Russian gas cut pushes euro toward new lows

By Rae Wee

SINGAPORE – The euro fell and was testing a two-decade low on Monday after Russia’s indefinite closure of its most important fuel provide pipeline to Europe stoked fears of vitality shortages, excessive costs and successful to development, whereas the U.S. greenback index hit a 20-year excessive.

The euro touched $0.9903 in early Asia, simply above final month’s trough of $0.99005. Sterling hit a 2-1/2-year low at $1.1458.

The pound has additionally been weighed down by issues over rising vitality prices. British overseas minister Liz Truss stated over the weekend she would set out rapid motion to deal with rising vitality payments and improve vitality provides if she is, as anticipated, to grow to be Britain’s subsequent prime minister.

The yen, at 140.23 per greenback, was underneath strain close to a 24-year low. The danger-sensitive Australian greenback slid 0.3% and was close to a seven-week low at $0.6790.

The U.S. greenback index hit a brand new two-decade excessive, briefly topping 110.

Russia scrapped a Saturday deadline for flows down the Nord Stream pipeline to renew, citing an oil leak in a turbine. It coincided with the Group of Seven finance ministers saying a worth cap on Russian oil.

“All the pieces is pointing to a decrease euro,” stated Carol Kong, senior affiliate for worldwide economics and foreign money technique at Commonwealth Financial institution of Australia.

“We’ve heard a substantial amount of damaging information concerning the European financial system, and I believe the decline in euro can proceed this week.”

Outsized charge hikes are additionally on the playing cards this week. Markets have priced a few 75% probability of a 75 foundation level (bp) hike in Europe and an virtually 70% probability of a 50 bp hike in Australia.

Pricing for a 75 bp hike in the US this month has pared again considerably after a blended jobs report on Friday, that contained a couple of hints of a loosening labour market.

Fed funds futures indicate a few 55% probability of a 75 bp hike.