Euro’s Parity Revisited As Dollar Surges

The Euro is under pressure as Russia to halt gas supplies, while the Chinese Yuan dips to nearly 2-year low as PBOC eases policy again. The U.S. dollar rose across the board on Monday, briefly driving the euro back below parity, as investors shied away from riskier assets amid growing fears that interest-rate hikes in the United States and Europe, aimed at curbing inflation, would weaken the global economy.

Against a basket of currencies, the dollar was 0.5% higher at 108.71, not far from the two-decade high of 109.29 touched in mid-July. The US dollar has found support in recent sessions as several Federal Reserve officials reiterated an aggressive monetary tightening stance ahead of the Fed’s Jackson Hole, Wyoming, symposium this week.

The latest of these officials, Richmond Fed President Thomas Barkin, on Friday said the “urge” among central bankers was toward faster, front-loaded rate increases.

With investors now clearly expecting a relatively hawkish message from Fed’s Powell at Jackson Hole on Friday, it’s a perfect cocktail of risk-aversion and a hawkish Fed for the greenback to bound higher, especially when growth worries, especially in Europe, continue to accelerate.