Euro extends losses to new 16-month low; Bitcoin falls

London

THE euro fell to a new 16-month low versus the US dollar on Tuesday (Nov 16), while Asian currencies gave up their gains from dialogue between the US and Chinese presidents.

The dollar index held near its highest in 16 months, having rallied since US inflation data last week showed consumer prices surged to their highest rate since 1990, fuelling speculation that the Federal Reserve may raise interest rates sooner than expected.

Investors are waiting for US retail sales data due later in the session, which could also influence the outlook for interest rates.

At 1238 GMT, the dollar index was flat on the day at 95.541.

The euro was flat versus the dollar at US$1.1367. Earlier in the session, it dropped to US$1.1352, its weakest since July 2020, extending recent losses on Nov 15 after dovish comments from European Central Bank President Christine Lagarde.

Lagarde said that tightening monetary policy now to rein in inflation could choke off the eurozone's recovery, comments which were viewed as pushing back on calls and market bets for tighter policy.

On Nov 15, Austria imposed a lockdown on unvaccinated people, while Germany's Parliament is due to vote on Nov 18 on stricter measures to deal with surging cases. France, the Netherlands and many countries in Eastern Europe are also experiencing a surge in infections.

US President Joe Biden and Chinese leader Xi Jinping stressed their responsibility to the world to avoid conflict, in talks which gave Asian currencies a lift overnight. But support for riskier currencies ebbed somewhat as the talks did not appear to lead to any particular breakthrough.

The dollar hit a 5-month low against China's offshore yuan overnight, at 6.3615, and was still down around 0.1 per cent on the day at 1242 GMT, at 6.3877.

But the Australian dollar - seen as a liquid proxy for risk appetite - was down 0.1 per cent at US$0.73385.

The British pound was up 0.3 per cent against the dollar at US$1.3467, having risen after data showed British employers hired more people in October after the government's job-protecting furlough scheme ended.

The Swedish crown was up around 0.3 per cent against the dollar at 8.789. Swedish headline inflation hit its fastest pace since 2008 in October, data on Nov 15 showed.

Elsewhere, the cryptocurrency Bitcoin fell back below US$60,000 for the first time since Nov 1. REUTERS