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Euro slides as Austria's fourth national Covid-19 lockdown begins

Austria began its fourth lockdown, the first introduced since vaccines became widely available, shutting Christmas markets, bars, cafes and theatres.

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Euro | Europe | Global Markets

Reuters  |  London 

euro, Euro
An employee shows fifty-euro notes in a bank in Sarajevo. (File photo: Reuters)

The fell on Monday to trade close to a 16-month low on growing concerns over the impact of new COVID-19 restrictions in Europe, with starting a full lockdown and Germany considering following suit.

began its fourth lockdown, the first introduced since vaccines became widely available, shutting Christmas markets, bars, cafes and theatres.

A fourth wave of infections has plunged Germany, Europe's largest economy, into a national emergency, Health Minister Jens Spahn said, warning that vaccinations alone will not cut case numbers.

The slipped 0.25% to $1.122 at 0905 GMT, close to a 16-month low touched on Friday when announced the lockdown.

"Pandemic-related risk premia have made an unwelcome return to European FX and may keep the vulnerable this week," Chris Turner, global head of at ING, told clients.

New lockdowns and pressure on the service sector in now provide the European Central Bank with many more reasons to go slow on tightening its policy, Turner added.

Versus sterling, the euro edged 0.1% higher at 83.95 pence, after it touched it lowest level against the UK currency since February 2020 as the market weighed Bank of England Governor Andrew Bailey's cautious comments on inflation over the weekend.

expect the BoE to become the first major central bank to raise rates since the start of the pandemic in a bid to tackle inflation that hit a 10-year high as household energy bills rocket.

In the meantime, the dollar got additional support from bullish comments by Federal Reserve officials Richard Clarida and Christopher Waller on Friday who suggested a faster pace of stimulus tapering may be appropriate amid a quickening recovery and heated inflation.

The dollar index, which gauges the currency against six major peers, traded little changed at 96.141, staying within sight of last week's 16-month high of 96.266.

A more rapid end to tapering raised the possibility of earlier interest rate increases too.

The minutes of the Federal Open Market Committee's meeting at the start of this month, when policymakers announced a start to tapering, are due Wednesday. They may provide more insight on how many Fed officials are considering faster tapering or earlier rate increases.

U.S. President Joe Biden is also likely to announce his nominee for Fed chair this week, after interviewing incumbent Jerome Powell and Fed governor Lael Brainard.

 

(Reporting by Joice Alves, Kevin Buckland; Editing by Shri Navaratnam, Ana Nicolaci da Costa and Philippa Fletcher)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Mon, November 22 2021. 16:48 IST
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