Dollar weighs on yen and euro, sinks currencies to new multi-year lows

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<div class="embed-wrap"><figure data-feedback="fb:likes,fb:comments"><img alt="An employee at Korea Exchange Bank stacks American dollars at the bank" s="" head="" office="" in="" Seoul="" on="" November="" EPA="" YONHAP="" src="https://sa.kapamilya.com/absnews/abscbnnews/media/2022/overseas/09/06/20220906-dollar.jpg"/><figcaption>An employee at Korea Exchange Bank stacks American dollars at the bank&#x27;s head office in Seoul on November 3, 2009. EPA/YONHAP/file</figcaption></figure></div>The euro and yen sunk new multi-year lows against the dollar on Tuesday as investors focused on central bank efforts to contain surging inflation and fears of an economic slowdown.The dollar struck a 24-year high of $142.98 yen, while the euro sank to $0.9864, a level unseen since December 2002.&quot;Recession concerns around the world continue to boost the appetite for US dollar, even at these levels,&quot; said City Index and FOREX.com analyst Fawad Razaqzada.&quot;Investors are becoming more and more convinced that the Fed is going to hike by 75 basis points this month and proceed with further aggressive hikes until inflation comes back under control,&quot; he added.The Fed has increased the key lending rate four times this year, including two supersized 75 basis points (0.75 percentage point) hikes in June and July, with Fed chief Jerome Powell indicating another similar increase is possible this month.Yields on US government debt continue to rise as investors expect further hikes.The Fed&#x27;s earlier start to raising interest rates, and pledge to continue to aggressively raise them until it has tamed surging inflation, has boosted the attractiveness of the dollar for investors.<ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/09/06/22/peso-weakens-further-to-p57-to-us-dollar-on-sept-6">Peso weakens for 3rd straight day, closes at P57 to US dollar</a></li></ul>The European Central Bank brought an end to eight years of negative interest rates with a surprisingly-aggressive 0.50 percentage point hike in July, and is expected to hike interest rates on Thursday by at least the same amount to tackle surging eurozone inflation.<ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/09/01/22/peso-again-touches-record-low-against-dollar">Peso touches record low against dollar in intraday trading, weakest in almost 18 years</a></li></ul>Meanwhile the Bank of Japan has dug in its heels on its easy-money policies as it seeks to ensure inflation is here to stay after a long deflationary period. Wall Street stocks wobbled during morning trading after a three-day holiday weekend, with the Dow down 0.1 percent approaching midday.European stocks ended the day higher despite poor German data, a day after tumultuous trading as Russia curbed gas supplies to Europe.<figure class="op-interactive"><iframe allow="autoplay; fullscreen" frameBorder="0" height="100%" id="ivsplayer01" scrolling="no" src="https://player.ivideosmart.com/ivsplayer/v4/dist/html/iframe-src.html?iframeid=ivsplayer01&amp;key=e8c22c015ca9eafa76f1e3edfa03c603&amp;spid=3001339&amp;vid=2211254" width="100%"></iframe></figure><div class="iwantbar">Watch more News on <a href="https://www.iwanttfc.com/#!/browse/Genres/News/tag_id_genres/id_news" target="_blank">iWantTFC</a></div><div>- &#x27;Wait-and-see mood&#x27; -</div>Nevertheless, traders are still wary.&quot;Investors remain cautious amid worries about the slowing global economy,&quot; noted Hargreaves Lansdown analyst Susannah Streeter.&quot;There is a wait-and-see mood hanging over markets.&quot;Russia&#x27;s decision over the weekend to halt gas supplies to Germany in retaliation for sanctions over Ukraine sent shock waves through European trading floors on Monday as it ramped up expectations of a painful recession in major economies.That continues to bedevil the euro, as well as measures that European governments are taking to prop up their economies in face of the energy crisis.Razaqzada said these measures are likely to fuel inflation even further. This would require the ECB to hike interest rates even more aggressively, meaning a sharper recession.&quot;So, it is a catch-22 situation for the ECB,&quot; he said.&quot;For this reason, traders are reluctant to buy the euro.&quot;Similarly, the yield on 10-year British government bonds surged to the highest level since 2011 after Britain&#x27;s new Prime Minister Liz Truss unveiled a 130-billion-pound package to freeze consumer energy bills. &quot;UK gilt yields have pushed above three percent for the first time since 2014, in anticipation that the Bank of England may have to adopt a slightly more aggressive rate posture,&quot; said CMC Markets analyst Michael Hewson.In Asia on Tuesday, Shanghai advanced after China unveiled fresh economy-boosting measures, but the overall picture was mixed.Sydney dipped after the Reserve Bank of Australia lifted interest rates to a near eight-year high and warned of more pain ahead.

The dollar struck a 24-year high of $142.98 yen, while the euro sank to $0.9864, a level unseen since December 2002.

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Dollar weighs on yen and euro, sinks currencies to new multi-year lows

Dollar weighs on yen and euro, sinks currencies to new multi-year lows

ABS-CBN News

Published Sep 07, 2022 04:13 AM PHT

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