The euro just missed parity with the dollar on Tuesday. At times, the common currency fell to $ 1.0001, the night before it was still trading at $ 1.0039. Most recently, the European currency stabilized again at $1.0040. Above all, concern that Russia could stop gas deliveries to Europe caused concern among investors. “The fear of a global recession obviously knows no bounds,” said Commerzbank analyst Antje Praefcke. As a result, the dollar’s role as a “safe haven” for investors has continued to solidify in recent weeks. The increasing interest rate differential between the USA and the euro area is also causing investors to turn to the dollar.
Further lockdowns due to the outbreak of a highly contagious corona sub-variant in China also clouded the economic outlook. Several Chinese cities have already issued new corona restrictions to prevent the spread. Stockbrokers therefore expected weaker demand for fuel. Brent crude oil fell more than 7 percent and cost less than $100 a barrel. The price of US oil WTI fell 8 percent to $95.70.
Concerns about demand and the strong dollar also hit copper. The price of the industrial metal fell by almost three percent to $7,370 a ton. Gold maintained its downtrend, falling 0.2 percent to $1,730 an ounce. The rise in the greenback, but also bets on more significant interest rate hikes, make the non-interest-bearing precious metal less attractive as an investment.
In view of the meager economic prospects, however, many investors resorted to government bonds. In turn, the yield on 10-year German government bonds fell to 1.094 percent from 1.250 percent the previous day.