MORE FALLS AHEAD (Catalyst: Weak EURO) EURAUD/EURUSD
Why the Euro is so weak
Reasons for Euro weakness are not hard to find:
European gas prices are at record levels, pushing wholesale electricity prices up 200% in the first nine months of this year, according to the Guardian newspaper. There are concerns this could spill over into the US this winter but there has been an unusually mild start to autumn there so the EU will likely suffer more;
Supply issues are a serious problem in the EU, with five of Germany’s top economic research institutes warning last week that “supply bottlenecks for intermediate products are hampering production in the manufacturing sector” of Europe’s largest economy;
Eurozone economic data have been poor, with, for example, industrial production down 1.6% month/month in August compared with an increase of 1.4% the month before. The next update will come from the batch of ‘flash’ Eurozone purchasing managers indexes (PMIs) due this coming Friday for September;
The European Central Bank remains determinedly dovish, with the markets expecting no increase in interest rates until late 2023. “The trigger for monetary policy action is not there,” said ECB Chief Economist Philip Lane a week ago; and
While COVID-19 cases are continuing to fall in most world regions, Europe is suffering a modest increase, according to the latest weekly pandemic update by the World Health Organization.
Reasons for Euro weakness are not hard to find:
European gas prices are at record levels, pushing wholesale electricity prices up 200% in the first nine months of this year, according to the Guardian newspaper. There are concerns this could spill over into the US this winter but there has been an unusually mild start to autumn there so the EU will likely suffer more;
Supply issues are a serious problem in the EU, with five of Germany’s top economic research institutes warning last week that “supply bottlenecks for intermediate products are hampering production in the manufacturing sector” of Europe’s largest economy;
Eurozone economic data have been poor, with, for example, industrial production down 1.6% month/month in August compared with an increase of 1.4% the month before. The next update will come from the batch of ‘flash’ Eurozone purchasing managers indexes (PMIs) due this coming Friday for September;
The European Central Bank remains determinedly dovish, with the markets expecting no increase in interest rates until late 2023. “The trigger for monetary policy action is not there,” said ECB Chief Economist Philip Lane a week ago; and
While COVID-19 cases are continuing to fall in most world regions, Europe is suffering a modest increase, according to the latest weekly pandemic update by the World Health Organization.