Euro, Stirling Plunge on Recession Business Activity Data, UK Mini Budget

LONDON/NEW YORK (Reuters) – The euro and pound plunged to their lowest in 20 and 37 years on Friday against a surging US dollar and the economy was probably heading into recession.

The UK’s new Finance Minister Kwasi Kwarten also announced tax cuts and measures to help households and businesses, and the UK Debt Service announced a £72 billion (79.74 billion A plan was made for additional issuance of U.S. dollars.read more

The pound set for its biggest weekly drop against the US dollar in two years after reaching a 37-year low of $1.1022. The pound last fell 1.9% to his $1.1049.

UK bond yields set for biggest daily gains in decades.read more

Juan Perez, trading director at Monex USA in Washington, said: “The UK budget proposal does not reflect the needs and realities of the UK economy. We are likely to have to pay the cost of .

“A lot of UK growth could lead to further debt at a time when recessionary pressures are severe, and markets are reacting quickly,” he added.

Earlier in the morning, UK PMI figures showed the UK economy’s slump worsened this month as businesses battled higher costs and weaker demand.read more

In line with the pound, the euro fell 0.9% to $0.9755, hitting $0.9726, its lowest level since October 2002.

The decline was driven in part by data showing that S&P Global’s Flush Euro Zone Composite Purchasing Managers Index (PMI), seen as a good indicator of overall economic health, fell further in September. wasread more

The slump in business activity in Germany deepened as rising energy costs hit Europe’s largest economy and companies suffered a decline in new business.read more

Europe’s shared currency is on track for its biggest weekly percentage drop since March.

central bank policy

The yen fell 0.5% to 143.14 to the dollar, but could rise weekly for the first time in over a month after Japanese authorities stepped into the market on Thursday to support the yen for the first time since 1998. I have.

The yen rose more than 1% on Thursday after news that Japan bought the yen to protect its plunging currency. Trading was thin on Friday. The Japanese market was closed for a public holiday.read more

The dollar index, which measures the US currency against a basket of currencies including the euro, pound sterling and yen, surged to 112.44, its highest since May 2002, and surpassed a 20-year high earlier this week. Most recently, it rose 1% to 112.38, setting it’s best week since March 2020.

Monex’s Perez said, “The dollar is certainly a safe haven unlike any time in recent decades as the war and its consequences have not impacted U.S. domestic goals.

The Bank of England raised interest rates by 50 basis points on Thursday to combat inflation, but like previous rate hikes in recent months, the move could support the pound as concerns about the economy overshadowed it. was not possible.

The dollar was boosted this week by a very hawkish Federal Reserve policy announcement and higher Treasury yields.

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Currency bid price at 10:10 AM (1410 GMT)

In London we report Joice Alves and in New York we report Gertrude Chavez-Dreyfuss. Additional report by Rae Wee.Editing by Susan Fenton and Jonathan Ortiz

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