The single European currency is weighed down by the risk of cutting Russian gas supplies for the European Union.
Le Monde with AFP
The euro fell on Tuesday July 12 at 1 dollar, a threshold which had not been reached since the year of its circulation, two decades ago. The European single currency is weighed down by the risk of cutting Russian gas supplies for the European Union.
Investors favored the greenback, which has won almost 14 % since the start of the year and briefly exchanged at 1 dollar for 1 euro when the questions about the brand new single currency weighed on its course.
The market is concerned about a major energy crisis on the old continent, doubting the recovery, by Russia, of gas flows after an interruption for maintenance on the Nord Stream pipeline 1. This situation accentuates fears of recession In Europe.
Energy from Russia “is at the heart of turmoil in Europe” and the announcement, by Canada on Saturday, that it would restore turbines for northern gas pipeline to Germany to mitigate the crisis Energy with Russia “is without positive impact”, comments Jeffrey Halley, analyst at Oanda.
The Nord Stream 1 gas pipeline in maintenance
Monday, the major Russian energy group Gazprom started ten days of maintenance on the Nord Stream pipeline 1. Germany and other European countries are waiting to see if gas delivery will be restored. “The key question is whether the gas will return after July 21. The markets seem to have already made their decision,” notes Mr. Halley. For Mark Haefele, analyst at UBS, the cessation of Russian gas deliveries in Europe “would cause a recession throughout the euro zone with three consecutive quarters of contraction of the economy”. The European Central Bank (ECB) will therefore find it difficult to tighten its monetary policy to combat rampant inflation without aggravating the economic situation.
The American Federal Reserve (Fed) has more room for maneuver to continue its increases in rates, employment figures published on Friday having shown that the economy of the United States is resistant, for the moment, better. The euro tumble could still continue. 2>
Difficulty against the Swiss franc
Wednesday, inflation data in France, Germany and the United States could feed investors’ concerns over a divergence from economies on both sides of the Atlantic. “If American inflation is stronger than the market does not plan, it could benefit the dollar”, investors betting that the Fed will have to act even faster to raise its rates, estimates Fawad Razaqzada, analyst at Forex.com.
The euro is very slightly raised after reaching $ 1, and was exchanged, around 12:10 p.m., for 1.0024 dollars. “Investors struggle to cross the symbolic course of parity” and to bring down the euro under this level, says Walid Koudmani, analyst at XTB. “This slow pace proves that this is a movement over time, the sale of the euro and the purchase of the dollar, and not a market manipulation,” adds Mr. Razaqzada.
The euro is also in difficulty against the Swiss franc, also a refuge value: it fell to 0.9836 Swiss francs, a lower since 2015. And the dollar also shines in the face of other currencies considered vulnerable to risk : The pound sterling plunged up to 1.1807 dollars, a more reached level since March 2020, when the start of the Cavid-19 pandemic in Europe, in full negotiation on Brexit, had the British currency back down to its lower level since 1985.