Euro drops to 20-year low, approaches parity with dollar

The biggest single pipeline carrying Russian gas to Germany, the Nord Stream 1 pipeline, began annual maintenance on Monday, with flows expected to stop for 10 days, but governments, markets and companies are worried the shutdown might be extended because of the war in Ukraine.

“The most proximate concern for markets is whether or not Nord Stream 1 is going to come back online,” said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto, adding that “the markets will likely price in a recession” for the region if it doesn’t.

The euro tumbled 1.29% to $1.0056 against the U.S. dollar, the weakest since December 2002.

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

The U.S. currency has 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 keep up,” Rai said.

The Fed is expected to lift rates by 75 basis points at its July 26-27 meeting. Fed funds futures traders are pricing for its benchmark rates to rise to 3.49% by March, from 1.58% now.< USONFFE=>

Consumer price data due on Wednesday is this week’s major U.S. economic focus. Economists polled by Reuters expect the index to show that consumer prices rose by an annual rate of 8.8% in June.

The Australian dollar fell to a two-year low as multiple Chinese cities adopted fresh COVID-19 curbs, from business halts to lockdowns, to rein in new infections, raising concerns about global growth.

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 bid prices at 9:38AM (1338 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 108.1400 107.0800 +1.00% 13.043% +108.1700 +107.0700

Euro/Dollar $1.0056 $1.0186 -1.29% -11.55% +$1.0183 +$1.0055

Dollar/Yen 137.5950 136.1250 +1.11% +19.56% +137.7450 +135.9850

Euro/Yen 138.38 138.56 -0.13% +6.18% +139.1600 +138.2500

Dollar/Swiss 0.9834 0.9766 +0.70% +7.81% +0.9842 +0.9738

Sterling/Dollar $1.1888 $1.2032 -1.18% -12.08% +$1.2036 +$1.1885

Dollar/Canadian 1.3031 1.2939 +0.71% +3.06% +1.3035 +1.2945

Aussie/Dollar $0.6724 $0.6856 -1.93% -7.50% +$0.6857 +$0.6717

Euro/Swiss 0.9889 0.9943 -0.54% -4.63% +0.9949 +0.9885

Euro/Sterling 0.8458 0.8460 -0.02% +0.68% +0.8473 +0.8447

NZ $0.6102 $0.6184 -1.38% -10.90% +$0.6192 +$0.6098

Dollar/Dollar

Dollar/Norway 10.2350 10.0990 +1.33% +16.16% +10.2430 +10.1225

Euro/Norway 10.2927 10.2836 +0.09% +2.79% +10.3261 +10.2587

Dollar/Sweden 10.6411 10.5083 -0.03% +18.00% +10.6473 +10.4768

Euro/Sweden 10.7017 10.7050 -0.03% +4.57% +10.7381 +10.6915

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