The yen gives up its gains as the euro and the dollar approach parity

Safe-haven demand briefly lifted the yen on Friday, after former Japanese Prime Minister Shinzo Abe was shot while campaigning for parliamentary elections, while continued dollar strength kept the euro just above parity. .

The euro hit a 20-year low this week on signs the euro zone economy is heading into recession, but rose from the previous session’s lows as markets adjusted some bets ahead of monthly data on employment in the United States.

Abe, Japan’s longest-serving leader, died Friday after being shot while delivering a speech in the western city of Nara.

The yen rose as much as 0.5% immediately after the news broke, but later gave back most of those gains and was up 0.1% at 135.89 per dollar by 1047 GMT.

Attention was focused on the euro, which has lost nearly 3% against the dollar this week, as investors worry about the economic impact of an energy crisis triggered by uncertain gas supplies from Russia.

The single currency fell 0.8% to hit a new two-decade low against the dollar at $1.00720 by 0744 GMT. It then recovered some losses and was down 0.2% at $1.01430.

For its part, the US dollar index hit a new two-decade high at 107.790. It was later trading 0.2% higher against a basket of currencies at 107.220.

The European Central Bank is set to start interest rate hikes this month, but will continue to lag behind the pace of monetary policy tightening by the Federal Reserve and most other central banks.

After a first rate hike of 25 basis points this month, a larger increase in September may be warranted, according to Ignazio Visco, a member of the ECB’s Governing Council.

Sterling was headed for a second consecutive weekly decline against the dollar, but its 0.9% decline this week is relatively modest amid political chaos that has led to the resignation of Prime Minister Boris Johnson. The pound was down 0.3% in the session at $1.1989.

US non-farm payroll figures are due out at 1230 GMT and economists forecast some 268,000 jobs will have been added in June.

Stronger data could allay recession fears, but would likely raise bets on rate hikes, further strengthening the dollar.

On Thursday, two of the more hawkish Fed officials said they would support a further 75 basis point interest rate hike later this month, but would slow down afterward.

Connect with the Voice of America! Subscribe to our channel Youtube and turn on notifications, or follow us on social media: Facebook, Twitter and Instagram.