Image: Reuters Berita 24 English - As worries about the effects of rising energy prices on the euro zone economy persisted, the euro was ju...
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| Image: Reuters |
Berita 24 English - As worries about the effects of rising energy prices on the euro zone economy persisted, the euro was just slightly above its lowest level in almost two decades when compared to the dollar.
Tuesday saw the Norwegian government step in to break a standoff that threatened to deepen Europe's energy supply crisis. The strike in the petroleum industry had reduced oil and gas production.
As a result of the fact that a complete restoration of Nordstream1 flows is no longer the most likely scenario, Goldman Sachs increased its predictions for natural gas prices.
The euro is under pressure for other reasons as well, according to Moritz Paysen, an FX and rates adviser at Berenberg.
"Another hardship is the already very high cost of energy. European energy prices are significantly higher than American prices, "Added he.
The euro was unchanged versus the dollar at 1.0266 after Tuesday's low of 1.0236, its lowest level since December 2002.
Investors continued to pay attention to the differences in the tightening cycles of central banks on each side of the Atlantic.
The key question, according to ING analysts, is whether the worsening growth outlook will be sufficient to stop tightening cycles in general and the Fed's in particular.
In anticipation of the Federal Open Market Committee's June meeting minutes, which are due at 1800 GMT on Wednesday, they predict the FX market will maintain its present levels.
The Fed may ultimately have more chance to pursue policy normalisation than many other central banks, according to analysts at Unicredit.
The dollar index, which compares the value of the dollar to six other currencies, was stable at about 106.5.
The euro momentarily fell to its lowest level against the Swiss franc since the Swiss National Bank abandoned its currency control in 2015 due to an early selloff.
After falling to a new 7-year low of 0.9911, the euro was down 0.1 percent to 0.9933.
The yen received some support from safety bids after the ratio of Japanese households expecting price increases in the upcoming year reached its highest level in 14 years during the three months leading up to June.
The dollar fell to 135.43 yen, a decrease of 0.3%. It rose to 137 at the end of June, its highest level since 1998.
The Bank of Japan has stated that it will not reduce monetary stimulus since inflation is caused by rising fuel and raw material prices that are attributed to the Ukraine conflict and are likely to be only short-term in nature. Bitcoin was last trading at $20,190 after seeing a roughly 1% decline. At $1,142, ether increased 0.6 percent.
