The dollar is cautiously supported by the market as growth fears dominate

LONDON (Reuters) – The dollar held steady in early trading on Monday as traders sought safer assets and braced for a sharp hike in US interest rates later this week.

European stock indices opened in the red, as investors warned about how the company’s profits could continue in the face of the global economic slowdown and rising inflation.

The Six Stokes 600 in Europe will announce second-quarter results this week, with earnings growth expected at 22% year-over-year, according to Refinitiv I/B/E/S forecasts. Read more

The US Federal Reserve signaled a 75 basis point rate hike at its July 26-27 meeting, although data last week showed inflation hit 9.1% year-on-year in June, raising the prospect of a larger 100 basis point increase. later this year. Read more

The US dollar strengthened against the Australian and New Zealand dollars during Asian trading, although the move eased as European markets opened. At 0715 GMT, the Australian dollar was flat against the dollar, while the New Zealand dollar was down 0.2% to $0.6242.

Against the Japanese yen, the dollar rose 0.2% to 136.35.

The dollar index was at 106.760, having fallen last week from a two-decade high of 109,290 hit in mid-July and analysts expect it to remain in demand.

US Treasury Secretary Janet Yellen said on Sunday that US economic growth is slowing and inflation is “too high”. Read more

ING FX analysts wrote in a note: “Recession fears should continue to prevent a strong rebound in risk sentiment, which would coincidentally give some additional support to safe havens (including the US dollar) and may keep the path uneven for high beta commodity currencies.” . to customers.

The Euro rose to a two-week high last week by the European Central Bank which raised interest rates for the first time since 2011. But it then fell after disappointing business data from France and Germany. On Monday, it was down 0.2% on the day at $1.01930. Read more

ING FX analysts said the euro’s moves suggest expectations about the European Central Bank’s policy plans will be driven more by future market data, highlighting eurozone inflation data due for release on Thursday and Friday. Read more

“We believe the 1.0200 level could prove to be a pivot point for the EUR/USD for the remainder of the summer, but a retest of parity presents a concrete risk in the current high volatility environment,” ING said.

Rising energy costs and fears of gas shortages in Europe are also weighing on the euro, as Germany relies largely on Russian gas to fuel its export-dependent economy.

A survey on Sunday showed that 16% of industrial companies in Germany are cutting production in response to higher energy prices.

The major Western energy companies are expected to post record profits for the second consecutive quarter. Read more

Sterling was down 0.1% against the dollar at $1.1993, while sterling was steady at 85.07 pence per euro.

British Foreign Secretary Liz Truss and former finance minister Rishi Sunak laid out plans over the weekend in their campaign to become Britain’s next prime minister. Read more

(Elizabeth Hawcroft reports). Editing by Catherine Evans

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