London, Europe Brief News – The euro fell to its lowest level since 2002 as fears of a recession in the eurozone.
The euro also dived on Tuesday as investors eyed aggressive interest rate hikes by the US Federal Reserve in its fight against inflation, in contrast with the European Central Bank which plans more modest increases.
The euro shed around 1.3% for the session to hit $1.029 by mid-afternoon in Europe, having earlier been as low as $1.028.
Euro zone inflation hit a record 8.6% in June, prompting the European Central Bank to give markets advance notice of its intention to hike interest rates for the first time in 11 years at its July meeting.
Just before 09:00 GMT, the shared eurozone unit tumbled to $1.0306, threatening a push towards US dollar parity for the first time since the euro’s creation in 1999.
Economic growth in the eurozone floundered in June, a key survey showed on Tuesday, hit by soaring inflation.
“Growing fears of a recession are hammering the euro lower, whilst the dollar is soaring on bets that the Fed will keep hiking rates aggressively to tame inflation,” City Index analyst Fiona Cincotta told the AFP news agency.
“Today’s PMI data from Europe have highlighted the risk of slowing growth at the end of the second quarter and raise the prospect of a contraction in activity in the coming months.”
