FOREX-Euro, sterling plunge on dour business activity data, UK mini-budget

Reuters

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      Euro hits fresh 20-year low vs dollar
    

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      Sterling falls to new 37-year trough 
    

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      Dollar index is at 20-year high
    

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      Dollar/yen higher on the day, but markets still cautious 
    

  
 (Adds new comment, FX table, byline, NEW YORK dateline; bullets, updates prices)
    By Joice Alves and Gertrude Chavez-Dreyfuss
       LONDON/NEW YORK, Sept 23 (Reuters) - The euro and sterling plummeted to fresh 20-year and 37-year
lows against a surging U.S. dollar on Friday after surveys showed the downturn in business activity across
the euro zone and Britain accelerated this month and the economies were likely entering a recession.
    Also weighing on sterling, Britain's new finance minister Kwasi Kwarteng announced tax cuts and
household and corporate support measures and the UK debt office laid out plans for 72 billion pounds ($79.74
billion) of additional issuance for this financial year to fund the stimulus.  urn:newsml:reuters.com:*:nL8N30T5LM
    Sterling  GBP=  was set for its biggest weekly decline against the U.S. dollar in two years after it
touched a fresh 37-year low of $1.1022. The pound was last down 1.9% at $1.1049. 
     British bond yields were set for their biggest daily rises in decades. urn:newsml:reuters.com:*:nL8N30U23W
    "The UK budget proposals do not reflect the need and the realities of the UK economy, one that likely
requires corporations to pay more so that higher revenue can come in to the government," said Juan Perez,
director of trading at Monex USA in Washington. 
    "A lot of the growth in the UK could come from further debt at a time of deep recessionary pressures and
the market is reacting swiftly," he added
    Earlier in the morning, UK PMI figures showed the downturn in Britain's economy worsened this month as
companies battled soaring costs and faltering demand.  urn:newsml:reuters.com:*:nZRN0057JP
    Moving in line with the pound, the euro  EUR=EBS  dropped 0.9% to $0.9755, after earlier hitting its
lowest level since October 2002 of $0.9726.  
    The fall was triggered in part by data showing S&P Global's flash euro zone Composite Purchasing
Managers' Index (PMI), seen as a good gauge of overall economic health, fell further in September.
 urn:newsml:reuters.com:*:nZRN0057JI
    The downturn in German business activity deepened, as higher energy costs hit Europe's largest economy
and companies saw a drop in new business.  urn:newsml:reuters.com:*:nZRN0057J4
    Europe's shared currency was on track for its largest weekly percentage drop since March.
    CENTRAL BANK POLICIES    
    The yen  JPY=EBS  was 0.5% lower at 143.14 per U.S. dollar, but likely set for its first weekly gain in
more than a month after Japanese authorities intervened in markets on Thursday to support the currency for
the first time since 1998.
    The yen rallied more than 1% on Thursday on news that Japan had bought yen to defend the battered
currency. Trading was thin on Friday with Japanese markets closed for a public holiday.  urn:newsml:reuters.com:*:nL1N30S30X
    The dollar index  =USD , which measures the U.S. currency against a basket of currency including euro,
sterling and yen, surged to 112.44, its highest since May 2002 and topping two-decade highs hit earlier this
week. It was last up 1% at 112.38 and set for its best week since March 2020.
    "The buck is indeed a safe haven unlike any other time in recent decades because the war and its effects
are not affecting the U.S.'s domestic goals," said Monex's Perez.
    The Bank of England lifted interest rates by 50 basis points on Thursday in an attempt to tackle
inflation but, like previous rate hikes in recent months, the move failed to support the pound as it was
overshadowed by concerns about the economy.  urn:newsml:reuters.com:*:nL8N30T32R
    The dollar received a boost this week from a very hawkish Federal Reserve policy announcement and rising
Treasury yields.  US10YT=RR   urn:newsml:reuters.com:*:nL1N30T298
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    Currency bid prices at 10:10AM (1410 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change                   
                                              Session                                             
 Dollar index      =USD       112.4000       111.2200    +1.08%         17.496%       +112.5100   +111.0700
 Euro/Dollar       EUR=EBS    $0.9737        $0.9834     -0.99%         -14.36%       +$0.9851    +$0.9726
 Dollar/Yen        JPY=EBS    143.0900       142.4000    +0.48%         +24.29%       +143.2800   +141.7700
 Euro/Yen          EURJPY=    139.32         140.00      -0.49%         +6.91%        +140.2500   +138.9100
 Dollar/Swiss      CHF=EBS    0.9775         0.9769      +0.07%         +7.18%        +0.9831     +0.9757
 Sterling/Dollar   GBP=D3     $1.1016        $1.1259     -2.13%         -18.52%       +$1.1273    +$1.0995
 Dollar/Canadian   CAD=D3     1.3554         1.3488      +0.50%         +7.21%        +1.3577     +1.3470
 Aussie/Dollar     AUD=D3     $0.6565        $0.6642     -1.14%         -9.67%        +$0.6656    +$0.6556
 Euro/Swiss        EURCHF=    0.9517         0.9608      -0.95%         -8.22%        +0.9622     +0.9499
 Euro/Sterling     EURGBP=    0.8836         0.8734      +1.17%         +5.19%        +0.8850     +0.8712
 NZ                NZD=D3     $0.5788        $0.5846     -0.98%         -15.42%       +$0.5856    +$0.5772
 Dollar/Dollar                                                                                    
 Dollar/Norway     NOK=D3     10.5550        10.3915     +1.50%         +19.73%       +10.5735    +10.4155
 Euro/Norway       EURNOK=    10.2763        10.2331     +0.42%         +2.63%        +10.2888    +10.2080
 Dollar/Sweden     SEK=       11.2283        11.0650     +0.52%         +24.51%       +11.2452    +11.0552
 Euro/Sweden       EURSEK=    10.9325        10.8763     +0.52%         +6.78%        +10.9552    +10.8896
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World FX rates    https://tmsnrt.rs/2RBWI5E
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 (Reporting Joice Alves in London and Gertrude Chavez-Dreyfuss in New York; Additional reporting by Rae Wee;
Editing by Susan Fenton and Jonathan Oatis)
 ((gertrude.chavez@thomsonreuters.com; 646-301-4124; Reuters Messaging:
rm://gertrude.chavez.reuters.com@reuters.net))

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