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Euro drops to 20-year low, approaches parity with dollar

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NEW YORK — The euro slid to a 20-year low

and came closer to parity against the dollar on Monday on

concerns that an energy crisis will tip the region into a

recession, while the U.S. currency was boosted by expectations

that the Federal Reserve will hike rates faster and further than

peers.

The biggest single pipeline carrying Russian gas to Germany,

the Nord Stream 1 pipeline, began annual maintenance on Monday,

with flows expected to stop for 10 days. Governments, markets

and companies are worried the shutdown might be extended because

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of the war in Ukraine.

“The most proximate concern for markets is whether or not

Nord Stream 1 is going to come back online,” said Bipan Rai,

North American head of FX strategy at CIBC Capital Markets in

Toronto, adding that “the markets will likely price in a

recession” for the region if it doesn’t.

The euro tumbled as low as $1.0051 against the U.S. dollar,

the weakest since December 2002.

The dollar index reached 108.19, the highest since October

2002.

The U.S. currency has gained on expectations that the Fed

will continue to aggressively raise rates as it tackles soaring

inflation.

“The Fed is going to raise rates more aggressively than most

other developed market central banks and we don’t think other

developed market central banks really have the bandwidth to keep

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up,” Rai said.

The Fed is expected to lift rates by 75 basis points at its

July 26-27 meeting. Fed funds futures traders are pricing for

its benchmark rates to rise to 3.50% by March, from 1.58% now.

U.S. consumers see inflation rising further in the year

ahead but expect a more moderate pace over the longer term in a

signal that inflation expectations remain reasonably anchored, a

survey from the New York Fed showed on Monday.

Consumer price data due on Wednesday is this week’s major

U.S. economic focus. Economists polled by Reuters expect the

index to show that consumer prices rose by an annual rate of

8.8% in June.

The Australian dollar was the worst performer on the day,

falling to a two-year low on global growth fears. Multiple

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Chinese cities have adopted fresh COVID-19 curbs, from business

halts to lockdowns, to rein in new infections, which could

create new supply disruptions.

The Aussie fell as low as $0.6716, the weakest since June

2020.

In the cryptocurrency market bitcoin fell 1.62% to $20,519.

========================================================

Currency bid prices at 3:00PM (1900 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 108.0000 107.0800 +0.87% 12.896% +108.1900 +107.0700

Euro/Dollar $1.0063 $1.0186 -1.22% -11.49% +$1.0183 +$1.0051

Dollar/Yen 137.2900 136.1250 +0.86% +19.27% +137.7450 +135.9850

Euro/Yen 138.17 138.56 -0.28% +6.02% +139.1600 +138.1400

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Dollar/Swiss 0.9799 0.9766 +0.34% +7.43% +0.9842 +0.9738

Sterling/Dollar $1.1897 $1.2032 -1.12% -12.03% +$1.2036 +$1.1868

Dollar/Canadian 1.2988 1.2939 +0.38% +2.72% +1.3051 +1.2945

Aussie/Dollar $0.6742 $0.6856 -1.66% -7.25% +$0.6857 +$0.6716

Euro/Swiss 0.9859 0.9943 -0.84% -4.92% +0.9949 +0.9856

Euro/Sterling 0.8458 0.8460 -0.02% +0.69% +0.8488 +0.8447

NZ $0.6120 $0.6184 -0.99% -10.54% +$0.6192 +$0.6098

Dollar/Dollar

Dollar/Norway 10.1750 10.0990 +0.81% +15.56% +10.2485 +10.1225

Euro/Norway 10.2417 10.2836 -0.41% +2.30% +10.3261 +10.2379

Dollar/Sweden 10.6116 10.5083 -0.24% +17.67% +10.6473 +10.4768

Euro/Sweden 10.6797 10.7050 -0.24% +4.35% +10.7381 +10.6766

(Additional reporting by Saikat Chatterjee and Dhara Ranasinghe

in London; Editing by Tomasz Janowski and Jonathan Oatis)

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