London (TIP)- The euro sank to a two-decade low versus the dollar on Tuesday as another surge in natural gas prices reignited worries about the health of the euro zone economy and data showed euro zone business growth slowed sharply in June. The euro tumbled 0.9% against the dollar to $1.0325, its weakest since December 2002. Versus the Swiss franc, it dropped 0.7%to 0.9941 francs, its lowest since 2015.

“It will continue to be very difficult for the euro to rally in any meaningful way with the energy picture worsening and risks to economic growth increasing notably,” said Derek Halpenny, an analyst at MUFG.

Survey data showed business growth across the euro zone slowed further last month and forward-looking indicators suggested the region could slip into decline this quarter as the cost of living crisis keeps consumers wary. The dollar index gained 0.8% to 105.98, a new two-decade high for the currency.

Australia‘s central bank became the latest to extend its interest rate tightening cycle, hiking by a second straight 50 basis points, although the Aussie dollar fell 0.8% as investors interpreted the bank’s accompanying messaging to be more dovish than expected.

Offering brief respite to nervous markets was a report that U.S. President Joe Biden was leaning towards a decision on easing tariffs on goods from China as well as news Chinese Vice Premier Liu He had spoken to U.S. Treasury Secretary Janet Yellen. A survey showing China’s services activity grew at the fastest pace in almost a year also helped sentiment. But as European trading picked up, the Euro STOXX reversed course and was last down 0.43% while Germany‘s DAX fell 0.6%. The FTSE 100 dropped 1.05%. In Asia, MSCI’s gauge of Asia Pacific stocks outside Japan rose 0.17%.

          Source: Reuters