The dollar falls against the euro and the pound, rises in price in tandem with the yen
The US dollar is depreciating against the euro and pound sterling in Tuesday trading, but is strengthening against the yen.
“The cessation of Russian gas supplies to Europe means that the economy of Germany and the entire eurozone will immediately fall into recession,” said Joachim Klement, an analyst at Liberum Capital, quoted by Bloomberg.
The European Central Bank (ECB) is expected to raise key interest rates on Thursday by 75 basis points (bp) at once, which has never happened before in its history.
The pound is supported by expectations that Liz Truss, who is to officially take over as prime minister on Tuesday, will take steps to reduce the scale of the energy crisis in the country. According to Bloomberg, she intends to present a plan to limit the increase in electricity and gas prices for ordinary consumers, which will cost the country’s budget 130 billion pounds over the next 18 months.
“The pound strengthens on optimism that the impact of higher energy prices on the UK economy will not be as severe as expected,” said Ray Attrill, an analyst at National Australia Bank (ASX:NAB) in Sydney. “The size of potential fiscal support means that the Bank of England will be able to accelerate monetary tightening to contain inflationary pressures.”
As of 9:36 Moscow time, the euro rose against the dollar by 025% – to $0.9954 compared to $0.9929 at the close of the previous session. The European currency remains near its lowest level since December 2002 due to persistent fears that the energy crisis in Europe will further accelerate inflation and lead the region’s economy into recession.
The pound sterling has risen in price by this time by 0.43% – up to $1.1566 compared to $1.1517 at the close of the market on Monday. On the eve of the British national currency fell to a minimum since 1985.
The US dollar rose 0.46% against the yen to 141.24 yen, the highest since August 1998, from 140.60 yen at the close on Monday.
The ICE-calculated index, which shows the dynamics of the US dollar against six currencies (the euro, Swiss franc, yen, Canadian dollar, pound sterling and the Swedish krona), adds 0.08% on Tuesday, the broader WSJ Dollar Index – sheds 0.04%.