* The euro hits a new 20-year low against the dollar * The pound falls to a new 37-year low * The dollar index is at a 20-year high * The dollar / yen is higher this day, but markets remain cautious (adds new comment, updates prices) Gertrude Chavez-Dreyfuss NEW YORK, Sept 23 (Reuters) – The euro and pound sterling fell to new 20-minute lows and 37 against a rising US dollar on Friday after surveys showed the slowdown in business activity in the euro zone and Britain was accelerating this month and economies were likely heading into recession. Also weighing in on the pound, Britain’s new finance minister, Kwasi Kwarteng, announced tax cuts and support measures for households and businesses and the UK debt office outlined plans for 72 billion pounds ($79.74 billion) in additional issuance this fiscal year to fund stimulus. The British pound posted its biggest weekly decline against the US dollar in two years after hitting a new 37-year low of $1.0840. The pound was the day’s biggest loser against the dollar, falling 3.4% to $1.0874, and also posted its biggest daily percentage loss in two years. UK bond yields also jumped on Wednesday as prices fell. Benchmark UK 10-year yields soared to 3.829%, a level not seen since April 2011. “The policy response required to what is happening is clear: a significant hike in inter-meeting rates by the Bank of England next week to regain credibility with the market. And, a strong signal that it is ready to do ‘whatever it takes to rapidly bring inflation down and bring the real yield back into positive territory,’ he added. Earlier in the session, UK PMI figures showed the slowdown in the UK economy had worsened this month as businesses struggled with soaring costs and falling demand. In line with the pound, the euro fell 1.5% to $0.9689, after hitting its lowest level since October 2002 at $0.9669. The fall was triggered in part by data showing that S&P Global’s flash purchasing managers’ composite index (PMI) for the euro zone, considered a good indicator of overall economic health, fell further in September. The slowdown in German business activity deepened as rising energy costs hit Europe’s largest economy and companies saw a drop in new business. Europe’s common currency posted its worst weekly performance since March 2020. CENTRAL BANK POLICIES The yen was down 0.6% at 143.30 to the US dollar, but posted its first weekly gain of 0 .3% in more than a month after Japanese authorities intervened in the markets on Thursday to support the currency for the first time since 1998. The yen appreciated more than 1% on Thursday following the announcement that the Japan had bought yen to defend the battered currency. Trading was thin on Friday as Japanese markets were closed for a public holiday. The dollar index, which measures the US currency against a basket of currencies including the euro, pound and yen, jumped to 113.23, its highest since May 2002 and topping two highs. decades reached earlier this week. It last rose 1.6% to 112.96, posting its best weekly percentage increase since March 2020, said Juan Perez, trading director at Monex USA in Washington. The Bank of England raised interest rates by 50 basis points on Thursday in an attempt to tackle inflation but, like previous rate hikes in recent months, the move did not support the pound as it was overshadowed by worries about the economy. The dollar got a boost this week on the back of a very hawkish Federal Reserve policy announcement and rising Treasury yields. ================================================= ===== Currency Bid Price at 4:01 PM (2001 GMT) Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index 112.9400 111.2200 +1.56% 18.060% +113.2300 +111.0700 Euro/Dollar $0.9695 $0.9834 -1.41% -14.72% +$ 0.9851 +$ 0.9669 dollar/yen 143.3100 142.4000 +0.65% +24.50% +143.4500 +141.7700 Euro/yen 138.93 140.00 -0.76% +6.61% +140.2500 .66% +0.9839 +0.9757 Sterling / Dollar $1.0869 $1.1259 -3.46% -19.62% +$1.1273 +$1.0840 Dollar / Canadian 1.3590 1, 3488 +0.77% +7.50% +1.3612 +1.3470 $0.6512 Euro / Swiss 0.9520 0.9608 -0.92% -8.19% +0.9622 +0.9499 Euro/Sterling 0.8916 0.8734 +2.08% +6.14% +0.8934 +0.8712 NZ$0.5751 +0.5846 -1.63% -15.98% +$0.586+ $0.583 + $0.583 + 0. 10.5920 10.3915 +2.21% +20.56% +10.6520 +10.4155 Euro/Norway 10.2669 10.2331 +0.33% +2.59 % +10.3117 +10.2080 Dollar/Sweden 11. 2817 11.0650 +0.59% +25.10% +11.3275 +11.0552 Euro/Sweden 10.9402 10.8763 +0.59% +6.88% +10.9598 +10.8896 (Report by Gertrude Chavez-Dreyfuss in New York; Additional reporting by Joice Alves in London; Editing by Susan Fenton and Jonathan Oatis)
FOREX-Euro, British Pound Plunge on Weak Trade Activity Data, UK Fiscal Issues
