The dollar’s role as the safe-haven go-to currency for investors worried about the economic outlook has been burnished in recent weeks, with the US currency roaring to two-decade highs against multiple currencies.
The euro sank to within a whisker of parity with the dollar on
Tuesday (12 July) and stock markets fell as the prospect of further
central bank tightening and worries about the health of economies
worldwide unnerved investors.
The euro has been particularly vulnerable given the impact of an
ongoing spike in natural gas prices on the regional economy and the war
in neighbouring Ukraine, and with the European Central Bank behind
rivals in raising interest rates.
The single currency had dropped to a low of
$1.00005 by 1030 GMT, its weakest since December 2002. It was last at
$1.0011, down 0.3% on the day.
The dollar index gained 0.3% to as high as
108.56 , while sterling hit another two-year low and the yen was not far
off its weakest in more than two decades .
“There doesn’t seem to be a lot of support for euro at this point,”
said Sarah Hewin, senior economist at Standard Chartered. “It does not
just relate to gas prices but to what seems to be a split within the ECB
over how far they raise rates.”
Business morale is also deteriorating in
the euro zone with more worried about a recession. German investor
sentiment fell sharply in July, according to a widely watched economic
sentiment index published on Tuesday....
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