On Wednesday, the Euro fell to a new two-decade low as concerns about rising energy prices and the possibility of shortages cast a long shadow over the bloc’s economy. Meanwhile, demand for safe-haven assets drove the dollar to fresh 20-year highs due to the demand for safe-haven assets.
According to statements made by Equinor on Wednesday, it is anticipated that all oil and gas fields disrupted by a strike in Norway’s petroleum industry will be back in the operation over the next few days. Meanwhile, Goldman Sachs (NYSE:GS) upped its natural gas price projections, stating that a complete restoration of Russian gas flows via Nordstream1 was no longer the most plausible scenario. This caused Goldman Sachs to believe that natural gas prices would continue to rise.
Despite the price drop on Tuesday, market watchers anticipate a speedy recovery for oil prices due to the continued lack of available supplies and the stability of front-month spreads. Moritz Paysen, a foreign exchange and rates consultant at Berenberg, said that “the danger of non-delivery (of gas) is not the only thing weighing on the euro.”
“The already high cost of electricity is a strain to deal with. The price of energy in Europe is several hundred times that of energy in the United States, “he continued. The value of the Euro decreased against the dollar by 0.7 percent, reaching 1.0186. This is the first time the Euro has been valued at less than 1.02 since December 2002. According to estimates issued on Wednesday by the statistics office of the European Union, Eurostat, consumers in the eurozone reduced their spending on food, beverages, and cigarettes for the second consecutive month in May due to an increase in prices.
Investors’ attention remained fixed on the discrepancy between the tightening cycles of central banks on both sides of the Atlantic. Analysts from ING posed the following question: “The main issue is whether this decline in growth expectations is enough to halt tightening cycles – particularly that of the Fed.”
They anticipate that the foreign exchange market will remain relatively stable on Wednesday ahead of the minutes from the Federal Open Market Committee’s meeting in June, which is scheduled at 1800 GMT. According to analysts working at Unicredit (BIT:CRDI), “the prevalent opinion” is that the Federal Reserve may eventually have more opportunity than many other central banks to continue the normalization of monetary policy.
The dollar index, which measures the value of the US dollar in relation to six other currencies, increased by 0.4 percent to 107.02, marking its highest level since 2002. Compared to the Swiss franc, the Euro reached a new all-time low, falling to its worst since the Swiss National Bank removed its currency restriction in 2015.
The single currency’s value fell by 0.4 percent, reaching a new seven-year low of 0.9897. According to the experts at MUFG, “Given the present climate, the traditional haven currencies of the United States Dollar, Swiss Franc, and Japanese Yen are poised to continue to outperform in the short term.”
In the three months leading up to June, Japanese households’ inflation expectations strengthened, with the ratio of homes expecting price rises over the coming year hitting the highest level in 14 years. As a result, the yen gained a little bit of support from some safety bids, which was positive for the currency.
The value of one dollar decreased by 0.3%, reaching 135.36 yen. At the end of June, it reached 137, its highest point since 1998.
The Bank of Japan has said that it would not remove monetary stimulus since rising fuel and raw material prices are being blamed on the situation in Ukraine and are expected to prove to be transitory. This is one of the reasons why inflation is occurring. Bitcoin decreased by 1.7 percent and was last valued at $20,088. The price of ether increased by 0.5 percent, reaching $1,138.