The dollar’s role as a safe haven for investors worried about the economic outlook has eroded in recent weeks, with the US currency roaring to two-decade highs against many currencies. The euro is particularly vulnerable given the impact of the continued rise in gas prices on the regional economy and the war in neighboring Ukraine, as well as with the European Central Bank trailing rivals in raising interest rates. Sign up now for FREE unlimited access to Reuters.com Register By 0725 GMT, the euro was down 0.3% at a low of $1.0004, the weakest in more than 20 years. The dollar index rose 0.3% to 108.48, while sterling hit a two-year low and the yen was not far from its weakest level in more than two decades. Mizuho analysts said the move to parity was happening as “recession in the euro zone is priced in” and said the backdrop suggested little for the risk climate to improve. “Either way, there seems little to prevent the euro/dollar from breaking out in the relatively near term,” they wrote. This week’s focus will be on macroeconomic data, including Wednesday’s US consumer inflation, and comments from Federal Reserve officials as investors look for clues on the outcome of the Fed’s upcoming policy meeting ahead of the blackout period before from the meeting. High inflation would put pressure on the Fed to accelerate its already aggressive rate hikes. In equity markets, the Euro STOXX (.STOXX) fell 0.7%, while Germany’s DAX (.GDAXI) fell 0.8% and Britain’s FTSE 100 (.FTSE) shed 0.44%. US futures markets also showed a weaker open. MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 1.3 percent to a two-year low, while Japan’s Nikkei (.N225) lost 1.8 percent. Also high on the list of investors’ concerns is the fact that a growing number of Chinese cities, including commercial hub Shanghai, are adopting new COVID-19 restrictions starting this week to curb new infections after a highly contagious Omicron subvariant was found . read more The rising cost of energy in Europe is also a major fear as the largest single pipeline carrying Russian natural gas to Germany entered annual maintenance, with flows expected to stop for 10 days. Investors worry that the shutdown could be extended due to the war in Ukraine, further restricting gas supplies to Europe and sending the struggling eurozone economy into recession. read more The yield on the benchmark 10-year Treasury note was at 2.92%, having slipped back below 3% overnight as investors bought safe-haven bonds amid a sell-off on Wall Street. Growth fears are also weighing on oil, despite concerns about tight supply. Brent crude futures fell 2.2 percent to $104.73 a barrel, while U.S. West Texas Intermediate crude settled at $101.53 a barrel, down 2.44 percent. Gold was steady, with spot prices trading at $1,735 an ounce. Cryptocurrency prices fell, with Bitcoin last down 1.4% at $19,670. Sign up now for FREE unlimited access to Reuters.com Register Additional reporting by Xie Yu in Hong Kong. Edited by Jan Harvey Our Standards: The Thomson Reuters Trust Principles.
