Gas woes drag euro down, dollar gains on recession worry

NEW YORK, July 26 (Reuters) – The dollar rose against a basket of major currencies on Tuesday, reversing course after three consecutive sessions of declines as recession fears grew and investors awaited a policy statement. from the Federal Reserve, while energy supply concerns weighed on the euro. .

European Union countries on Tuesday approved a weakened contingency plan to reduce gas demand, after reaching compromise agreements to limit cuts for some countries, as they prepare further supply cuts Russian. Read more

Risk aversion sentiment helped boost the dollar as US stocks were dragged lower following a profit warning from retail giant WalMart (WMT.N), which said it would cut prices to reduce inventory. Read more

The Fed is expected to raise interest rates by 75 basis points on Wednesday, with investors closely watching central bank forecasts as it grapples with high inflation and the potential for a recession. Last week, the European Central Bank (ECB) raised rates by 50 basis points. Read more

“The writing is on the wall for the euro. I know it’s been a punching bag for a while, but these growing pains aren’t going to get better, the energy crisis, it just seems that it will only get worse,” said Edward Moya, senior market analyst at Oanda in New York.

“There are growing risks that we could see investors getting a little more nervous that it’s not just a very brief recession, that it’s a little bit more impactful, so you’re probably still going to seeing this haven sink into the dollar are likely to remain the focal point for many traders.”

The dollar index rose 0.714% to 107.180, with the euro down 0.98% to $1.012. The euro was on course for its biggest daily percentage decline since July 11.

Data showed U.S. consumer confidence fell for a third straight month in July, while new home sales fell to their lowest level in more than two years, signaling an economy at risk of a recession.

On Thursday, investors will get the advance reading of second-quarter gross domestic product, while Friday will bring the release of personal consumption expenditures, the Fed’s preferred inflation measure. Read more

A second consecutive quarter of negative growth would result in what analysts call a technical recession, although an official statement of a recession from the National Bureau of Economic Research, which uses a more comprehensive definition, would likely come much later.

On Monday, the Russian energy giant Gazprom (GAZP.MM), citing instructions from an industry watchdog, said gas flows to Germany via the Nord Stream 1 pipeline would drop to 33 million cubic meters per day from Wednesday, half the current stream, which was already only at 40% capacity. Read more

The euro also fell 0.87% against the safe-haven yen at 138.450 and lost 1.1% against the Swiss franc at 0.975.

The Japanese yen weakened 0.07% against the greenback at 136.78 to the dollar, while the pound last traded at $1.2024, down 0.15% on the day.

In cryptocurrencies, bitcoin last fell 5.75% to $20,894.37 after Bloomberg News reported that the U.S. Securities and Exchange Commission (SEC) was investigating whether Coinbase Global (COIN.O) improperly letting Americans trade digital assets that should have been registered as securities. Read more

(This story has been reclassified to add a deleted word in the first paragraph)

Reporting by Chuck Mikolajczak Editing by Mark Potter

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