Downturn fears support dollar, Aussie slumps to two-year low

Author of the article: LONDON — Gathering gloom about prospects for the global economy lifted the safe-haven dollar on Friday and pressured risk-sensitive currencies, with the Australian dollar tumbling to a two-year low. Rampant inflation and a rush by central banks to raise interest rates and stem the flow of cheap money has fueled sell-offs…
Downturn fears support dollar, Aussie slumps to two-year low

Author of the article:

LONDON — Gathering gloom about prospects for the global economy lifted the safe-haven dollar on Friday and pressured risk-sensitive currencies, with the Australian dollar tumbling to a two-year low.

Rampant inflation and a rush by central banks to raise interest rates and stem the flow of cheap money has fueled sell-offs across markets and lifted assets seen as safer bets.

Fresh data on Friday showed euro zone inflation hit another record high in June, while separate statistics showed manufacturing production in the bloc fell for the first time in two years.

The dollar index – which tracks the greenback against six counterparts – is on track for a nearly 1% weekly gain, and was last up 0.3% on the day at 105.060.

“It’s a risk-off start to the second half of the year with equities and commodities down, so the dollar is stronger pretty much across the board,” said Kenneth Broux, an FX strategist at Societe Generale in London. “The Fed is committed to bring inflation under control but can it deliver a soft landing?”

The U.S. Federal Reserve has lifted rates by 150 basis points since March, with half of that coming last month in the central bank’s biggest hike since 1994. The market is betting on another of the same magnitude at the end of this month.

The odds were extremely low that the United States would slide into recession without dragging the rest of the world with it, RBC Capital Markets strategists said in a note.

More risk-sensitive currencies fell across the board. The Australian dollar and New Zealand dollar both fell by more than 1% on the day, with the Aussie tumbling as much as 1.6% to $0.67900, its lowest since June 2020.

The Reserve Bank of Australia decides policy on Thursday, and markets expect a half point hike to its key rate. But that has not helped the Aussie much, which has instead tracked commodity prices lower as the global economic outlook deteriorates.

Sterling fell more than 1% to $1.20460, a day after official data showed a record shortfall in Britain’s current account deficit in early 2022.

The euro slipped by as much as 0.5% to $1.04330. It was last down 0.4% at $1.04465.

The European Central Bank is expected to raise interest rates this month for the first time in a decade, although economists are divided on the size of any hike.

The Japanese yen gained as much as 0.75% on the day, pulling away from a mid-week low of 137.00 – its weakest in 24 years. It was last up 0.4% at 135.235 yen per dollar.

In cryptocurrencies, Bitcoin resumed its slide, falling 4% to trade just above $19,000.

(Reporting by Iain Withers Additional reporting by Saikat Chatterjee in London and Kevin Buckland in Tokyo Editing by Alex Richardson and Mark Potter)

Financial Post Top Stories

Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.

By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300

Read More

Total
0
Shares
Leave a Reply

Your email address will not be published.

Related Posts
Gold inches up heading into Christmas on weaker dollar
Read More

Gold inches up heading into Christmas on weaker dollar

Author of the article: Gold prices edged higher on Thursday in thin year-end trading, as the safe-haven dollar weakened following encouraging study results on the Omicron COVID-19 variant and rising optimism about the global economic outlook. Spot gold rose 0.2% to $1,806.12 per ounce by 0455 GMT, adding about 0.5% for the week so far…
EU’s Breton to hold video call with Google, YouTube CEOs on Ukraine fake news
Read More

EU’s Breton to hold video call with Google, YouTube CEOs on Ukraine fake news

This advertisement has not loaded yet, but your article continues below. Author of the article: Article content BRUSSELS — EU industry chief Thierry Breton will hold a video call with Alphabet Chief Executive Sundar Pichai and YouTube CEO Susan Wojcicki on Sunday to ask them do more to stop disinformation after Russia’s invasion of Ukraine,…
Ford Government’s Health Care Staffing Plan Doesn’t Add Up; Will Leave System Tens of Thousands Workers Short
Read More

Ford Government’s Health Care Staffing Plan Doesn’t Add Up; Will Leave System Tens of Thousands Workers Short

Author of the article: TORONTO — On Tuesday, December 7, 2021, at 1 p.m., SEIU Healthcare and the Canadian Union of Public Employees (CUPE) will present data that shows a terrifying gap in the number of health care workers Ontario will need over the next few years and the number of workers current Ford government…
Early Facebook investor Peter Thiel to step down from Meta board
Read More

Early Facebook investor Peter Thiel to step down from Meta board

Author of the article: Reuters Eva Mathews and Dawn Chmielewski Facebook-parent Meta Platforms Inc said on Monday that billionaire investor Peter Thiel, an early investor who has been on the company’s board since 2005, has decided to retire. Thiel aims to spend time helping elect candidates who he believes will advance former President Donald Trump’s…