monetary policy through growth. markets no longer took into account the growth of 75 points in July and are now speculating on an even higher 100 basis point gain. For several months now, the aggressive and rapid growth of interest rates in The US strengthens the dollar and weakens the euro whose decline has accelerated in recent weeks. The euro is also weakened by fears about gas supplies from Russia to Germany and the possibility of the economy entering a recession.

The Russian gas consortium Gazprom said on Wednesday that it currently cannot guarantee the safe operation of the Nord Stream gas pipeline, which transports Russian gas to Germany below the Baltic Sea, due to doubts over the turbine left in Canada, of which there is no record of its return. “The dollar is still overvalued, if you take into account the theory of purchasing power parity, double current account deficit fiscal, etc.,” says Miguel Useda, Investment Director at Welzia Management.

Weak euro matters inflation due to the purchase of energy assets they are in dollars and therefore imports of products in dollars are much more expensive. By paying more for imported products in dollars, the rise in prices is further increased. On the other hand, export goods and services from the eurozone to the US. “Great political instability in Italy could very well be the straw that breaks the camel’s (parity) back,” Monex Europe analysts commented. The Five Star Movement (M5S), one of the main parties in Italy’s government coalition, today abstained from a vote of confidence in Prime Minister Mario Draghi in the Senate, opening a government crisis in the country. the single currency was exchanged in a range of fluctuations from $0.9950 to $1.0051.



Source: www.lainformacion.com

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