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Euro slides as Fed chief steals ECB's rate hike thunder

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Agence France-Presse

<div class="embed-wrap"><figure data-feedback="fb:likes,fb:comments"><img alt="View of US dollar notes and Euro inside a currency exchange office, in Cairo, Egypt , 07 September 2022. EPA-EFE/KHALED ELFIQI" src="https://sa.kapamilya.com/absnews/abscbnnews/media/2022/business/09/09/20220909-us-dollar-euro-epa.jpg"/><figcaption>View of US dollar notes and Euro inside a currency exchange office, in Cairo, Egypt , 07 September 2022. <em>EPA-EFE/KHALED ELFIQI</em></figcaption></figure></div><p>NEW YORK, United States - The euro slid on Thursday against the dollar despite a record interest rate hike by the European Central Bank as Federal Reserve chief Jerome Powell also signaled a tough approach against inflation.</p><p>Meanwhile, the pound remained close to a 37-year low against the dollar that was struck Wednesday, as new British Prime Minister Liz Truss announced that she will freeze domestic fuel bills for two years to help ease the burden of a UK cost-of-living crisis.</p><p>The British currency did not move significantly on news of the <a href="https://news.abs-cbn.com/overseas/09/09/22/queen-elizabeth-ii-dies-at-96" target="_blank">death</a> of Queen Elizabeth II after a 70-year reign. </p><p>The ECB warned Thursday that inflation was &quot;far too high&quot; and likely to stay above target for &quot;an extended period&quot; as it announced its record 0.75 percentage point hike.</p><p>ECB chief Christine Lagarde made clear interest rates were far from where they need be to bring inflation down.</p><p>&quot;We actually took the decision today that we would continue to raise interest rates... because we believe that we are far away from the rate at which we hope we&#x27;ll see inflation return to the two percent medium term target,&quot; she said.</p><p>Lagarde also warned the eurozone risks recession if Russia completely cuts off gas, which it has nearly done.</p><p>But comments by Fed chief Jerome Powell were seen as even more hawkish than those by Lagarde.</p><p>&quot;We need to act now forthrightly, strongly as we have been doing and we need to keep at it until the job is done to avoid ... the kind of very high social costs&quot; of the surge in inflation in the 1970s and 1980s, Powell told a US think tank.</p><ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/09/08/22/ecb-makes-historic-rate-hike-to-battle-record-inflation">European Central Bank unleashes historic rate hike to battle record inflation</a></li></ul><div><strong>Greenback &#x27;more attractive&#x27; </strong></div><p>Chris Beauchamp, chief market analyst at online trading platform IG, said &quot;Investors clearly believe that the Fed is more committed to higher rates than the ECB, while the stronger economic performance of the US means the greenback and not the euro seems the more attractive prospect.&quot;</p><p>The euro, which had broken back above parity with the dollar, slid down as far as $0.9934 before recovering some ground.</p><p>The Fed has made it clear it plans to continue to aggressively raise interest rates to rein in surging inflation, even at the cost of causing some economic pain.</p><p>The dollar has moved ever higher against its major peers in recent weeks as investors flood into the currency hoping for better returns as the Fed raises rates and as they seek a haven in the face of economic turmoil.</p><p>The euro on Wednesday touched a fresh 20-year dollar low.</p><p>The Fed holds its next policy meeting on September 21, with a third successive 75-basis-point lift forecast.</p><p>In equities trading, eurozone stocks closed the day mostly higher, and Wall Street equities pushed higher following a choppy session.</p><p>Analysts said the hawkish central bank policy was largely in line with expectations.</p><p>&quot;The resilience was construed as a sign that a lot of bad news, and worries about near-term rate hikes, have been priced in already,&quot; said Briefing.com. </p><ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/09/07/22/dollar-weighs-on-yen-and-euro">Dollar weighs on yen and euro, sinks currencies to new multi-year lows</a></li>	<li><a href="https://news.abs-cbn.com/business/08/18/22/fed-says-more-us-rate-hikes-coming">Fed says more US rate hikes coming, pace will slow &#x27;at some point&#x27;</a></li></ul><div><strong>RELATED VIDEO:</strong></div><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=2123141" 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>

The euro slid on Thursday against the dollar despite a record interest rate hike by the European Central Bank as Federal Reserve chief Jerome Powell also signaled a tough approach against inflation.