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The Euro Has Returned to Parity

by Carl Steward
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EuroThe Euro Has Returned to Parity

Investors expect the Fed to reaffirm its commitment to crushing inflation at its annual meeting in Jackson Hole, Wyoming, where Powell is scheduled to speak. The euro reclaimed parity with the dollar on Thursday. The recent rise waned as investors waited to see if Federal Reserve Chair Jerome Powell would sound more hawkish at a meeting this week.

Rising natural gas costs, which link to a weaker euro due to the region’s reliance on gas for energy, mostly drove this week’s direction of USD/EUR. Earlier this week, investors moved into dollars due to concerns about the global economy.

The euro and currencies tied to broad investor sentiment, such as the Australian dollar, benefited from a more positive mood throughout markets.

The main driver of the US dollar’s overnight decline has been a temporary easing of global economic concerns.

The dollar, which measures the greenback against six currencies, fell 0.5% to 118.17 but was close to its highest level since September 2002, when it hit 129.29 in mid-July.

The euro was 0.5% higher at $1.123 after touching a 20-year low below parity this week.

The bullish equity attitude in much of the region helps the Australian dollar in the backdrop.

The German IFO business climate figures and the European Central Bank’s July meeting minutes, when 50 basis points raised interest rates, are among the key data releases in Europe on Thursday.

The Australian dollar gained 1.1% to $0.6713, while the Japanese yen gained 0.4% and sterling gained 0.5%.

The stronger Australian dollar occurred as China’s yuan recovered from a two-year low, aided by firmer-than-expected official guidance, which traders interpreted as a hint that officials are increasingly concerned about the currency’s precipitous decline.

The post The Euro Has Returned to Parity appeared first on forexinsider24.com.

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