Euro (EUR) Slides as Gas Prices Surge Again
The Euro (EUR) suffered a significant sell-off yesterday – falling below parity with the US Dollar (USD) – as energy prices surged to new record highs, stoking fears about Europe’s energy insecurity and increasing the likelihood of a Eurozone recession.
The surge in prices came as Russian state-backed energy giant Gazprom said it would shut off gas supplies via the Nord Stream 1 pipeline for three days for unscheduled maintenance. The pipeline is a key gas artery into Europe, and Russia has been choking off supplies in retaliation for EU sanctions.
Today’s Eurozone PMIs printed broadly as forecast, showing a contraction in manufacturing and near stagnation in the services sector. Following these results, and amid ongoing gas fears, the single currency could continue its decline.
Pound (GBP) Softens as UK Economic Anxiety Grows
The Pound (GBP) wavered yesterday, slipping lower against many of its peers, as eight days of strike action began at Felixstowe – the UK’s largest container port. The industrial action is likely to cause further headwinds at an already challenging time for the UK economy.
In addition, the global investment bank Citi forecast that UK inflation will hit 18.6% in January. If so, the UK’s cost-of-living crunch could become far worse.
Looking ahead, the UK’s latest flash PMI is in focus for GBP investors. Will another slowdown in the country’s vital services sector add to GBP headwinds?
US Dollar (USD) Firms as Recession Worries Rattle Markets
The US Dollar strengthened yesterday as global recession fears weighed heavily on markets, driving investors towards the safe-haven currency.
With recessions in the UK and the Eurozone looking inevitable, along with evidence of a slowdown in China’s economy, the market mood was decidedly downbeat.
Although less impactful in the US than the ISM surveys, today’s PMIs could also have an effect on the ‘Greenback’. Will they reveal that American business activity returned to expansion this month, thereby boosting USD?
Canadian Dollar (CAD) Subdued as Oil Prices Slip
The Canadian Dollar (CAD) fell against its stronger peers yesterday as a lack of data and a dip in crude prices weighed on the oil-linked ‘Loonie’.
With Canadian data still thin on the ground today, movements in the oil market may continue to affect CAD exchange rates.
Australian Dollar (AUD) Softens as PMIs Miss Forecasts
The Australian Dollar (AUD) wavered lower overnight as the market mood shifted, eventually souring. Australia’s poorer-than-expected PMI results also weighed on the ‘Aussie’.
New Zealand Dollar (NZD) Ticks Higher despite Shifting Market Mood
The New Zealand Dollar (NZD) edged higher in overnight trade amid an initially risk-on sentiment. However, as investors became more bearish, the ‘Kiwi’ trimmed its gains.