Forex News

The dollar is at a two-decade high, and the euro is even higher.

On Friday, the US dollar remained at a two-decade high as risk aversion swept global markets and traders speculated on a 100 basis point Fed rate hike later this month.

A barrage of negative news over the last 24 hours weighed on riskier currencies, particularly the Australian and the pound.

As the U.S. financial earnings season began on a negative note, China’s second-quarter growth fell more than expected, and Italy faced a new political crisis, the dollar surged to its highest levels since September 2002, above 109.

ING analysts wrote: “A dollar stabilisation around present levels is possible today, but we continue to highlight: a) limited headroom for a drop; b) near-term upside risks.”

The greenback was on track for its third straight week of gains as traders predicted the Fed will go for a super-sized tightening at their July 26-27 meeting.

Despite inflation, St. Louis Fed Governor Christopher Waller and St. Louis Fed President James Bullard both favour another 75 basis point increase this month.

After two days below parity, the euro was unchanged at $1.0026.

The euro fell to $0.9952 after Mario Draghi volunteered to resign but was rejected by Italy’s president.

China’s yuan fell to a two-month low versus the dollar as dismal statistics raised worries about this year’s economic growth objective.

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