The German Bundesbank presents the new 50 euro banknote at it's headquarters in Frankfurt in the doldrums as euro founders worry about the economic downturn.
SINGAPORE Reuters - The euro huddled at a two-decade low on Thursday and oil nursed losses as investors fretted about a looming recession, while equities were caught between growth worries and relief that a slowdown might put the brakes on interest rate hikes.
MSCI's broadest index of Asia-Pacific shares outside Japan went up from a two month low and rose 0.3% in early trade. Japan's Nikkei increased by 0.7%. The Australian and New Zealand dollars scraped themselves from two-year lows.
S&P 500 futures were flat. Overnight, the index went up 0.4% and Treasuries dropped as traders struggled with positive U.S. economic data, solid job openings and hawkish minutes from the June Federal Reserve meeting.
The coincidence of fairly hot job market data and more resilient ISM services further underpins the point that the Fed is unlikely to step down the pace and intensity of tightening, said Mizuho economist Vishnu Varathan.
The two-year Treasury yields went up 14 basis points overnight and hovered at 2.9691% in the Asia session. The bond market is pointing towards a slowdown in growth as rate hikes hit, which is above the 10 year yield of 2.9206%.
The U.S. data shows job openings are higher than expected and the services sector is holding up. The labour market numbers can give a fuller picture of the state of the world's biggest economy on Friday when the next big data point is on Friday.
The speeches of Bullard and Waller are the next litmus test for the direction of yields and should shed more light into the thinking of the hawkish camp within the Fed, said Jan Nevruzi, NatWest Markets' rates strategist.
James Bullard, the St Louis Fed President, and the Fed Governor Christopher Waller are both due to speak at 1700 GMT.
The Fed has stoked recession fears and hurt growth sensitive commodities such as copper, oil and iron ore as a result of the global rate tightening over recent months. The euro has been hammered as investors see Europe as the zero for a global slowdown.
The price of crude oil fell below $100 a barrel early in the Asia session and was last at $100.26, down 10% for the week so far. The Shanghai copper price increased but has lost 20% in a month.
The Australian and New Zealand dollar lost ground on Thursday as the Aussie fell 0.5% to $0.6813, despite the fact that it lost ground against growth sensitive currencies such as the Australian and New Zealand dollar.
The euro is near parity on the dollar and has fallen more than 2% this week, touching its lowest level since 2002, at $1.0162, and steadying at $1.0202 on Thursday. The inflation in FRX Europe is at record levels and the rising energy prices suggest that consumer prices will remain stiff for a while longer. Dutch gas prices have doubled since the middle of June due to concerns about the longevity of Russian gas supply to the west.
Chris Weston, head of research at Pepperstone in Melbourne, said it was not just a question of the recession, but it's a question of how dark it gets in Europe. The market players that follow trends have been piling in to euro shorts. One surprising standout was the relative stability of sterling despite the strength of the U.S. dollar and the precarious state of Prime Minister Boris Johnson's leadership - mainly because markets don't see much change if he leaves.
The view that a new Tory government and chancellor will speed-track fiscal easing is something that is why sterling is not faring badly, said Ray Attrill, head of National Australia Bank's head of FX, National Australia Bank, who said a hawkish tone from the central bank also helped.