Gas woes weigh on euro, dollar gains after WalMart warning

* Dollar index climbs for first time in four sessions

* Euro on pace for biggest daily pct decline in two weeks

By Chuck Mikolajczak

NEW YORK, July 26 (Reuters) - The dollar rose against a basket of major currencies on Tuesday after three straight sessions of declines ahead of a U.S. Federal Reserve policy statement, while concerns over the possibility of another Russian gas supply cut weighed on the euro.

European Union countries approved a weakened emergency plan to curb their gas demand on Tuesday, after striking compromise deals to limit the cuts for some countries, as they brace for further Russian reductions in supply.

Risk-off sentiment helped boost the dollar, as U.S. equities were pulled lower following a profit warning from retail giant WalMart WMT.N , which said it would slash prices to reduce inventory.

The Fed is widely expected to raise interest rates by 75 basis points on Wednesday, with investors keeping a close eye on the central banks' forward guidance as it grapples with high inflation and the potential for a recession.

"The key factors driving currencies haven’t changed any – it is gas problems in Europe, it is the difference between the Fed and the ECB and the BOJ in terms of who is the more hawkish in terms of their reaction function," said Huw Roberts, head of analytics at Quant Insight.

"The margin compression story on WalMart from higher inflation, you have to think that can be extrapolated across a number of other names in the retail space and other industries in the broader economy so it is only going to keep people worried about recession."

The dollar index =USD was up 0.564% at 107.010, with the euro EUR= down 0.81% to $1.0137.

Data showed U.S. consumer confidence fell for a third straight month in July, indicating slower growth to start the third quarter. On Thursday, investors will get the advance reading for second-quarter gross domestic product, while Friday will bring the release of personal consumption expenditures, the Fed's preferred inflation measure.

A second straight quarter of negative growth would result in what is known as a technical recession by analysts, although an official declaration of a recession from the National Bureau of Economic Research, which uses a more comprehensive definition, would likely come much later.

On Monday, Russian energy giant Gazprom GAZP.MM , citing instructions from an industry watchdog, said gas flows to Germany through the Nord Stream 1 pipeline would fall to 33 million cubic metres per day from Wednesday, or half of the current flow, which was already at only 40% capacity. [

The euro EURJPY= also fell 0.9% against the safe-havens yen to 138.400 and was down 1.04% against the Swiss franc at 0.975.

The Japanese yen JPY= strengthened 0.12% versus the greenback to 136.52 per dollar, while sterling GBP= was last trading at $1.203, down 0.10% on the day.

In cryptocurrencies, bitcoin BTC= was last down 5.75% to $20,893.93.

World FX rates Link

Reporting by Chuck Mikolajczak
Editing by Mark Potter

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.