Euro hits its lowest since 2002

By Al Mayadeen English
Source: Agencies
5 Jul 15:17

As the Federal Reserve continues to raise interest rates faster than its peers, the Euro hits a new low for the first time in 20-years.

Euro fell below $1.03 as of 10:00GMT

As shown by trading data, the Euro fell below $1.03 for the first time since December 2002. The euro traded at $1.0296 which is down from $1.0421 at a time when the dollar index was 1.04% to 106.23 points.

Fears over the European energy crisis are putting pressure on the euro. Strike-related production suspensions at many fields by Norway's Equinor increased gas prices. Nord Stream will be suspended for scheduled maintenance from July 11 to July 21. In light of this, European gas futures are rising by 6% to almost $1,800 per thousand cubic meters.

To a significant measure, the euro crisis is a result of dollar strength, which has been exacerbated as the Federal Reserve continues to raise interest rates faster than its peers. A new round of global risk aversion, which has knocked the wind out of equities and credit markets, is simply adding fuel to the run into haven currencies.

The European economy's prognosis is likewise deteriorating. An ongoing stalemate with Moscow over natural gas supplies to the continent has heightened the likelihood of a significant slowdown. The International Monetary Fund has reduced the currency bloc's growth prediction for 2022 to 2.8 percent.

Previously with the Euro and Dollar rates

On June 30th, the US government released data that showed price increases that had held steady in the past 12 months ended in May, while the rise in consumer spending slowed sharply.

This, according to some, may comfort consumers as a sign that the Federal Reserve's aggressive interest rate plans are beginning to have an effect in limiting the fastest uptick in inflation seen in more than four decades.

Compared to May 2021, the Personal Consumption Expenditures (PCE) price index rose 6.3%, the same pace as in the prior month, despite it rising 0.6% compared to April, according to the Commerce Department.

This monthly increase, which was faster than in the preceding month, was still below economist projections. As for US multinationals, the quick rise in the value of the US dollar since the beginning of the year is a double-edged sword, forcing them to determine whether to hedge or move their operations abroad to prevent damage.