© Reuters.
By Peter Nurse
Investing.com – The U.S. dollar steadies at the start of trading in Europe this Thursday, but is still near two-decade highs on safe-haven demand on renewed concern over rising prices. rates and the world recession.
At 9:05 AM ET, the , which tracks this currency against a basket of six other majors, is broadly flat at 104.873, not far off its recent 20-year high of 105, 79.
The fall in the yield of US Treasury bonds slows the rise of the dollar this Thursday, although the greenback remains in high demand as a safe haven, as central banks continue to express the need to tackle runaway inflation, even at the cost of a sharp slowdown in global economic growth.
The president of the Federal Reserve, Jerome Powell, in his appearance on Wednesday at the annual forum of the European Central Bank in Portugal, defended the recent rise in interest rates by the US central bank – the highest since 1994 – as necessary to help to bring inflation down to its 2% target, even though a broader economic slowdown is a “likely” outcome.
ECB President Christine Lagarde has also warned that eurozone inflation is “inappropriately high” and that the central bank will go “as far as necessary” to bring inflation back to its 2% target, while the Bank of England Governor Andrew Bailey says policymakers “have a choice” to act more forcefully to contain inflation, not ruling out a 50 basis point hike at the next meeting.
“The short-term damage of an aggressive adjustment (perhaps a recession) would be much preferable to the long-term damage of a price and wage spiral,” ING (AS:) analysts explain in a note.
The pair is up 0.1% to the 1.0442 level as the single currency tries to regain its footing after losing almost 0.8% against the dollar on Wednesday, and is on track for a 2.7 monthly drop. % and a quarterly loss of 5.5%.
They increased in May, despite a slight decrease in the volume of operations in terms of food retail, increasing by 0.6% in real terms compared to the previous month, although this is still an increase in annual terms.
The pair rose 0.2% to the 1.2148 level, but sterling remains on track to suffer its biggest loss in six months against the dollar, of more than 10%, after the governor of the Bank of England’s Andrew Bailey said the UK economy was starting to slow down, while all signs point to inflation continuing to rise, raising fears of stagflation.
They rise in June at a slower pace than in May, but the median home price continues to hit new highs, according to data from mortgage lender Nationwide.
The pair is down 0.2% to the 136.35 level, pulling back after posting fresh 24-year highs just below 137.00 as the difference between the Fed’s aggressiveness and Bank’s prudence from Japan weighs heavily on the yen.
The pair rises to the level of 0.6883, while the trade is down 0.1% to 6.6975, supported by data indicating that China’s industrial activity expanded in June, for the first time since February, to as authorities lift COVID lockdown measures in major cities like Shanghai.