The euro fell to its lowest level in two decades against the dollar on Tuesday as a surge in natural gas prices rekindled concerns about the eurozone economy and data showed that growth in businesses in the region had slowed sharply in June.

News that Norwegian offshore workers began a strike on Tuesday that will cut oil and gas production has added to fears of an energy shortage in Europe.

The euro fell 1.3% against the dollar to $1.0281, its weakest since December 2002. Against the Swiss franc, it fell 0.9% to 0.9925 francs, its lowest since 2015.

The dollar index jumped 1.1% to 106.24, a two-decade high for a currency that investors tend to buy during times of acute economic uncertainty.

“Everyone is preparing for the deactivation of Nord Stream and Russia has already signaled that it will use it as a weapon. So it really hurts the competitiveness of German industry,” said Jordan Rochester, currency analyst at Nomura.

“Germany has much higher manufacturing, so we are facing a crisis in energy supply, rationing, so the competitiveness of the euro zone will collapse and its exports will be reduced.”

Tuesday’s survey data showed business growth in the eurozone had slowed further last month and forward-looking indicators suggested the region could slide into decline this quarter as the cost of living crisis keeps consumers on their guard.

Elsewhere, stock markets gave up early gains as soaring natural gas prices dampened sentiment, quashing earlier optimism about signs of easing trade tensions between the United States and China.

After US markets closed on Monday, trading is expected to be busier on Tuesday with Wall Street reversing early gains and heading towards 08:25 GMT.

The Euro STOXX was last down 0.54% while the German DAX fell 1%. The FTSE 100 also fell 1%.

BRIEF RELIEF

Giving jittery markets a brief respite earlier was a report that US President Joe Biden was leaning towards a decision to ease tariffs on goods from China as well as news that Chinese Vice Premier Liu He had spoken. to US Treasury Secretary Janet Yellen.

A survey showing that services activity in China grew at the fastest pace in nearly a year also helped sentiment.

Tuesday offers little economic data, but later this week the US Federal Reserve and European Central Bank release their minutes from recent policy meetings and on Friday widely watched US payrolls data will be released.

“Markets are all about recession risk,” said Grace Peters of JPMorgan Private Bank.

“Inflation has been the theme since last year, but since the beginning of June we have started to see consumers change their behavior significantly. The economic momentum has deteriorated significantly in the second quarter. cross movements of assets.”

The Australian central bank raises its rates again with a second consecutive increase of 50 basis points.

However, the Australian dollar fell 1.1% to $67.82 as investors interpreted the bank’s accompanying message as more dovish than expected and the US currency appreciated across the board.

In South Korea, June inflation accelerated to its highest level since the Asian financial crisis, stoking expectations that the central bank could offer a 50 basis point rate hike for the first time the next week.

US Treasury yields returned from the holidays little changed, with the benchmark 10-year bond yield at 2.9%, below last week’s levels of more than 3%.

Eurozone government bond yields fell two to five basis points on uncertainty over the future path of monetary tightening by the European Central Bank and as investors fearful of the economic outlook sought security.

As economic fears spilled over into markets, oil prices fell in sympathy. Brent crude futures weakened 1.1% to $112.24 a barrel after rising earlier, although U.S. crude oil edged up 0.1% to 108.5 a barrel.

Spot gold fell 0.34% to $1,803 an ounce.

Bitcoin lost 2.5% to $19,706.

This story was published from a news feed with no text edits.

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