Asian markets were lower on Wednesday after global stocks fell as the euro tumbled against the dollar and traders await news of the next US interest rate hike.
The single currency fell to $0.9901 – a fresh 20-year low – but later recouped losses as the greenback was hit by poor US economic data.
The dollar had strengthened this week ahead of a speech by Federal Reserve Chair Jerome Powell on Friday as markets speculated the central bank will tighten further.
Higher interest rates strengthen the US currency by making dollar-denominated debt more attractive to investors.
But the euro was also weighed down by a bleak outlook for the euro-zone economy as Russia’s war in Ukraine has pushed up energy prices.
The unit plunged below par against the dollar on Monday on recession fears to hit its lowest level since 2002, when it first entered physical circulation.
Most recently, the closely watched monthly composite Purchasing Managers’ Index (PMI) from S&P Global showed that economic activity in the euro zone contracted for the second straight month in August.
At this week’s central bank symposium in Jackson Hole, the focus is on what Fed Chair Powell has to say about plans to combat high prices, amid many fear officials could plunge the economy into recession.
“I think investors are braced for some aggressive comment from Fed Chair Powell over the coming week,” Cresset Capital’s Jack Ablin said.
Wall Street indices mostly closed lower and major markets in Asia followed suit.
Tokyo, Hong Kong and Shanghai fell – although Sydney, Seoul, Taipei, Wellington and Manila rose at the opening.
US natural gas prices, meanwhile, hit a fresh 14-year high of $10.028 on Tuesday.
Across the Atlantic, European natural gas prices fell, although they remain high on fears of a halt to Russian gas supplies.
Gas had surged to record highs in March after key producer Russia launched its invasion of neighboring Ukraine.
That has led to rising domestic energy bills and fueled decades of inflation that have led to tighter monetary policies around the world.
Moscow’s maneuvers have hit the single currency hard because the bloc relies heavily on imported Russian gas, said Kit Juckes, an analyst at Societe Generale.
“The problem with the euro is…the threat of continued gas supply shortages and the cost of replacing Russian gas,” Juckes said.
– Key figures at 0250 GMT –
Tokyo – Nikkei 225: down 0.34 percent at 28,359.10
Hong Kong – Hang Seng Index: down 0.9 percent at 19,318.04
Shanghai – Composite: down 0.68 percent at 3,253.97
London – FTSE 100: down 0.6 percent at 7,488.11 (close)
Euro/Dollar: DOWN at 0.9949 from $0.9973
Pound/dollar: DOWN at 1.1804 from $1.1835
Euro/Pound: UP at 84.29p from 84.25p
Dollar/yen: up at 136.92 yen from 136.77 yen
West Texas Intermediate: FALSE, up 0.31 percent at $93.46 a barrel
North Sea Brent Crude: FALSE, up 0.4 percent at $99.82
New York – Dow: 0.5 percent down at 32,909.59 points (close)
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