Euro strikes fresh 20-year low as eurozone economy shrinks again

Euro strikes fresh 20-year low as eurozone economy shrinks again

FRANKFURT: The euro dived Tuesday to a new two-decade dollar low and equities wavered, as data highlighted the shrinking eurozone economy and the worsening energy crunch. The single currency, hit also by the US Federal Reserve’s rate-hiking plans before this week’s hotly-awaited comments from Chair Jerome Powell, tumbled to $0.9901.

The shared unit had already plunged below parity Monday on recession fears to plumb the lowest levels since 2002, when it came into physical circulation. In the latest blow, S&P Global’s closely-watched monthly composite purchasing managers’ index (PMI), which measures corporate confidence, languished in August below the key 50-point level. That stoked long-running worries of a protracted economic downturn.

‘Overarching threat’

“Eurozone PMIs … confirm concerns of an impending recession in Europe on the back of high inflation and energy crunch, as they signal declining activity for two months in a row,” warned Citi analyst Luis Costa. He added: “The energy crunch remains an overarching threat to economic stability in Europe.” Equities in the region wavered amid stubborn worries that the US Federal Reserve will carry on ramping up interest rates to fight inflation.

Rising US interest rates also push the dollar higher against other currencies. On Tuesday, natural gas prices remain elevated on fears