Euro Drops To 20-Year Low, Approaches Parity With Dollar

• The euro slid to a 20-year low and came closer to parity against the dollar on July 11 on concerns that an energy crisis will tip the region into a recession, while the U.S. currency was boosted by expectations that the Federal Reserve will hike rates faster and further than peers. 
• The most proximate concern for markets is whether or not Nord Stream 1 (a major Russian gas pipeline) is going to come back online,” said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto, adding that “the markets will likely price in a recession” for the region if it doesn't. 
• The euro tumbled as low as $1.0051 against the U.S. dollar, the weakest since December 2002. The dollar index reached 108.19, the highest since October 2002. 
• “The Fed is going to raise rates more aggressively than most other developed market central banks and we don’t think other developed market central banks really have the bandwidth to keep up,” Rai said. The Fed is expected to lift rates by 75 basis points at its July 26-27 meeting. Fed funds futures traders are pricing for its benchmark rates to rise to 3.50% by March, from 1.58% now. 

(Source: Reuters)