The dollar went above the threshold of one euro on Monday, the greenback benefiting from the determination of several members of the American Federal Reserve (Fed) to tighten their monetary policy. This is the lowest level since the year it was put into circulation, weighed down by the energy crisis which threatens to plunge Europe into recession.
The greenback benefiting for its part from the successive tightening of the American Federal Reserve (Fed), the euro lost 0.96% around 3:30 p.m. GMT (5:30 p.m. in Paris) to 0.9941 dollar, its lowest since 2002.
The strength of the dollar makes imports more expensive, especially for commodities such as oil, which are priced in dollars, accentuating an inflation that is already devastating for consumers and businesses
Nord Stream gas pipeline closed at the end of the month
On the American side, if some forex traders, specialists in foreign exchange operations, had bet that the Fed would slow the pace of its increases, several officials of the monetary institute tried to convince them that the rise in rates would continue.
At this meeting of central bankers, the Fed boss will speak on Friday. On the European side, “Europe is preparing for a new closure of the Nord Stream 1 gas pipeline later in the month”, reminds AFP Craig Erlam, analyst at Oanda.
Gas giant Gazprom has warned that gas supplies will be cut for “maintenance” from August 31 to September 2, risking renewed fear of a shortage in Europe, where Russia is accused of energy blackmail.
As a result, the price of European gas (Dutch TTF futures contract) soared again and reached 292.995 euros per megawatt hour (MWh) on Monday, approaching the all-time highs reached in the first days of the invasion of Ukraine. by Russia.
While the American economy is less affected than Europe by the war in Ukraine, the Fed has more leeway to act than the central banks of the Old Continent. Thus, the British pound has also returned to its 2022 low. “It’s a bad year for the pound, which is even falling against the euro while the Bank of England has raised its rates at each meeting” since the end of 2021, remind OFX analysts.
Despite these increases, British inflation exceeds 10% over one year and is the highest in the G7, due to the war in Ukraine, the aftermath of the pandemic, but also Brexit which tightens the labor market and further disrupts UK supply chains.
At 1.1764 dollars for one pound, the British currency is at its lowest since the beginning of 2020 and the first months of the pandemic. Prior to that, the British pound had not fallen below $1.18 since 1985.