Euro flirts with parity as Russian gas link enters planned shutdown

Euro rates survived above paity against the dollar over Russian gas prices due to one of the biggest pipeline being shutdown.

euro
Photo: Unsplash/Ibrahim Boran
Reuters LONDON
2 min read Last Updated : Jul 11 2022 | 4:26 PM IST

By Saikat Chatterjee

LONDON (Reuters) - The euro held above parity versus the dollar on Monday as the biggest single pipeline carrying Russian gas to Germany entered annual maintenance, with flows expected to stop for 10 days.

Investors are worried the shutdown might be extended due to the war in Ukraine, restricting European gas supply further and tipping the struggling eurozone economy into recession.

"Most key drivers of the pair's recent weakness - risk sentiment, Fed-ECB divergence, to name two - don't look highly likely to improve just yet, and the lingering concerns about a reduction in Russian gas flows to the EU should continue to keep the euro rather unattractive," ING strategists said in a note.

The euro had fallen to the brink of parity at $1.0072 on Friday after the release of a bigger-than-forecast U.S. payrolls figure for June before bouncing higher.

On Monday, the single currency was trading down 0.8% at $1.0107 per dollar thanks to the greenback's broad gains as risk aversion gripped investors.

The dollar climbed to a 24-year high versus the yen on Monday after Japan's ruling conservative coalition's strong election showing indicated no change to loose monetary policies.

It reached 137.28 yen in morning trading, the firmest since late 1998. It then pared those gains slightly and was last up 0.6% at 136.93.

Expectations of another red-hot U.S. inflation data print for June will bolster bets of aggressive rate hikes from the Federal Reserve and propel the dollar higher. A Reuters poll expects a 8.8% reading, a fresh 40-year high, compared to 8.6% in June.

The other main economic event this week is Chinese second-quarter GDP data on Friday, with investors watching for signs of how hard the economy was hit by COVID-19 lockdowns.

The offshore yuan was trading 0.4% weaker versus the dollar.

Cryptocurrencies were on the backfoot with Bitcoin flirting around the $20,000 levels.

 

(Reporting by Saikat Chatterjee; editing by Kirsten Donovan)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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Topics :EuroDollarRussia Oil production

First Published: Jul 11 2022 | 4:26 PM IST

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