The euro traded at $0.9998 around 12:45 GMT on Wednesday (Getty)
traded single european currency undervalued US dollar Today, Wednesday, for the first time since the end of 2002. What is the story?
Practically, the price of the euro fell on Wednesday, affected by the gloomy expectations for the European economy With the possibility of cutting off Russian gas supplies entirely, below the symbolic US dollar threshold, which has not been crossed since December 2002.
The euro was trading once morest 0.9998 dollars at around 12:45 GMT, in a precedent since the beginning of trading in the European currency, before recording a new rise following official figures showed a rise in inflation in the United States in June, which reinforced expectations that the US Federal Reserve would follow a monetary policy More stringent.
The inflation rate reached 9.1% in June over one year, compared to 8.6% in the previous month, according to the CPI Consumer Price Index published by the US Department of Labor on Wednesday.
Initially, the index pushed the dollar higher before declining later in the session. At around 16:00 GMT, the euro rose 0.4% to $1.0078. The European currency has lost regarding 12% of its value since the beginning of the year.
“Investors are starting to believe that inflation is so high that it will do so much damage to the economy that the Fed will have to stop raising interest rates soon, and even reverse in the first quarter of next year,” says analyst Fouad Razakzadeh at StoneX.
But Stephen Innes, an analyst at SPI Management, says that “a rebound in the euro is likely to follow sales as long as (the gas pipeline) Nord Stream 1 does not resume pumping” and deliveries of Russian gas to Europe.
Fears are inflamed more and more by the complete cessation of Russian gas exports to Europe, as the French government spoke at the end of last week of the “possibility” of cutting supplies.
“How far can the deterioration of the euro go? It probably depends on Russia’s desire to escalate the economic war with Europe,” says analyst Jane Foley at Rabobank, a financial services company, noting that “knowing the intentions of Russian President Vladimir Putin is not easy.” .
Given the weak growth in the Eurozone, the European Central Bank can raise interest rates with difficulty, in order to combat inflation, which in June reached 5.8% in France and 7.6% in Germany, according to figures published Wednesday morning.
(AFP)