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Friday, December 3, 2021

Euro falls as Austria re-insulates; The dollar is flying high

LONDON. On Friday, the euro fell to nearly a 16-month low after Austria became the first country in Western Europe to reintroduce total isolation, and Germany did not rule out doing the same.

The single currency has been in a quandary all week under growing expectations that interest rates will tighten faster in other countries, especially the United States.

The dollar rallies for the fourth straight week against major rivals, capitalizing on the euro’s troubles.

European Central Bank President Christine Lagarde redoubled her cautious stance on Friday, saying the ECB should not tighten policy as it could undermine the recovery.

Austria also said it will require all of its citizens to be vaccinated against COVID-19 by February, while Germany’s health minister warned that isolation restrictions could return there.

“One thing is for sure, if all of Europe is once again isolated, and depending on how long that lasts, we will have to rethink our growth scenarios,” said Stefan Ekolo, global equity strategist at brokerage Tradition.

The euro is down more than 1 percent this week, dropping two-thirds of a percent on the day to fall below $ 1.13, close to Wednesday’s low of $ 1.12630.

The euro was down across the board, also hitting more than a six-year low against the Swiss franc, which was most recently down 0.5 percent.

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The General Dollar Index, which tracks the dollar against a basket of six major currencies, is up about 1% over the week.

The dollar rose 0.4 percent on the day to 95.958, close to a 16-month high of 96.266 hit Wednesday.

There are growing expectations that the dollar may strengthen even more next year. US retail sales exceeded expectations this week after last week’s inflationary surprise.

“We believe that the combination of a slower Fed growth and a slowdown in global economic growth should favor the US dollar in 2022,” UBS analysts said in a forecast report.

The Japanese yen strengthened following the Austrian quarantine announcement as traders sought refuge, and was most recently up 0.3 percent against the dollar at yen 113.93.

The currency previously weakened slightly after the Japanese government introduced a new stimulus package worth 55.7 trillion yen ($ 490 billion).

Sterling lost some of its recent gains and fell 0.5 percent to $ 1.34330.

In terms of cryptocurrencies, Bitcoin is below $ 60,000 and set for the worst week in six months – last trade was around $ 57,000.

(1 dollar = 114.4500 yen)

Ian Withers

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World Nation News Deskhttps://www.worldnationnews.com
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