SINGAPORE- The euro hovered a whisker above parity on the dollar on Wednesday ahead of US inflation data, with traders wary a sky-high reading could force it to lows not seen in decades.
The greenback was firm in Asia trade, with 50 basis point rate hikes in New Zealand and South Korea that came in as expected failing to offer much support to the kiwi or won.
The euro languished at $1.0036. It is down nearly 12 percent this year and fell to a 20-year low on Tuesday as the war in Ukraine has triggered an energy crisis that has hurt the continent’s growth outlook.
It dropped as low as $1.00005 on the most widely used Electronic Broking Services’ dealing platform and touched $1 on Reuters dealing overnight.
Analysts say it could fall further if fast-rising US consumer prices keep investors betting on US rate rises.
Economists forecast headline US inflation accelerated to 8.8 percent year-on-year in June, a 40-year high, which is likely to reinforce expectations of interest rate hikes and help the dollar.
“I think the US dollar will keep increasing if the US CPI is stronger than expected,” said Commonwealth Bank of Australia strategist Joe Capurso in Sydney. “There’s definitely a very good chance that the euro falls below parity tonight.”
The euro fell below parity with the Swiss franc last month and is flirting with a drop beneath its 200-day moving average against the pound.
Weakness in the euro and yen has lifted the US dollar index, which scaled a two-decade peak of 108.560 this week and was hovering at 108.13 in Asia trade on Wednesday. – Reuters
