FOREX-Euro under pressure as inflation fears send investors to dollar haven

By Rae Wee and Alun John

SINGAPORE/HONG KONG, June 30 (Reuters) – The euro struggled to regain a footing on Thursday, having tumbled in a single day in opposition to a resurgent U.S. greenback, which benefited from safe-haven demand on renewed worries about greater charges and a worldwide recession.

The euro was at $1.044, after shedding 0.75% on the greenback the day earlier than, and heading for a month-to-month decline of two.7%.

It additionally dropped to a contemporary 7-1/2-year low versus the Swiss franc at 0.99663 francs, with the Alpine foreign money one other beneficiary of safe-haven flows and likewise nonetheless basking within the afterglow of the Swiss Nationwide Financial institution’s shock charge minimize two weeks in the past.

Christopher Wong, senior FX strategist at Maybank, attributed the euro’s fall in opposition to the greenback to the market transferring away from riskier property after “central bankers warned of lasting inflation and that they might prioritise combating (it), leading to broad greenback rebound in a single day.”

A gentle and aggressive world swap to tighter coverage has stoked recession worries and shaken monetary markets in latest months.

Talking on the European Central Financial institution’s annual convention in Sintra, Portugal, U.S. Federal Reserve Chair Jerome Powell mentioned it was necessary to convey down inflation, even when it meant financial ache, with comparable remarks from ECB President Christine Lagarde.

Decrease German inflation figures additionally briefly weighed on the euro, mentioned Ray Attrill head of FX technique at Nationwide Australia Financial institution, earlier than “the market realised that there was some particular components there, it wasn’t a real draw back shock.”

“The larger image fear is what occurs with power provides within the eurozone as we head in the direction of the winter… We’re fairly cautious in regards to the euro,” Attrill added.

The greenback was additionally on the entrance foot in opposition to different majors, with sterling hunkered down at $1.21225, with losses this week leaving it set for a 3.8% month-to-month decline, whereas the Australian greenback was struggling at $0.6873.

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The greenback additionally hit contemporary a 24-year peak of 137 yen in a single day, because the hole between a hawkish Fed and a dovish Financial institution of Japan continues to weigh closely on the yen, which was final buying and selling at 136.57 yen.

The BOJ is ready to maintain rates of interest pinned down as a result of Japanese inflation continues to be low by world requirements, although even small value rises are inflicting a messaging drawback for the central financial institution.

The greenback index, which measures the dollar in opposition to six friends, was at 105.19, a two week excessive.

Bitcoin, dipped again under the symbolic $20,000 stage on persistent market ructions, and was additionally damage by the U.S. Securities and Change rejecting a proposal to checklist a spot bitcoin exchange-traded fund by Grayscale, one of many world’s largest digital asset managers.

(Reporting by Alun John Modifying by Shri Navaratnam)